Online Retail

Online Retail: How far is the Tipping Point for etailing in India!!

Amazon is here, but it’s content to dip its toes while it waits for regulations to change in its favour. If and when they do, it will still face the task of doing something it has never done so far: crack an emerging market. Shelley Singh reports

IN JUST three months, MirchiMart, a Delhi-based online retailer of mobile phones, has seen its business jump by 50%. In the same period, another electronics retailer Universal, which runs 500 stores in South India, has shipped tablets and smartphones to every state and union territory in India. And AXA PDA Lounge, a Bangalore-based retailer of mobile phones and accessories, has seen its business grow by one-third, selling products as far away as Srinagar and Imphal.
Behind the increase in sales and reach of these three retailers is their decision to sell their products also via Amazon.in, the Indian platform of the world’s largest online retailer launched in June. While this is doing wonders to their sales, it’s a small step to bigger things for Amazon India, but far from a done deal.
Indian rules don’t allow Amazon to stock and sell products, which is how it earned 60% of its 2012 revenues of $61 billion (Rs 3,66,000 crore). So, as it bides its time for rules to change in India, it is dipping its toes in this $12 billion market by being an online marketplace, hosting and enabling 500 sellers like MirchiMart, Universal and AXA PDA Lounge. “If regulation permitted Amazon. in to be a seller, it would be good for the consumer,” says Amit Agarwal, vicepresident and country manager, Amazon Seller Services. “We will be able to offer more choice.”
In his 14 years at the 19 -yea r- old Amazon, Agarwal has seen the company do that, with great purpose, force and results. Before he relocated to lead Amazon in India, the IIT Bombay and Stanford graduate helped build the marketplace business in the US, started its cloud computing business, did a stint with Amazon international and did two years as advisor to Amazon founder Jeff Bezos. He has seen Amazon power ahead in developed markets. And he has seen Amazon move gingerly in emerging markets, hemmed in by rules, local consumer behaviour and local competition. India is the 12th country for which Amazon has a dedicated website. It’s only its third emerging market, after China in 2004 and Brazil in 2012, and this is a space where Amazon is yet to stamp its presence the way it has done, say, in the US. “In Brazil, Amazon’s offering is fairly new and focuses on e-books,” says Zia Daniell Wigder, vicepresident and research director, Forrester Research. “However, it will face competition from traditional retailers in Brazil, who have now gone online.”
Amazon has been longer in China, which is also a much bigger market. According to Praveen Sengar, research analyst at Gartner, e-commerce in China is a $197 billion market, against $220 billion in US. “China will overtake the US as the largest e-commerce market in a few years,” he says. “But Amazon is not among the top five sellers in China. Even in developed economies like Japan, local player Rakuten is much bigger than Amazon. Companies have to localise to succeed in emerging markets and Amazon has been unable to do so in China.”
The Local Challenge Like China, e-commerce in India is throbbing with local players—75-100 start-ups, driven by entrepreneurs and backed by venture capital. “It’s hard for an executive to compete with an entrepreneur,” feels Sanjeev Aggarwal, managing director of Helion Venture Partners. “The passion and energy they bring is very different.”
Besides, adds Aggarwal, these start-ups understand the local market—like low value transactions, cash on delivery and supplying to 20,000 pin codes. “You can’t run retailing in India with executives installed from the US,” he says. “Amazon will replicate what has worked for it in other markets.” In developed markets, what has worked for Amazon is its large product catalogue, competitive pricing, good customer orientation, a culture of innovation, deep pockets (it has about $11.5 billion in cash and marketable securities) and branding. In India, too, it will gradually leverage all of this.
Globally, Amazon offers products in 40 categories and two million sellers, and draws about 100 million buyers. “Amazon is like Walmart —keep a huge inventory and sell at a low price,” says Anshul Bansal, who quit as vice-president in the investment banking division of Yes Bank in 2011 to become an online retailer of sarees on eBay, another online marketplace.
In India, Amazon is currently offering 13 product categories and is planning to add more in time for the festive season. Sengar calls it a “timely entry”. According to Pragya Singh of Technopak, a management-consulting firm, organised, brickand-mortar retail has 7-8% penetration and does not reach small cities. “E-tailing is less than $1 billion at present, with plenty of headroom to grown, in sync with growth of mobile Internet users,” says Singh, associate director, retail, Technopak. Singh believes the tipping point in e-tailing is three to four years away. “VC-funded models don’t have the deep pockets to match global companies,” he says. Amazon too is in no hurry. “We are driven for the long term,” says Agarwal. “We take a 7-10 years time frame for the seed to sprout and not three years or three months.” Sengar sees Amazon making an acquisition. “It costs Rs 1,200-1,500 to acquire a customer, while an average order value per year is $200 (about Rs 12,000,” he says. “An acquisition will help it obtain customers who are used to buying online, besides warehouses.” Agarwal deflects queries on acquisitions. “At, present we are focussed on customer experience,” he says. “I won’t speculate on future strategy. We are here for the long haul.”
For now, Amazon is content to build its marketplace model by adding sellers from the pool of 14 million small and medium enterprises in India who have something to sell. That model is what eBay is founded on—it does not own warehouses and products are shipped directly from sellers—and it’s what Flipkart, the largest online retailer in the country today, launched earlier this year.
While eBay, which has been in India for about a decade, has 30,000 sellers, Amazon has 500 currently. While sellers can express an interest to be on the Amazon platform, the company decides. “It’s a due diligence we do on the ability of a seller to provide a good customer experience,” says Agarwal. These, typically, include the kind of stock a seller has and its ability to complete an order on time.
The Building Challenge Amazon does not charge sellers for listing products and has no cap on how many products can be listed. For the first year of its operations, Amazon has also waived its monthly subscription fee and transaction fee (about 10-15% of the price of an item). “Buyer ‘footfall’ is the biggest advantage sellers get on Amazon,” says Dinesh Agarwal, founder-CEO of IndiaMart.com, a business-to-business marketplace.
Mumbai-based MX Information Systems has a retail outlet and 14 shop-in-shops or counters in large multi-brand retail stores or malls. It is also a seller on Amazon. Satish Bathija, its director, says that being on Amazon increases the catchment area for its products, helps sell on the back of a global brand, creates trust among buyers, and offers access to Amazon services like payment gateways, shipping and logistics. “We see online business grow faster than offline,” says Bathija.
A seller on Amazon can ship products directly or through Amazon, from its 150,000 sq ft warehouse on the outskirts of Mumbai. In case of the latter, buyers can see an FBA tag (‘fulfilled By Amazon’) alongside the product. “We don’t need to invest in manpower for shipping, packing and logistics,” says Bathija, “though we have to pay for payment gateway (for credit-card sales).”
Some retailers feel that if and when Amazon can sell on its own, it will threaten its portfolio of sellers, even as it promotes their interests. “Amazon does not share market research data with sellers and uses that data to push its own products,” says Bansal, proprietor of Old India Republic, a retailer of sarees on eBay. “Small sellers feel threatened by a giant like Amazon.”
Agarwal, today, emphasises on getting the basics right. “It’s just been three months since we launched, and we believe consumers care more about low prices, wide selection and reliable delivery,” he says. “We are focussed on that.”

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The Brightest Leaders...Management Tip!!

Management Tip:Bring Out The Best in Them

By Harvard Business Review

THE BRIGHTEST leaders don’t rely on their own intelligence just to succeed, but use it to help their people shine as well. Here are three ways you can help your employees not only feel smarter, but act smarter:
Look for ideas everywhere. Don’t assume you know where all the new and creative ideas will come from. Involve people on projects not because of their titles but based on their ability to contribute.
Encourage openness. 

 Create a safe environment where your people know they can—and should—think, act, and speak with reason. Have a high tolerance for mistakes so people aren’t afraid to take risks.
Challenge people to get better. 

 Offer opportunities for them to stretch their thinking and behaviour. Set the expectation that everyone, including you, should improve his or her skills.

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Umbrella Mentoring

Maruti Suzuki Kickstarts ‘Umbrella Mentoring’

RICA BHATTACHARYYA

The country’s largest carmaker, Maruti Suzuki, has embarked upon a structured programme called “umbrella mentoring”, aimed at developing mentors within the organisation who can grow a long-term relationship with employees. Though mentoring is not new to the organisation, this is the first time it is being taken up in a structured way in line with the company’s business expansion plans. As the name suggests, ‘umbrella mentoring’ is aimed at touching a large number of employees. It covers managerial staff across levels as well as shop floor workers.
The programme is aimed at giving employees across levels and functions such exposure early in their careers. Besides, it looks to help the employees prepare themselves for bigger roles in the organisation and to make them feel responsible towards the growth of their mentees.
 The mentors guide them to swim through the slowdown and prepare them for the turnaround with regular and open communication.  Mentoring in such cases is about managing expectations while still preparing for the turnaround.
It helps with introspection on “how we can improve ourselves, enhance our productivity so that we are better equipped to face the good times” . The programme will provide a platform for mentors to enhance their leadership competencies and help build an open work culture where people are respected and cohesively aligned with organisational objectives with swift two-way communication channels.
Each mentor has been assigned four to five mentees. Mentors undergo training. Some of the competencies considered while training mentors include communication, influencing, conflict resolution, and problem solving, decision making, team bonding. Training for mentees covers responsibility, optimisation, alignment, dedication, motivation, attitude, passion. The trainers deploy a combination of games and activities, video clips, discussions and role plays, self introspection, case studies. The company is also offering specialised trainings to the aspiring mentors and mentees. At each level, competencies have been defined and trainers have designed content on the basis of the competencies.

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Attrition : Causes & Effects...What should be done!!

HIGH STAFF TURNOVER

Attrition: The Ticking Time Bomb in Industry

Shiv Shivakumar: Former chief of emerging markets, Nokia.

Attrition is a complex, cultural and leadership challenge with no easy answers. In 2012, according to HR consultant Towers Watson, attrition in India was 17%, higher than the 11.2% salary rise. At this level of attrition, an organisation in 2020 will have only 22% of the employees it had in 2012. The salary rise in 2013 is expected to be 12.4%; attrition will be higher. Attrition is at all levels, more in junior customer-facing jobs. Attrition in the banking, financial and insurance sectors was 30%, in IT services 28%, retail and consumer goods 16%, retail store-level 30%, healthcare 10% and hi-tech 14%, according to the report.

 What is the impact of high attrition? It erodes consumer loyalty, hurting brand reputation. High attrition creates a vacuum at middle-management, which should handle execution. Attrition creates a middle management that’s tasted neither success nor failure. Weak middle management delivers faulty, corner-cutting processes. It forces senior management to work a level lower, forsaking the bigger picture. A weak middle management means poor mentorship of entry-level managers, hurting long-term leadership development.  

Why do we see high attrition? The first is economic; new industries open up when GDP grows faster than 5%. Talent in established industries is raided to staff newer industries. FMCG is the talent bank in India, funding telecom, retail, health and entertainment industries. The next reason is “hurried aspiration.” Everyone is in a hurry to be a young vice-president or a CEO, to own the latest car and television or to take that exotic holiday. This forces people to take risks with their loans, and anyone with an EMI payment greater than 25% of his takehome salary is constantly in the job market, to reduce that to below 10%. Hurried aspiration is fuelled by average headhunters who create insecurity and peer pressure by transacting CVs between managers and firms. Performance evaluation is loose and incomplete, based more on potential and less on merit. 

What do Indians value at work? The top five factors are: job security, career advancement, base pay and title, learning and development, and the reputation of the organisation. A company must grow. If it doesn’t, people leave. Learning and development is the Achilles’ heel in India. Companies do not invest much in training and developing talent: this is the first reason quoted by exiting employees. The cost of training and development is minuscule, but it is the first item cut in tough times. On-the-job learning from leaders is something young people value. Leaders in India must coach young employees; this will lead to higher engagement, better performance and lower attrition.  

 

The world will see a talent shortage by 2021. The US, Canada and Europe will see a deficit of 12 million people to fill roles. India with 2.1 million, Indonesia with 1.5 million and South Africa with one million will be the top three countries with a talent surplus by 2021. This is an opportunity to develop global leaders. Culturally, we need to change. We should value contracts, which we don’t do today. Our contracts are social in nature and less legal or economic. Employees will need a moral compass of right and wrong: joining competition, refusing to join a new firm at the last minute, burning bridges and so on. Companies will need to be flexible, using innovative policies for women, building alumni networks and designing customised career paths. Firms must differentiate on merit early to keep top talent. They should build a stronger middle-management pool by rewarding those who stay. Senior leaders must engage, coach and grow talent. Firms should start learn-andearn internships. Companies are good at identifying the needs, wants and desires of consumers; they should identify the needs of their employees. Finally, young managers must realise that a good career is a 20-year journey. If they do not develop strong general skills and industry competence, younger and less-costly managers will substitute them. A rolling stone career strategy is a short-term success and a long-term liability for individuals and companies.

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Socio-Economics: Some Interesting Statistics on India

Socio-Economics: Some Interesting Statistics on India:-

1. India has something like 9 million enterprises, only 1 million of them are corporations, only maybe less than 10,000 are listed and maybe less than a thousand are traded. It is a very shallow kind of market. 
2. Only 50 million Indians have a passport, which is 5%, only 30 million Indians pay taxes, which is 3%. 
3. Mobiles phones are 600-700 million, internet connection is about 140 million, growing dramatically with smartphones. Cable is going digital. Aadhaar will be about 800 million in the next two-three years. Bank accounts become universal. We are going to have millions of outlets with online connectivity. 
4. If you look at every market of ours, it is very, very shallow. It does not reach everyone – the stock markets in India probably have 15 million shareholders, 1.5% of the population. 
5. The currency has devalued because we do not have the depth in manufacturing; it is not big enough. It is only 15% of our GDP. It can create a lot of inclusive growth, given the combination of skilled and unskilled labour required. Indian manufacturing is actually getting a much better image abroad – products are getting accepted, our engineering depth is much better than it was a decade ago, Indian brands are doing well in international markets. We have a lot going for us in terms of potential and we need to address some of the problems whether it is infrastructure or supply chain or raw material bottlenecks.

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Retail Industry Landscape in India

Retail

Indian retail is one of the fastest growing markets in the world. The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in Tier-II and Tier-III cities. Retail market in India is expected to reach US$ 866 billion by 2015 from the current US$ 516 billion.
The organised retail segment in India is expected to account for 20 per cent of the overall retail market by 2020. Net retail sales in India are also quite significant among emerging and developed nations.
India's strong growth fundamentals along with increased urbanisation and consumerism opened immense scope for retail expansion. Further, easy availability of credit and use of 'plastic money' have contributed to a strong and growing consumer culture in India. With growth in the E-commerce industry, online retail is also estimated to touch US$ 70 billion by 2020 from US$ 0.6 billion in 2011. The Government of India (GOI) has approved 51 per cent foreign direct investment (FDI) in multi-brand retail and increased FDI limit to 100 per cent in single brand retail and for cash and carry (wholesale) trading and exports.

Sectoral Presentation (August 2013)

http://www.ibef.org/artdisplay.aspx?cat_id=377&art_id=35018

Retail Industry Landscape In India  By IBEF

 

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Selling in a Slowdown....Special Feature in ET!!

7 Levers Marketers are Pulling in this Slowdown

From auto to FMCG, insurance to telecom, every sector is hitting the brakes. Chief marketing officers are having to work harder and smarter, and these are the seven levers they are pulling to beat this slowdown, report Kala Vijayraghavan and Lijee Philip 

Chief marketing officers are having to work harder and smarter, and these are the seven levers they are pulling to beat this slowdown

    BY HIS OWN ADMISSION, MAYANK Pareek, who is responsible for ensuring that cars keep moving out of Maruti Suzuki showrooms at a faster pace than never, says he has no personal life today. Cars are not moving at India’s biggest carmaker like they used to. “I am working seven days a week,” says Pareek, chief marketing officer. “Tough times call for tough measures. We can’t be selling cars sitting in the office.”
In August, Maruti organised about 26,000 events aimed at the consumer, including exchange melas, camps for financing and AC check-ups. “The idea is to reach every potential consumer and convert them into a buyer,” he says. It’s a challenge for every chief marketing officer (CMO) in this slowdown, and it’s not an easy one to overcome. “There are no homogenous customers,” says Sunil Kataria, CMO at Godrej Consumer Products.
In the first two quarters, the Indian economy has grown at a tepid 4.8% and 4.45, respectively. And the forecast for the entire year is only mildly better—5.3%, according to a panel advising the prime minister last week. High prices and job insecurity, in the face of economic uncertainty, has upset consumer confidence, with spends on electronics and automobiles dropping for eight months in a row. Yet, Kishore Biyani, who knows a thing or two about the Indian consumer, feels this is not the time for companies to be defensive. “It is the time to be aggressive,” he says. “If marketers keep quiet, the consumer will keep quiet. One has to behave normally during such times.” Not CMOs, though,
who are having to deal with reluctant
consumers, tighter budgets, and a
competitive and changing marketplace. Even as they pull these six levers to beat the slowdown, there’s a seventh one they cannot afford to let go off.
1. Find New Niches
Alongside marketing campaigns aimed at the consumer in general, some companies are targeting niches for growth that is more visible, is easier to record and
comes at a lower cost. For Maruti, this
thinking has seen it pinpoint and drive into
settlements, with a need and purchasing power, like priests in Tamil Nadu and turmeric growers in Nashik. “So, it’s not mass marketing, but niche marketing,” says Pareek, the carmaker’s CMO. Having a widespread network helps as such campaigns become just incremental work for a sales team. They can make a catch and return to their bread-and-butter. More recently, adds Pareek, Maruti has been adopting a similar strategy in Jamnagar, Gujarat, where groundnut and cotton farmers have seen a kicker in their incomes following a good crop and higher prices. Elsewhere in the state, its sales executives, pitching its Eeco as a cost-efficient mode of transportation, recently sold 40 vans to restaurant or motel owners on the highways of Ahmedabad and Baroda.
    Similarly, earlier this year, Vodafone launched a campaign for migrant workers in mid-town Mumbai to teach them how to use a mobile application of the Indian Railways to book train tickets. “A number of these workers have entry-level phones,” says Vivek Mathur, chief commercial officer, Vodafone India. “With an application, they see the utility of a data connection against MBs or GBs of a data plan.” Godrej Consumer found new consumers for its room and car fresheners, Aer, through a new distribution channel. In the first five months of launch, Godrej was selling Aer as an FMCG product, moving it through traditional and modern trade. After its consumer research showed home care and car care to be different segments. “Car buyers are very passionate about what they use in their car and spend time in car accessory shops,” says Kataria of Godrej. “We quickly appointed separate distributors for car accessory shops.”
2. Get Out Of The Offi ce
It took several consumer interactions for Godrej realised its folly on how to distribute Aer. But those consumer interactions were not by default, but by design. This June, Godrej kicked off an initiative called ‘conquest’, whose objective is to have five employees meet 100 consumers in a week, gather information, process it scientifically and embed it into decision-making. The mid-course change in how Aer was to be distributed was one example of Conquest at work. “The main idea behind Conquest is to pick consumer knowledge first hand and work on it swiftly,” says Kataria. “In regular research, there
    is a transition loss that tends to happen as
    research agencies moderate and diagnose data.” Most companies, in their own way, are strengthening their efforts to reach the consumer. In early-2013, mobile service provider Idea Cellular started participating in ‘haats’—local markets, typically organised on a weekly basis, both in rural and urban areas. Idea now sets up a permanent stall in haats in 450-500 districts, with each market serving a population of 2,500. According to Himanshu Kapania,
    chief executive of Idea, 60% of the company’s customers are in rural areas.
Elsewhere, Axis Bank is also promoting more field initiatives to win new business. One such initiative aims to get more senior citizens to open accounts with the bank. Its product, called Senior Citizen Privileged Account, offers health checks, bill payment facilities, an ID card for medical emergencies and a CD of old movie songs. “Banking is not an acquisition business like FMCG,” says Manish Lath, head of marketing, retail liabilities & electronic banking, Axis Bank. “It is really a relationship business.”
3. Engage More With Sellers
Consumers are one touch-point of such outreach exercises. The other is the links between the company and the consumer: dealers and retailers. Increasingly, CMOs acknowledge, it is in their interest to do so as these two sets are influencing sales in a bigger way; they are no longer dormant channels and, today, have the power to convince consumers to choose a particular brand.
According to Nilesh Gupta, director of consumer durables retail chain Vijay Sales, Apple is the only brand that has the differentiation for a marketer to call the shots, and even that is under question today. “There is no brand or product differentiation in the market today,” he says, in the context of consumer durables. “Usually, the dealer may have the final say in the brand choice picked up by the consumer.”
So, companies are offering incentives. This April, Aircel launched a reward scheme for its retailers, targeting their wives: the wife whose husband sold the highest number of Aircel connections got a Hyundai Santro car, the runner-up got to meet MS Dhoni, captain of the Indian cricket team.
If it’s not incentives, it’s meetings. “It is important in a downturn, and amid killing competition, to have your trade channels back you solidly,” says Salil Kapoor, CMO of Dish TV. “We have been directly
    meeting our top-performing 7,000
    dealers of our 48,000 dealerships in
    the last few days to solve on-the-ground
    issues and motivate them.”
“You manage dealer problems and they will manage yours,” says Chandu Virani, managing director of Balaji Wafers. For many years now, Virani has been holding an annual meeting of 25-50 dealers, of Balaji’s 800-plus dealers; he is now increasing their frequency. There is no talk of sales. Instead, Virani listens to the problems of dealers and tries to offer immediate solutions.
4. Make A Rural Push
In today’s skidding market, the top-of-the-mind concern for dealers and companies alike is growth. Kapoor of Dish TV says market trends in India, especially in urban areas, is a partial repeat of 2008, when a feeling of gloom pervaded over India following a financial crisis in the west.
Concerns on job losses, a declining rupee and mortgages is an urban phenomenon, adds Kapoor. “Half of the problem is sentiment-driven,” he says. “But the villages are not affected by this gloom talk.” Harvests in general have been good, yielding higher incomes for farmers, and this likely to see them spend more. Dabur expects growth in rural India to be 30-40% higher than urban markets.
Pareek of Maruti says the company has identified about 300 rural niches in recent years, which account for 10% of
its domestic revenues.
These include potato growers in West Benga l, blue -p ot ter y m a ker s i n Jaipur, timber merchants in Gujarat, turmeric growers in Tamil Nadu, granite p ol i shers i n Hyderabad, painters in Madhubani in Bihar, and manufacturers of nuts and bolts in Sonepat. An August 2013 study by Nielsen, titled ‘India: Boom or Bust’, validates the rural push of companies. The report says that of the 400,000 new stores set up in India in 2012, more than 70% were in rural areas. CMOs expect companies to stay this course, not just in terms of where all they are but also in terms of what products they offer.
    So, for example, Emami, Dabur, LG and Videocon are looking to go beyond small packs and entry-level products, with larger packs and mid-range products, in the belief that consumers in rural areas will start upgrading. LG plans to ship more smartphones and flat-screen TVs to villages and smaller towns in this festive season.
5. Entice with the Price
The Nielsen report cited above says the companies that did well are those that “were not so aggressive on price…they recognised the pressures on the consumer”. The report says that in 2012, the five fastest-growing FMCG companies in increased product prices by an average of 8.2%, against 11% in 2011. By comparison, the bottom five companies raised prices by a greater amount —12.5% in 2012, against 9.3% in 2011. In this slowdown, price has emerged as an important lever, both as perception and as real value. The auto industry, which is reeling under eight consecutive months of declining sales, leads the way, with price cuts and hefty discounts. For example, Hyundai pitched its Grand i10 Rs 50,000-80,000 cheaper than Maruti Swift; Ford launched its new and improved Figo at its previous-generation price, of Rs 3.99 lakh; manufacturers sought to disrupt the market with aggressive pricing of brand new models like Ford EcoSport (Rs 5.99 lakh) and Honda Amaze (Rs 4.99 lakh).
In the FMCG space, bundling, promotions and discounts are galore on soaps, shampoos and laundry. So, for example, Hindustan Unilever is offering a discount on its premium detergent brand Surf Excel Matic, while P&G is
    offering 15% extra shampoo on its Rs 3 sachets. It helps them the cost of crude oil and palm oil, key ingredients for soaps and detergents, have declined 7% and 3%, respectively, in the past few months.
6. Keep Innovating
Even as they play defence and keep a check on prices, the slowdown winners also turn on the offence and keep innovating, observes the Nielsen report. More importantly, they support these new launches. The new launches made in 2011 by the five fastest-growing FMCG companies grew five times in value terms in 2012, against two times for the bottom five companies in the set.
Devendra Chawla, president, Food Bazaar, a modern retailer, says FMCG companies have dared to take big bets with new product and category launches in 2013. The list of new product launches—not refreshes—in this slowdown is long and formidable. So, for example, with its whitening toothpaste, Colgate launched a new category, pricing its product at a 50% premium to other products in the market. P&G launched its big toothpaste brand Oral B in India a month back.
There’s also HUL’s hair care brand Tresemme, Marico’s Saffola Masala Oats, Engage Deo by ITC, Park Avenue Beer shampoo, Instant Chinese noodles by ITC, Dettol Kitchen by Reckitt Benckiser, Odonil gel from Dabur, Alpino chocolates by Nestle. “The consumption economy is definitely leading to consumers willing to pay for differentiated products,” says Kataria of Godrej, which has launched two new products and two product variants in the last 10 months.
At Big Bazaar, for example, olive oil sells more than Marico’s Saffola. Chawla says modern trade has helped companies drive sales in new categories: while its contribution in overall sales growth has been 7-8%, it’s been 35-50% in new-age categories such as anti-aging creams, health foods like oats and toilet cleaners. “In a way, it is a new marketing lever—focusing from general to specific, and with a long-term strategy,” he says.
7. Keep Thinking Long Term
Rajiv Bajaj, managing director of Bajaj Auto, has a different thinking on offering too many brands. “The marketing principle is that the width of the brand portfolio must be inversely proportional to the breadth of the markets that one seeks to address,” he says. “Unfortunately, most marketers lead their companies to offer more and more brands as they seek to enter more and more markets. That’s usually the beginning of the misadventure to
    a sorry end.” In the domestic market, Bajaj has just two brands: Pulsar and Discover.
K Ramakrishnan, president marketing of Café Coffee Day, also stresses on holding on to the basics as a guiding force. “Life (for a SMO) has always
    been full of complications
    and changes, and we have to
    accept that,” he says. “If there is primary focus on the value offered by the brand, I think, one is on safe ground.”
It’s why Bajaj feels marketers should think less about the world and more about their brand. “When there are too many competitors and not enough customers, CMOs need to heed (marketing guru) Jack Trout’s advise, ‘differentiate or die’, and reorient their organisations from being manufacturers and sellers of products to becoming an engineer of categories and a marketer of brands.” Marketing consultant Suman Srivastava feels marketers are probably making little headway in unconventional ways to reach the consumer because the marketing tools being used today are primarily for FMCG products and evolved in the 1960s, for a different consumer. “Today, FMCG is just one of the various product categories,” says Srivastava, founder of Marketing Unplugged. “The world has changed and the CMO has to change dramatically too. Their immediate instinct is to control the communication to the consumer like speaking from a podium; they are not having a conversation with them.”

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Nirmalya Kumar & Amitava Chattopadhyay pointing out the same strategy.....Someone really need to connect the dots!!!

‘Cos Able To Compete in Emerging Markets Will Rule the World’ Amitava Chattopadhyay, chair of marketing innovation and creativity at Singapore-based global business school INSEAD, says today’s emerging market multinationals will be tomorrow’s global leaders. The international branding expert talks about some of the ideas he has tackled in depth in his latest book, The New Emerging Market Multinationals, in an interview with ET’s Sudeshna Sen. Edited excerpts: India as an emerging market is currently going through a turbulent image phase; in the past year, perception about the country tanked, but now some light is seen at the end of the tunnel. How important is the brand of the country for emerging multinationals? The country brand is extremely important. One of the things emerging market multinationals have to deal with is the country of origin and the perceptions about it and associations related with it. Let’s go a few decades back. In 1981, it was a different world. The only thing western media projected about India was abject poverty. Today the stories in western journals are usually about what an Indian company is doing that is upsetting the applecart for western companies, or about policy initiatives like the recent spate of reform announcements, and discussions about that. You discuss emerging market brands. Many emerging market companies are choosing to enter other emerging markets, like in Africa, instead of developed markets. How important is it for an emerging market company to have a recognised brand in their portfolio, like a Jaguar, to be taken seriously in the global arena? That’s an interesting question, and a very western perspective. The balance of power is shifting. Growth in the developed world has faltered. All of modern history, it has been that the incumbent brand is the developed country brand. As the tide shifts, it will be the brands incumbent in emerging markets which are the incumbent brands globally. It is exciting to see these companies building brands. Look at Thums Up—it still is the largest cola brand in India, after 20 years of Coca Cola owning it. I think Parle was badly advised and undersold the brand at the time (Parle sold Thums Up and its other soft drinks to Coca-Cola for $60 million in 1993). If I own the equivalent of Thums Up in Africa, when the penny drops, and developed world MNCs start competing in Africa, brands that are local leaders will hold their own, whoever owns them. So what is the value of acquiring a big name global brand for any emerging market company? Take Tetley, for instance. That was the first big acquisition of Indian brand overseas, by the Tatas. The first time they tried, they did not have the financing in place. But there is no way Tata Global Beverages could have existed as it does today without Tetley. Tata Tea owned tea gardens and sold its produce in the markets in Calcutta. It sold its first branded tea in 1986; now, it owns no tea gardens and is a branded beverages player. No way     could it have done that without Tetley. Or take Jaguar-Land Rover. Tatas acquired JLR just before the Lehman collapse, so later everybody said you paid too much. But four years on, this company contributes disproportionately to the profits of Tata Motors. How important is the western perspective? After all, most emerging company MNCs need capital, and that’s still driven by western perspectives. There is a reason that instead of talking about cows in the street, western media is talking about policy initiatives—because that’s where the action is. That is why you have Indian CEOs at global multinationals. There’s a reason why Indra Nooyi is CEO of Pepsi, or Ivan Menezies is head of Diageo. The future winners will be the companies who can compete in emerging markets; it will not be companies who can grow their market share from 18% to 19% in developed countries. The importance of western perception is eroding. Yes, that perception matters, but emerging countries are beginning to see that they have a role. And there is talk of making funds available on a regional basis because emerging market companies see themselves as world players. All of this takes time. It takes time for people to get their heads around the idea of a change in perception. Bloomberg TV : Inside Strategy Series-II…. Strategy Tips from Dr. Nirmalya Kumar- London Business School… Authored Indian Global Powerhouse:- Here Going further deeper into Emerging Markets http://www.youtube.com/watch?v=mUjHlKGmF3c 1.       Segmenting the market and understanding the consumer is the key. It is the starting point for both Strategy & Marketing. 2.       One product is just not enough, company needs a basket of products. If you have strong umbrella brand, develop and nurture more n more Sub-Brands….make them self sustainable. 3.       Value Vs Volume. 4.       If Co. has a customer, Co. need to innovate to maximize its offerings to that customer. 5.       Ancillary services can be highly profitable. 6.       Profit Migration Path with the customers…Ex-Bank sells various credit instruments to Saving/Current Account Customers. 7.       Strategy of volume have to be 3 to 5 yrs. Discounted Cash Flow Concept then only will make sense. 10 yrs is too long a time, we may be dead. 8.       Key Drivers for MNC: Large variety/basket/portfolio of products. 9.       Challenges for Indian CO.s: MNCs Expertise/Learning Curve/Economies(Both Efficiency & Effectiveness) of Scale & Scope/ ………..For competition Indian Cos need to go Global………..Indian Cos have better customer insights….MNCs have started deputing resources in India and this is going to be a challenge for Indian Cos….Indian Cos need to be agile and have to be more cost effective. 10.   MNCs are attacking NICHES……OR buying Indian Cos 11.   Indian Cos need to scale up if they wish to survive 12.   If Indian Cos need to attack US consumer or western Europe..Need a big marketing budget…….Not possible rite now…….20 yrs down the line may be a different story. 13.   Growing scale is essential to fuel Global Ambitions 14.   Japanese Strategy: Low Cost…Competitive Home Market…Pushing them to be innovative…Prime Mover in Differentiating Technologies which have a world-wide acceptance. 15.   Suggestion for Going Global: Go in Emerging Markets….Build Up Scale 16.   Brands Emerge Out Of China: Japanese/Korean Strategy Imitating………Developing a World Leading Co…….Ex-Telecom…..Pianos…….Microwaves…Low Cost Strategy n give scale……..Outsourcing to China help them to understand technical know-ho of manufacturing world-class products……Just Imitate. 17.   India Vs China 5 yrs down the line:-   Bullish on both….India has really big Global Players in B2B…We have to go overseas to compete or per say survive in long run…

 

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