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.

THEME-BASED REALTY! DOES IT EVEN WORK?

For most part of the year gone by, realtors harped over the affordable housing strategy to lure consumers. But builders now are now trying to lure buyers through theme-based dreams! Do they even stand a chance?

Of he few structures that would be hard to miss while sauntering along Dubai’s Business Bay, the Boris Becker Business Tower, which is increasingly becoming an emerging commercial hub of the city, forms the key. The 19-storey tower standing tall above the water-level, is the third and final offering of the ‘Sports Legends Trilogy’ built by Germany’s ACI Real Estate Developer, which has also built the Niki Lauda Twin Tower and Michael Schumacher Business Avenue. Moving beyond the city of gold, even countries like UK and Jordon have developed a state of the art Media City to promote the media industry of their respective countries. In India too, the development of Cyberabad in the city of Hyderabad, marks the coming together of several Fortune 500 companies from the IT/ITeS sectors. But these aforementioned projects are all commercial, relatively easy to sell and more so, when you have a theme associated with the structures. And while this trend of marketing commercial real estate projects (either by associating a personality or attaching a theme with the project) has for long been in vogue, the ‘theme’ proposition is steamrolling itself into the residential property space in India. Apparently, this would help real estate developers boost sales by spamming the nouveau rich segment. Umm, does this even work?

The success of Bollywood superstar Shah Rukh Khan’s maiden real estate venture – Shah Rukh Khan Boulevard – in Dubai is an example of how aspirational the global consumer has become when it comes to buying a house. But then, isn’t the Indian customer a beast with an undefined nature? With the commercial real estate still growing at a sluggish pace in the Indian market, all hopes of most of the developers are pinned on their residential projects. Currently, the market scenario is such that around 40% of the property being purchased is for investment purposes and the remaining 60% is bought for actual residential use. To that extent, developing theme-based housing projects does seem – on the face of it – to be a high risk high return proposition.

But Vivek Mittal, CEO, Realty Stocks, disagrees with us, “The last 18-24 months saw a huge dip in the realty sector, with both residential and commercial space suffering from a lack of demand. Affordable housing helped the realtors gain some ground by selling houses in the range of Rs.20-30 lakh. However, it is time that realtors offer more than just affordable houses to their consumers. Launching theme-based houses is a step in that direction.” It is accepted that with more and more educated consumers coming into the picture, there is a dire need for proper marketing of the projects. But wouldn’t theme-based projects end up being too costly for the consumer?

As if to prove our conjecture wrong, the Italian-style Tuscan City developed by TDI International in Haryana with a starting price point of Rs.21.5 lakhs is targeted at the middle class mass-market. Says Kamal Taneja, Managing Director, TDI Group, “A judicial mix of mid and low-rise units offered at such competitive rates would definitely induce customers to come forward and own houses that suits their requirements.” Then there is CHD Developers’ Active Senior Lifestyle Township, which is marketing the project to people over 55-years of age. CHD Developers also launched a residential project near Vrindavan (Uttar Pradesh) with a unique architectural design of Sri Krishnalok capturing the spirit of the holy city of Vrindavan. Says Ravi Saund, Marketing Head, CHD Developers, “40% of the occupants who have purchased our Vrindavan projects, are localites. Interestingly, a lot of buyers from Gujarat and Chandigarh have invested in the project thereby signifying its success.”

And to our surprise, we found a few positive consumer sets too. Nitin Tiwari, a 39-year-old MNC executive and his wife Ritu, were hunting for a home for the past seven months (“House is a once-in-a-lifetime investment for working couples like us and we did not want to settle in for just anything. We were waiting for that ‘something’,” says Nitin). And that ‘something’ came in the form of a Jaypee Greens Sports City billboard that, Nitin says, caught his eyes. Complete with motor racing tracks, go-karting facilities, golf course and stadia and courts for other sports, the thought of buying and staying in such a complex sounded far too appealing to the couple, more so as Nitin had been a great sports enthusiast during his heydays. The case is somewhat similar for 35-year-old Jasmeet Virk who heads the Northern Sales division of a leading paints company. A career-oriented single woman, Jasmeet says to us that she celebrates womanhood and is proud to have made a mark for herself in a male-dominated corporate world. When hunting for a house, Jasmeet settled for Meriton Groups’ La Femme, as “buying a house in La Femme instilled into me a sense of solidarity toward woman-hood.” And that’s what the residential real estate marketers talk about today, as one real estate developer lets on – “If you’ve got an ego to massage, we’ve got a home that does just that!”

In the last one year, most residential projects were marketed by playing purely upon the price factor. In realty, pricing of a project primarily depended upon the location (still does!), as ultimate profits take place only if the location is acceptable. However, by properly marketing the projects in the name of themes, the marketer takes a leeway with pricing. Theme-based residential projects – even the ones targetted at the middle income community – are therefore priced slightly higher than the conventional affordable houses as they are targeted to a niche. “A real estate product is just like any other product or service. Buying a house is a high-involvement purchase and the marketer has to convince the customer of a value-purchase. Negotiating on price points becomes easier for marketers then,” says Neeta Walia, Director, Brand Talk. She adds that developers have very strategically themed their housing projects. For instance, a housing project for senior citizens will attract newly-retired people who have just got their Provident Fund and are looking for investment options.

But what about the illiquidity of it all? “The money that senior citizens, for example, will invest in buying property, can be recovered to some extent by taking reverse mortgage loans,” explains Mittal of Realty Stocks.

Female buyers on the other hand enjoy lower stamp duty rates and higher tax rebate as compared to male buyers. Emergence of career-oriented women with a desire to secure their future has also led to an increase in women buying houses, and banks too are not too worried about doling out loans to females as compared to menfolk. As a tactic to lure female buyers and boost sales over a short period, Meriton Group, for example, even decided to share registration charges (if the purchase of the flat was made before December 31, 2009).

Well, star-studded residential complexes like the Shahrukh Khan Boulevard in Dubai may still be a distant dream in India, but it’s now evident that one cannot summarily reject this new concept – and it might even work!

Laughingstock of The Creative – Design!

Design does not just explain The Aesthetics of The Finished Ad or Product – It is born with the first stroke of the Artist’s Brush. Sadly, The essence of the term ‘Design’ has started getting Misunderstood, in some cases, quite blatantly.

We are allegedly involved in the robbery of ideas from the West – the English and Americans to be more precise. Taking no offence, let us begin this debate on “the significance of design in the ad-world” by taking a cue from the Cambridge dictionary of American English. The word “design”, as a noun, informally refers to a plan for the construction of an object (as in architectural blueprint, circuit diagrams and sewing patterns). As per the same dictionary, “advertising” is an example of a vital design discipline known as “Communication Design”. But even the very lexicographers would agree that the above-mentioned dictionary meaning of design is not overwhelming by any standards. Why? Design in truth, cannot carry any specific definition! In safest terms, it would simply mean a “language that any form of visual communication must speak”. If communication is an expression, design is simply the language.

Design gives stature!

Did you ever notice that every commercial advertisement contains more than one aspect of design? The name of the brand, which is conspicuously highlighted (like in the latest Airbus print ad, with the Airbus A380 laid out on a US dollar bill; for the record, the Airbus name appears 8 times in the ad, while A380 appears 11 times!) or is deliberately underplayed (like the latest Royal Dutch Shell print ad, where the name Shell appears only once, that too in an email address given on the spread) is a part of the ‘nomenclature design’. Then comes the content of the advertisement, which is actually designed in a way that makes the entire offering appeal to your eyes, so that when you see words written, you just don’t see words, but beautifully written words stitched together. We call it ‘content design’. To incorporate a human being who is endorsing the brand, there would be ‘casting design’, to portray him/her in a certain desired fashion. This would call for a ‘costume design’ (remember the bright green, blue and red dress that Kareena Kapoor dons in the latest Sony Viao TVC to match the changing colours of the notebooks?). And to ensure a free flowing sensible script, there will be a ‘script design’ (a storyboard that has a lasting influence of the viewers – like the Roberto Carlos PepsiCo ad in the 2002 FIFA World Cup, where he scored during a free kick; sadly, the ad was banned in Japan because it insulted the Japanese style of greeting). Last but definitely not the least, the overall look of the commercial is controlled by visual graphics or ‘visual design’, which could be meaningful or simply abstract.

Take for instance the advert for any juice brand. Its name is designed in a certain way to communicate the USP of that brand. For instance “Real” means the juice is real and not artificial, or “Tropicana”, implying it contains fruits from the far tropics. Then if you look at the way the packaging is done, putting fresh fruits on the packet, with fresh leaves on which the dew drops have settled – all of this is to communicate natural purity and the freshness of the product. Now, the words which are referred to as the tagline, are also well designed, with “100%” implying the product has 100% juice (while in reality, it has only 19.7% orange juice)– the customer’s trust is won irrespective when he watches/reads the ad.

Design is born out of need

Can design skills be taught? Is it essential in our country, to be an NID (National Institute of Design) or an Art school pass-out, to be an impeccable designer? There might be diverging views on this subject. If Steve Jobs is known as an innovator, that’s because of his orientation towards design (iPod, iPad, iMac...) than just technology. But he never went to a school of product designing! Industry experts like Raj Kurup, founder and Creative Chairman of Creativeland Asia, mention, “It’s not that you have to go to an Art School or that you need to be an inventor. You can just be a techno-wiz or a fantastic thinker. Technical skills can be learnt, but design is something that completely comes from the school of hard knocks. Designing is born out of need!”

The way we establish a better understanding of design, we realise that it is all pervasive in advertising. But everything that cannot be ignored may not necessarily be worthy of discussing at length as well. So, what more does ‘design’ have to offer that would make it a subject worthy of serious discussion amongst arrays of the ad world?

Design influences?

“At every level of solution, design is imperative in the name of any action taken to solve a particular problem,” says Kurup. Look at every object of use around you. You needed something to write, so someone designed a pen, and then someone fine-tuned it to make it more aesthetic. That’s called ‘advanced design’. You wanted people to stop spitting on walls, you designed a concept of painting God’s picture on walls so that people would consider spitting on walls as sin. That’s an excellent paradigm of behavioural design. John C. Jay, Global Executive Director, Wieden & Kennedy tells 4Ps B&M, “I started as a designer, I went to a school that was very Swiss in design philosophy. But one great thing they taught me was how to think about a problem. I was never just allowed to do something that I felt like. I had to think through, articulate, do adequate research & then reach out for a solution. It’s all design.”

And if ‘Design’, the element, was that insignificant, it couldn’t have possibly influenced behaviour to this extent. It is a discipline worth celebrating!

Design is science too!

Around the world, design is understood from the point of view of bettering lives. Says Shubhoshekhar Bhattacharjee, CEO, Planman Motion Pictures, “Take for example Scandinavia, where some of the better designers come from. They aim to make everything more ergonomic – a chair or a keyboard is made more ergonomic, not just to make it look good, but to make it more convenient and to solve problems of all. In fact, design organisations in London account for 2.5% of UK’s GDP.” Design in the world has grown in the same way as the design of Apple’s first Macintosh PC has transformed to this day’s Apple iPad. Globally, design has become much sleeker, brighter, and definitely savvier. Design is not about getting high on a psychedelic drug. It really is serious science meant to solve a problem in the society. It is not just pure art or something meant to exercise for the sake of pleasure because it is aesthetic.

Design + India = ?

By now, it is evident that design is an integral part of advertising. But when it comes to our own country’s ad-world, many myths prevail. To say that design is purely adding an aesthetic value is a misnomer. Take the example of infrastructure. Compare any flyover made in the past century in India to one made in this decade – and you’ll understand how aesthetics are slowly catching up with mere ease of usage, which was the only factor considered previously. Yet, India is years behind Western economies, many which use flyovers as massive irrigation and water storing/harvesting units. Design in such economies starts from the very idea of making a flyover and figuring out how one will to circumvent the ecological imbalance a flyover could cause – and of course, making sure that the traffic goes correctly. And then, if the flyover looks beautiful, it’s a bonus. There is an untrue perception that the part of making an infrastructure unit is construction & engineering, but making it look good is design. Similarly, in advertising parlance, the logo is considered a part of design, but when it comes to an ad in its totality, it is termed ‘layout’. Purely a question of semantics, but if you look at it through design’s point of view, communication becomes a lot more interesting. In the same context, Jay of W&K adds, “I read a book called Quintessence – the quality of having ‘it’. It talks about the design of objects that are quintessential, things more than simply classic, that have the ‘it’. I’m sure India also has that certain quality (‘it’) in its culture. It might not necessarily be hi-design, but it has that sensibility to it that makes it so valuable emotionally as well as physically.”

For decades altogether, advertisers in India have overlooked the element of design in their debates & discussions, as Shoumitra Rai Choudhary, NCD, Madison Communication, elaborates, “Design has become a different category now. Even in award ceremonies, an agency’s design efforts would be awarded in a separate genre!” But isn’t the design team a part of the creative team? Truth is, design is by the day gaining greater foothold in the ad-world as Amitava Mitra, COO (North), Percept H, says, “In today’s cluttered world, design becomes a rather critical element. Most clients first look at whether an ad stands out or not, and the core design element is what makes it stand out”.

design – dead or divine?

On an emphatic note, the biggest problem with the ‘designers’ in India is that they have become behaviourally stereotyped. They have gone to design school, they believe in having a particular kind of haircut, wear a particular kind of dress, sit and talk in a particular way and have a particular lifestyle. And they think that that’s what makes them designers. True, some of the best designers in the world have not been celebrated at all. The inventors of the most complex machines are nothing but designers – the person who invented the engine of the car is a designer, the one who invented the first PC wallpaper is a designer, and even the person who invented a cellphone is a designer. But neither were they world-famous, nor did they flaunt the same hairstyle everyday of the year. What they shared in common is the fact that they understood where to strike the right balance between functionality and aesthetics. They started work on the design keeping both the elements in mind.

Functionality today has taken a backseat and the creative might be seen pushing for aesthetics. And that is a dangerous situation. Look at design as a science, and not just an aesthetic element, and design will get its due.

Does Social Media Really Matter to Indian Businesses?

Social Media has become one of the most Loved Mediums for the Indian Youth today. But are Indian Business Houses geared up to capitalise on the same?

Traditionally, companies would have had to send out an inquiring army to the market to get questionnaires filled, or arrange focus group discussions, and have a sample of perhaps a few thousands to get some credible feedback on how their brands were performing. And despite such sweat-demanding exercises, doubts about the authenticity of their product or service quality would prevail. But thankfully, the gods of evolution became merciful, and along came a brainwave, which multiplied the credibility of the research and reduced manifolds the troubles and costs. Dig this – early this year, the $42.87 billion-a-year earning (revenues for FY2009) Kraft Foods was planning to take a feedback from customers on its Philadelphia Cream Cheese. Earlier, customer engagements in traditional interactions had provided Kraft with around a 100 recipe suggestions a year. Rather than resorting to tradition, all Kraft Foods did this time was to affiliate with Paula Deen, the famous American chef, restaurateur and actress, who is quite a celebrity on The Food Network. Paula runs a cooking contest by the name of Real Women of Philadelphia. Through this initiative, Kraft got back 5,000 recipe suggestions in just a matter of eight weeks. And how many individuals was she was able to engage? Hold your breath – 300,000 users in the same duration who spoke about the brand. What worked was the right method of engagement and a well-chosen messenger. Technology did the rest.

Now take another, rather stark extreme. A guest who was impressed by the service of Devesh Mishra, a taxi driver in Varanasi, got his video uploaded on YouTube, where he gives his brief introduction with his contact details to prospective clients. The results have been encouraging with respect to the rise in the number of enquiries, and an excited Mishra is confident that hereon, there will be no looking back. 2010 has proven yet another great run for Mishra.

These were just trailers of the immense power and reach of social networking, a medium that marketers globally are only in the process of understanding. As Facebook crossed the 500 million user base in July this year, the social networking website had certainly achieved far more than what one initially expected out of a start-up venture born in Mark Zuckerberg’s dorm room at Harvard. With close to 7.3% of the world population already present on the social network, the six year-old company is surely one of the most successful start-ups of this decade. Be it because of the individual social network of the users, photo-sharing, event updates or even the applications, networking is widely touted as the next big thing people have begun to do online after search. As Mark Zuckerberg admits (on the 500 million achievement), “I could have never imagined all the ways in which people would use Facebook when we were getting started six years ago.”

It is not only Facebook that has become the apple of the eye of the new-age marketers. Platforms like Twitter, YouTube and LinkedIn are also making a huge difference in the opinion of the ultimate consumer. Aware of the fact that a large chunk of the Target Group (TG) spends a lot of time online and mainly on social media platforms rather than the traditional advertising mediums, many global names have rightfully enhanced their presence on the social media platforms. For instance, BMW has a fan base of close to 2.9 million people on its fan page on Facebook, while Nike and Coca Cola’s official fan pages have close to 2.6 and 1.7 million respectively. If that is not enough for the first round of dope, sample this: Ford Motor Company skipped all the auto shows and decided to reveal the much-popular next-gen Explorer on Facebook, as the company was sure that it will be able to create a better connect with its TG on the social network. A survey done by the global PR firm Burson-Marsteller proves that 79% of the Fortune 100 companies are using at least one of the social media platforms – Facebook, Twitter, YouTube and a corporate blog. The survey further mentioned that while 20% of the companies are using all four mediums, the figure is higher in Europe (88%) and lowest in Asia-Pacific (50%). In fact, when Barack Obama won the Presidential elections in 2008, many industry experts gave a lot of credit to the social media campaigns that the Democrat candidate had floated. Apart from making his presence felt on the major social networking websites with the ‘Change We Need’ campaign, Obama also made optimal use of his own website and other tools. For the record, Obama has close to 5.8 million followers on Twitter currently and is unsurprisingly one of the most popular personalities on the site. But these are renowned cases from the western world where the social media industry is being used at a far more enhanced level.

As the reports from the field would suggest, the trend is also picking up in India. According to a latest one by ViziSense (till July 2010), social media in India reaches around 60% of the online audience, wherein Facebook is at the pole position with a user base of 22.1 million users in the country. It is followed by names like Orkut (18.5 million), ibibo (3.56 million), Twitter (3.14 million), Bharatstudent (2.95 million) and LinkedIn (2.95 million). Facebook has also topped the charts on engagement, with 975 seconds spent on the site per visit followed by ibibo at 894 seconds and LinkedIn at 676 seconds. Twitter has already become a popular medium in India, thanks to the way celebrities like Anand Mahindra, Sharukh Khan and Sachin Tendulkar are making use of it. Of course, former External Affairs Minister Shashi Tharoor’s contribution to its popularity cannot be ignored, due to his controversy grabbing tweets. Ironically, what did him in was a tweet by former IPL Chairman Lalit Modi, which gave ownership details of the IPL Kochi team!

While many of the big names that have their presence on various social media portals are solely running after more numbers, industry experts are of the view that content will be the crowd-puller in the long-run. “Where many of these companies have been going wrong is they have been focusing too much on getting sheer numbers on their pages on the social media portals, but equal importance needs to be given to the content bit,” explains Pradeep Chopra, CEO, Digitalvidya. Adds a spokesperson of MTV, “It is important to establish your core and ensure you are able to drive value to your fans. Active engagement is also a challenge. Social media cannot become a platform to only offer deals to consumers.” Social media as an industry in India, is at a nascent stage as compared to the exposure it has received so far in the western part of the globe. But the winds will gather greater momentum. There is hope.

Brands like MTV, General Motors, Pepsi, BlackBerry, Ching’s Secrets, Mahindra & Mahindra and many more are also effectively making use of social media platforms to connect with their TG. “We have allocated 50% of our ad-spend for television advertising, and the rest is used for non-traditional media to connect with consumers,” says Deepika Warrier, Head – Marketing, Frito-Lays (PepsiCo’s foods arm). In fact, Pepsi has over four lakh fans on its Facebook page alone and runs various contests on the same to connect with its consumers. “All the companies whose target consumers are present on social media platforms cannot afford to miss this space. In fact, sectors like FMCG, automobiles and entertainment are the most aggressive on social media in India,” says Freddie Laker, Executive Director – Digital Strategy, SapientNitro Asia.

When M&M was planning to launch its Xylo’s ‘Happy Legs’ campaign with Atul Kasbekar (the ace fashion photographer), many industry experts weren’t convinced with the idea. But the events that followed proved them wrong. “Just before we launched the campaign for Xylo with Atul, Sachin Tendulkar (a close friend of Atul) tweeted about the same to his fans. Moreover, the online contest that we ran on the same also got a similar response as Anand (Mahindra) retweeted my tweet on the same to his fans as well. Social media as of today has become an integral part of our marketing activities,” says Vivek Nayer, Senior VP – Marketing (Automotive sector), M&M. He also informs that when some critics attempted to spread a bad word about the company, fans at the community blasted-off the post, saying that the company has been delivering what it promises. Taking its Scorpio, Xylo, Great Escape and Bolero pages into account, the company has close to five lakh fans on Facebook.

Needless to add, the sites can be used as a tool to strengthen competitive advantage as well. A case in point is the time when Apple was busy dealing with its antenna problems of late. Nokia took no time in boasting-off on various social media platforms, that its antennas are the best in the industry. It also showed consumers how people hold their phones in different ways and yet the signals remain unaffected. Undeniably, social media is very different as compared to traditional media and may not yet have the power to replace the idiot box, but it can surely be a very strong complimentary factor. Moreover, users can switch channels easily on the telly. On the social network, they have a richer engagement. “Some of the evolved brands that have embraced the platform have realised this and have approached social media marketing as not just a platform for brand advertising, but also for building up of their basic concept. It has provided organisations an opportunity where brands can easily communicate while providing a platform for its audience to talk and express themselves, exchange opinions and increase unaided brand awareness. It is imperative for brands to realise that, because of the sheer number of people that access various social platforms. The key to success lies in the engagement level, transparency and credibility,” says P. Balendran, VP, General Motors India. Moreover, it allows the company to establish a relationship with tomorrow’s customers as well. “Social media acts as a direct, cost-effective and an interactive medium that provides complete information on the brand and acts as an authentic contact point too,” added Anup Jain, Director-Marketing, Yum! Restaurants India – Pizza Hut. Pizza Hut runs several contests on its Facebook page and has close to 2.6 lakh fans on the same.

And the social fever isn’t restricted to just large companies. Consider this case in Mumbai. After having had enough of the overcharging and unruly behaviour of auto rickshaws and taxiwalas in the country, three advertising professionals Abhilash Krishnan, Jaidev Rupani and Rachana Brar decided to launch the ‘Meter Jam – Say No to Taxis & Autos on 12th August 2010’ campaign. While the initial overwhelming response came as a surprise, the fact that the problem was not taken as a Mumbai-centric problem from day one, was a bigger shock. In fact, it got more fans from Bangalore as compared to the other metros. For the record, close to 12,500 citizens pledged and boycotted the use of autos and cabs on August 12, by signing up on Facebook and Twitter pages of the campaign. The ad-trio also launched the second chapter of the campaign recently on October 12, which was able to generate a similar response. The community pages of Meter Jam as of date, has close to 42,000 fans on Twitter and Facebook collectively. Similarly, a Pune-based restaurant chain, Faaso’s has initiated the innovative tweet-to-order phenomenon under which, the consumer can just choose to tweet his order, rather than place it via a call.

“India has till now seen only the starting chapters in the social media journey. The coming years will have a lot to offer,” says Digitalvidya’s Chopra. Companies like Facebook, who will be banking on the broadband and telecom boom in emerging markets like India will give ample opportunities to the new-age marketers to tap the young Indian consumers. As far as Indian companies are concerned, they have to move beyond numbers and improve the engagement levels on their pages. Numbers may not sound as attractive initially, but this is a sure way to reach some of your best customers and read their minds. If properly nurtured, these could be your most cherished brand champions in the coming future.

TITAN OR TITANIC?

Will the Sony Ericsson brand stage a comeback in the Indian market and regain lost glory of yesteryears? Or will it go down in the books as yet another Titanic?

There have been many brands in the country that have gained great acclaim in a very short span of time and fizzle out soon after. One such name is the hybrid Jap-Swedish combo – Sony Ericsson. There was a time, when backed comfortably by its Walkman and Cybershot series, it had remained a calm and consistent number three (in terms of shipments) in the Indian market, for years at a stretch. It was practically ruling the roost in the mid-segment handset market. Then matters changed for the worse. With the onset of economic slowdown, Sony Ericsson’s business across the world, and even in a high-growth market like India, hit a wall.

The company could not do much. Worse, over the past year, there have been speculations about Ericsson mulling over cutting-off its ties with Sony, due to the dismal performance of the JV. Matters however turned out better than expected and thankfully, the two are together after all. And there’s better news for the duo, with the company getting back in action at the World Mobile Congress 2010 in Barcelona. Sony Ericsson showcased some handsets that it plans to launch over the coming year. So where exactly does India stand in its plans. In short: way up there? The company has already launched its much-hyped Android devices Xperia X10 and Vivaz in the country. It has also roped-in Kareena Kapoor as the new face of the company. While speaking to 4Ps B&M, Rajiv Seth, Regional Head – Sales, Asia Pacific Region also said that Sony Ericsson has plans to get “very aggressive with regards to its entire marketing strategy”. Good news for believers of marketing, but isn’t it a minute too late and a dollar too short? Or will the Indian consumers lap up the company’s offerings, giving it a great chance to regain its lost glory?

On a critical note, though the company has been talking about getting serious with its India-specific plans for quite some time now, but its actions do not make the believers smile. Even during the past three months, the company has not been able to find any replacement for Anil Sethi, who resigned as the India Head for the company. Today, there is no one dedicated to India-specific operations, which is quite surprising given the kind of importance that the likes of Nokia, Samsung and even smaller local players have been giving to the Indian market. If the company doesn’t have a localised workforce for a country like India where understanding the consumers’ mindsets is a challenging job, then how can Sony Ericsson possibly hope to strike back by managing through their Singapore office?

Sony Ericsson is clearly confused. Allow us this statement, for it is one handset brand that on one hand does not have an operating system of its own (which is not a problem area), while on the other, has never been sure of which operating system it should (and shouldn’t) rely on. Initially, it started by using the Symbian platform (which is housed in Nokia handsets). In the year 2009, it launched its flagship mobile handsets – the Xperia X1 and X2, that were based on Windows Mobile platform. And today, after just a few months of betting on the Windows technology, it has planned to experiment with the Android with its Xperia X10. Thus, Sony Ericsson, as of date, is actively involved with three ‘unrelated’ smartphone platforms! And here’s the motherlode of all confusions – Bert Norberg, Global CEO of Sony Ericsson has even hinted that his company would be glad to take on a fourth platform (or more) in due course of time. This will leave the brand with a confused product line and a hazed-out positioning strategy, something which will definitely not help the cause of a company, which is struggling to reconnect with its customers not only in India, but across the world.

Ask any of the emerging local players about which Ps of marketing are most critical when it comes to a competitive and price-sensitive market like India? The answer would be – Price & Place. And those are areas where Sony Ericsson has to improve. Even its most recent launches have been in the price range of Rs.25,000 to Rs.35,000. Though this helps its premium positioning strategy, it surely will not get its sales register ticking in the Indian market. Even Hirokazu Ishizuka, Sony Ericsson Corporate VP & Head of APAC region says, “The key would be a portfolio with a minimum price of Rs.3,000, because that is where we think our phones can add value in a customer’s life.” “The reason why Xperia X1 could not do well was because of its pricing. It was launched at Rs.42,000,” avers a leading telecom analyst. Therefore the trick is to launch lower-priced products, for the mass market. There are also concerns regarding its distribution, as Rajiv Seth, Regional Head of Sales, APAC Region, says, “We already have 40 exclusive stores in the country and would be looking at opening more.” Certainly, there is no harm for the company to be selling products that fall in the premium category, but for that, it would have to work towards building an improved product portfolio, pay greater attention to its distributor/dealership network, focus on a uniform OS platform and revamp its communication strategy. Our take: though the odds are high, if Sony Ericsson works on these, it might just strike back!

Wars of the Luxury Car Makers in India

The Indian Luxury car market is on the verge of exploding, led by the increasing affluent class. this has catapulted Germany’s big 3 into an internecine and long drawn war. Is their any winner in sight yet? 

To understand a nation’s economic growth, one could study many indicators, from GDP rates to consumption indices to even employment levels. But the most fascinating and alluring of all such factors remains the automobile industry growth, which over time has become a seat-of-the-pants clinker of a method to forecast expected economic momentum. In other words, positive automobile industry sales are in general signals for positive GDP growth; and vice versa too. For example, when August 2010 US automobile sales figures were released, analysts realised that these were the worst August auto sales figures in 27 years –immediately, market expectations of and from the US economy fell in an instant. Yes, there are many economists who deride the drawing of such a clunky correlation between the auto-industry and economic growth – but then, the fact of the matter is, such a correlation not only exists but is supremely inevitable.

And for sprightly economies like India’s where in reality there exists no true middle class, and where factors like UN’s Gini index (shows income inequality, with 0 denoting total equality and 100 denoting utter inequality) have become more eccentric by the year – apparently, at 36.8 on Gini, the UN believes India is pleasurably floating on brilliant equality of income across classes – an extension of the auto sales correlation to the luxury car segment throws up brilliant market understanding, again seat-of-the-pants, of how forcefully would India’s top segment of consumers drive our economy.

While this was one of the primary reasons why we took up this issue’s cover storyline, this wasn’t the only one. The lives and styles of the rich and famous fascinate one and all – including yours truly. And there’s always this infatuated fascination with getting to know how richer are the rich growing by the day (well, not many might wish to entertain a commentary on how much poorer are India’s poor) – something similar to how new records in high-end b-school placement packages are followed by everybody. What better a method to study the same, and look intellectual at the same time, than to minutely analyse the luxury car segment, interrogate top CEOs in this sector, and get to drive a few of their dapper suave monster machines – all for the sake of the nation! And given the suspiciously elongated justification we’ve attempted to pull for this article, we jump right into the issue.

The target market: There’s no gainsaying the fact that the current rabid war in India’s luxury car segment is clearly because the target market has undergone a similar rabid growth. Some statistics would put this inference into context. According to the World Wealth Report by Merrill Lynch and Capgemini, India’s HNWI (High Net Worth Income) population came down by 31.6% yoy to 84,000 in 2008 after growing by 22.7% yoy in 2007. The Indian industry, which had suffered a slowdown in 2008, came back strongly in 2009, apparently on the backs of the HNWI population, which grew by 50.9% yoy for the year. The report further suggests that India’s HNWI population will reach three times its 2008 level by 2018. Cut to the luxury car segment in India, and in a similar vein to the HNWI movement, a recent study by AT Kearney projects that the Indian luxury market is set to triple from current levels to $14.72 billion by 2015. And going by SIAM figures, even though the luxury car segment accounts for just around 1% of the Indian automotive market, this minute segment in itself grew by 33.58% yoy in the period of April-September 2010.

Clearly, there’s not much left to imagination about why western car manufacturers, especially in the luxury segment now, are focusing in a mammoth way on developing nations like China and India. For example, German luxury car maker Mercedes Benz assembled its first car in India in 1996, and had had a virtually free run since in the affluent class for years – till the time competitors entered and got on with the battle in double time. Today, the field is still dominated by the Germans, with Mercedes Benz, BWM and Audi (Volkswagen’s premium arm) engaged in an epic battle to capture. Besides them, brands like Porsche, Bentley, Jaguar, Lamborghini, Land Rover, Maybach, Rolls Royce, Toyota, Volvo, Nissan and Mitsubishi are present in one or more segments, since they still don’t feel the Indian market is ready for their products. That’s a surprising take, given that the increasing desire to own luxury cars simply to ‘up’ one’s status has led to India’s luxury car market heating up like how. From a mere 600 units back in 1999 (primarily Mercedes Benz), the luxury car segment is poised to give annual sales of over 15000 units per year.

Market share movements: Even to the untrained eye, the critical years that have changed India’s luxury car marketing landscape have been the last two to three years, with 2009 being the watershed year. In 2006, BMW had a market share of simply 9% in India. Cut to 2009. While Mercedes’ sales reached 3,202 units, BMW managed to clock a fantastic 3,587 units. As a result, BMW overtook Mercedes and gained over 40% market share. BMW President Dr. Andreas Schaaf told B&E, “2007-2009 were demanding years for BMW in India, and at the same time, the most successful entry for BMW in any country recently.” Successful because BMW was able to increase its sales by ten-folds from 2006 to 2009. Audi wasn’t far behind, with a record 2009 as well in India. Audi sold 1,658 cars in 2009, translating into a growth of 58% over 2008.

Understandably, this was news that shook the whole industry. In the first five months of this financial year, however, Mercedes again recaptured its leadership position with a sale of 2,212 cars, with BMW at 1,987 units and Audi at 1,876 units in hot pursuit. Dr. Wilfried Aulbur, CEO, Mercedes-Benz India, told B&E, “We will end up with more than 5000 units this year, which means we have had a CAGR over these 5 years of about 30%.” In January 2010, Mercedes broke its own past records by selling 411 units, with BMW and Audi standing at 341 319 respectively. Mercedes-Benz India announced a sale of 321 units in April 2010 taking the cumulative sales for January-April 2010 to 1603 units marking a growth of 80% yoy. E-Class registered 139% growth while the SUV portfolio registered 67% growth. There was a significant month-on-month growth in April 2010 for both C-Class (71%) and E-Class (84%). Such huge growth figures in the face of competition are critically surprising and momentous. Mercedes’ July 2010 month sales of 521 vehicles in India was apparently the best ever month sales since Mercedes entered India 15 years ago. Their August 2010 sales at 573 units bettered that too! And if you were to see the 662 units they sold in September 2010, you’d start understanding why we have been continuously using the term ‘rabid’ to describe this segment’s growth.

The scenario is similar with Audi. The more technology oriented German player revised its 2010 targets to 2700 (from 2300), having exceeded expectations by clocking 63% growth with 2178 cars sold in Jan-Sep 2010. This was the best sales performance for Audi ever in India, which shows how it is also gradually climbing the sales ladder. In fact, Audi India’s countrywide vehicle sales in September 2010 grew to 292 cars as compared to 205 units sold in September 2009. If one were to see the Jan-Sep 2010 period, Audi sold 323 units of its Q7 and A8 branded cars during this period; these brands stand at par with the Mercedes-Benz S-class & SL Roadster, which clocked 343 and 421 units respectively in the same period. “We are confident that we will achieve annual sales of 3000 cars, which is more than our revised target of 2700 cars,” said Michael Perschke, Head, India Operations, Audi.

In all, these three have posted total sales of 7178 units between them in the April-September 2010 period, a phenomenal growth of 84% yoy. But the reality is that going forward, all these luxury car makers are now attempting unique strategies that are brilliantly differentiated on one hand and classically positioned on the other.

Pricing and financing differentiation: Pricing matters in India! If you’re selling in India, the faster you understand the concept of value for money, the better for your sales. Take BMW for instance. On October 5, 2010, BMW launched BMW Financial Services as a new business entity in India; this firm is a 100% subsidiary of the BMW Group and will operate as a Non-Banking Finance Company (NBFC) as per the Reserve Bank of India (RBI) norms. In 2010, we’re informed that the BMW Group will invest $50 million (Rs.2.3 billion) in this arm. The reasons are quite obvious. The financing arm is to make the product more accessible to a wider audience. Look at how superbly BMW’s positioning has changed in recent times to accommodate the lower-upper class of Indian society. BMW’s recent advertisements are already offering the 3-Series at an attractive EMI of Rs.19,999 a month. Imagine the potential such a move holds, where hundreds of thousands of well earning middle management in as many Indian companies suddenly become potential customers. K. Kumar, India Manufacturing Head, Deloitte India, echoes this view to B&E, “The most important factor to expand this segment would be to put these cars within the reach of the upper middle class consumer.” Mirroring BMW’s strategic move, Daimler (the parent company of Mercedes-Benz) also announced that their financial services arm will start supporting India sales.

But BMW already has the first mover’s advantage, because while BMW’s financial arm is ready and active as of right now – and the festive season is the most critical of all times – Mercedes’ financial services are likely to be available only by next year. Audi still hasn’t expressed any views towards launching any financial services arm, as their current strategy encompasses significant investments in branding and marketing, exclusive dealerships and after sales service for the upcoming year. Evidently, this financing round is being won by BMW hands down.

Product ‘UN’ Differentiation: BMW is winning the war in another quasi-battleground, which is worth the analysis. BMW realised that the demand patterns of certain high volume business customers in India, for example premium hotels and cab owners, was more for stripped-down versions of their luxury cars, than for the whole hog. With high sales numbers backing these stripped-down versions, BMW apparently finally decided to put forward this type of model to even the retail customers; and the sales jump, as mentioned above, was astonishing due to the lower price point! In the process, BMW was accused by Mercedes of discounting and de-contenting its products in the Indian market. BMW has denied this allegation, also commenting that it was only endeavouring to reach more consumers. Be that as it may, the fact remains that this is another example of one-upmanship for BMW.

Production Economies: Setting up production bases in India will be the next big move for these luxury car giants to grow the market further and move lower down the price pyramid. Currently, the trend is to bring in CKDs (Complete Knocked Down units) for higher volume models (this attracts 50% duty) and CBUs (Completely Built Units) for lower volume models. Mercedes-Benz India currently assembles C-class and E-class at its manufacturing facility in Chakan with a capacity to churn out up to 4,000 vehicles in a year. BMW’s plant in Chennai has presently increased its production capacity to 5400 units per year on a single shift basis from the present 3000 units. Audi has plans to ramp up their India production volumes for the models A4, A6 and Q5 by 2015 with investments of around €30 million. Recently, it began assembly of the Q5 in India with plans to assemble up to 1500 units per year. By 2015, Audi expects that up to 6,000 units will be rolling off the Audi India assembly line each year. If mastering economies of scale is the question, and assuming that import duties will always disadvantage the importer, Audi seems to have delayed a critical link on the cost control stream to much later.

Re-inventing the Wheel; the used Car Segment: As the fight for their regular customers continues, these market players have suddenly found out the value of the so called ‘used car segment’. Mercedes is already in this market with their “Proven Exclusivity” showrooms; BMW has announced a similar intent, but would be in the market only by the end of the year. If trends in the overall auto segment were to be extrapolated to the luxury car segment, then the used car segment has the potential to be astoundingly massive. For example, the used car segment in America is approximately 2.5 times larger than the new car segment. Even in India, at current rates, the used car segment is larger than the auto segment. In such a scenario, the fact that Mercedes earlier this year had already entered this market is a big plus in its strategic positioning.

Going Forward: “Perception once made, can’t be changed,” said branding guru Al Ries. He perhaps had no idea what Indians are capable of. For an Indian consumer, perception is equal to the advertisement he saw last week. In other words, irrespective of how ‘valuable’ in international terms your brand might be, until you don’t advertise/market regularly, your product is not going to sell. Look around; age-old traditional fortresses are being restructured in India; from the Marutis to the Nokias, all legacy monopoly leaders have given way to new incumbents who’ve focused on advertising and promotion as the key to gaining market leadership – of course, at value for money offers. This assumes bigger importance when one sees that the newer market growth could well come from Tier 2 and 3 cities, which have their focused target markets of ultra rich buyers (for example Mercedes, in October 2010, got an order of 150 cars from Aurangabad in Maharashtra). While adding newer products into the portfolio is a good thing (Mercedes-Benz, which already has the largest portfolio of 38 models across 10 product segment, got in 21 new models to India in 2010; BMW got in 10), beyond a certain point, there is no differentiation advantage that can be obtained from the same – rephrasing the same, there is more advantage to be gained from investing in appropriate distribution and marketing a value-for-money luxury product in India, than in attempting to improve, say, the car’s engineering magnificence.

Fortunately, India’s luxury car makers are not ignorant about that and are even working on these concepts at brass-tacks levels. The coming years will see harsher wars between these players, with case studies ready to be written and recounted innumerable times on how India was the only world where global behemoths like BMW and Mercedes were forced to market luxury products as value-for-money affordable propositions. But then, these case studies will also show how while these three together managed to sell 15000 units in India in 2010, they sold close to 400,000 units in the same year in China. In short, perhaps all this is much ado about nothing. That’s the wonder of what the Indian market is, and will be, and the faster global players realise this factuality, the better!