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Thursday, July 19, 2012

Over a Century of Futility?

Even way back in 1909, World Leaders had Gathered and Resolved to counter The Illegal drug trade. Unfortunately, The Evil still persists, and Interestingly has Everything to do with Affluence

Against persistentent global efforts to control the illegal drug trade, both production and consumption of dangerous narcotics like marijuana, cocaine, ecstasy and heroin are ever increasing. Though the issue has captured substantial space in the global media and celluloid, it has been particularly tough to combat. With global trade estimated between $400-600 billion, drug intake is a high turnover global phenomenon. However, there isn’t much change in the pecking order. Afghanistan remained the world’s largest supplier of opium/heroin with over 85% in 2009 (79% in 1999).

Around 4.8% (some 200 million) of the people around the world are drug addicts as per United Nations Office on Drugs & Crime (UNODC). UN projects that around 25 million of these are serious drug users. While earlier, drug use was permeating all sections of society, now, given rising prices, drug consumption has a significant correlation with economic well-being of individuals. The major drug consuming regions are North America, Western Europe and some rich parts of Asia. North America tops the list in cocaine consumption followed by Western Europe and Asia. Africa, being the poorest, expectably ranks the lowest.

Opiate, however, is highly in use in underdeveloped and developing nations, as it is quite cheaply available. Cannabis, which can be grown and refined even in one’s backyard, happens to be popular across the globe irrespective of income levels.

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Source : IIPM Editorial, 2012.

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

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Wednesday, July 18, 2012

India has become a net Importer of Steel

Over the last two years, India has become a net Importer of Steel. As steel makers respond with Brownfield and Greenfield capacity addition Plans and a Slew of asset Acquisition Strategies, B&E analyses what These Players are Exactly up Against!

According to a report by the Indian Chamber of Commerce and PwC, raw material cost is 70% of price for steel players without captive resources as opposed to 45% for players with captive resources. On the other hand, cost of mining has also gone up by around $10 per ton in 2009, as per ICC-PwC. Despite productivity enhancements through better mine design, cost cutting, et al, global mining companies saw revenues rise by around 23% and costs by 27%, leading to lower profits.

At the moment, Indian firms have two possible types of destinations to acquire iron ore – destinations like Australia with stability and world class systems and destinations like Africa, which suffer from issues like political instability, poverty, et al. Naturally, mining assets in places like Australia are expensive, therefore a cost benefit analysis needs to be done. The fact that more or less the same players are chasing the same assets is pushing up asset prices rather illogically. The way forward should involve mining and steel makers bidding together, as a consortium, so that they increase their financial muscle.

We should perhaps, in reality, be looking closer home for assets. The steel industry has been representing to the government that the companies setting up greenfield steel plants should be allocated iron ore mines – that’s an urgent point relevant to ponder. Indeed, the availability of quality iron ore in India (ranks 3rd after Australia & Brazil) is a key element of its attractiveness to global steel players.

The government has now proactively started increasing export duties on iron ore lumps and fines to make more raw material available to the domestic players. But more than raw material, the failing in India, as Prasoon Majumdar, Head, Global Strategy and Investment Consulting (GSIC), says is with respect to “setting up and implementing large steel projects; which of course, is also due to the constraints like land acquisition. Once those happen, Indian steel makers have the wherewithal to compete without captive mines.” Till the 2016-17 period, major steel makers are expected to absorb price increase into their steel prices; considering the projected surplus. The key, as Fitch Ratings accepts, is to see demand when the Government removes its stimulus.

The last, but not the least issue that steel companies are growingly, and rightly, worried about is the state of the very infrastructure (including power) that they are playing a major role in building. According to Rao of PricewaterhouseCoopers, “Infrastructure is indeed a key challenge and early actions are needed given the long lead time to develop needed facilities, and the multiple issues to be addressed viz. roads and rail, locos and rolling stock, ports, handling facilities.” One can imagine the scenario by considering how, for every tonne of steel being produced and going to the customer, 4-5 tonnes of raw material has to come from the back end.

As per the ICC-PwC report, achieving the targeted steel capacity implies generating additional annual cargo traffic of around 150 million tonnes by 2011-12 and around 320 million tonnes by 2019-20. Around 75% of raw materials and 25% of finished goods are transported by rail today. So they will have to take up most of the additional load. For the 11th plan, it means planning is required in several areas.

Firstly, we would need an additional 1800 electric and diesel locomotives each, besides the need to improve yard capacities for faster loading, multiple access lines to relieve congestion and availability of better unloading equipment & route management. The road network is important as well, since roads are heavily used by the smaller players. But the fact is that road infrastructure in resource rich states like Orissa is poor. Highways representing only 2% of the overall road network carry a whopping 40% of the load. Similarly, port traffic has also increased.

For Marmugao and Paradip, the iron ore traffic went up by a high 12% per annum over the past two years; in absolute terms, to over 48 million tonnes. If Indian companies are to develop surplus capacities for exports soon, this has to be addressed too. Iron ore handling capacity at all major ports is around 62.8 million tonnes per annum, but Indian iron ore exports are expected to cross that figure very soon.

As the Union Steel Minister projects, the Indian steel industry faces an extremely critical point in its history. If all stakeholders handle it well, the sector has the potential to act as a catalyst for other widespread and desirable changes in the Indian economy and to growth. Conversely, the costs of missing the bus will be too great to bear.

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Tuesday, February 28, 2012

Better luck this time?

Tata has recently launched the 2012 Edition of the Nano. But as sales continue to sag and customer confidence wears thin, will the facelift really change much for India’s wonder car?

During the run up to its launch and all the hype that surrounded it, the Tata Nano, with its $2,500 price tag, was touted as a dream come true for the common man. It was also a great moment for Ratan Tata personally, who came upon the idea when he saw a family of four riding a scooter in the rain. However, as the events unfolded – right from the political debacle at Singur, West Bengal to the low & erratic sales numbers to the rising component prices to the cases of burning cars – it became clearer to one and all that the car was following a strategy, which Dr. Michael Porter calls ‘stuck in the middle’ – a place where a product is stuck unsure of the positioning it wishes to follow.

We call it the devil and the deep sea issue. The rich man doesn’t want it; the poor man can’t afford it. After adding a bouquet of features to the world’s cheapest car, Tata Motors assumed that it would enjoy a cult-like status in the market – the kind Apple has.

It seemed a given when customers started flocking to showrooms when the Nano bookings opened in 2009. In fact, customers had to buy application forms and only a few lucky ones got their dream car. However, when a car comes that cheap, it has to justify its existence in a product portfolio with far greater numbers. Consider the higher priced Eon, launched by Hyundai Motor Company in October 2011 to primarily compete with Maruti Suzuki Alto. By November 5, the company had already completed over 9,000 bookings! The cheaper Nano sold only 3,868 units in October 2011.

What is more astonishing is the fact that despite reducing production, sales of Nano have been considerably low compared to last year. The production of Tata Nano in April-October 2010 was 40,492 units, which dropped to 34,068 units this year. Similarly, Nano recorded sales of 40,467 units in April-October 2010, much more impressive as compared to this year’s figure at just 33,245 units.

The latest ploy from Tata to rev up the sales is the Tata Nano 2012 edition. It has been launched in three variants – standard, CX and LX. Besides minor modifications with the external design and classier interiors, the car is being powered by a 624 cc and 38 bhp engine and tubeless tyres for a smooth drive and offering it at just about the same prices. The new edition also promises additional promotional offers with a Rs.15,000 cash down payment and discounts on all variants with extended warranty schemes. But will this facelift really be able to do to the Nano what the original product could not?

More than anything else, the Nano project has suffered the burden of flawed assumptions. It was assumed that two wheeler owners will upgrade readily to the Nano. The mistake was, perhaps, in the positioning space that Nano straddled. All advertisements of Nano at that time portrayed the non-rich family – one Nano advertisement even showed the family living in a place similar to a village. This immediately alienated the upwardly mobile city middle class which perchance are the largest segment for car sales. The Nano became, and perhaps still is perceived as, a poor man’s car. Playing on the Rs. 1 lakh pricing tag line too gave a dent to Nano that was unexpected. Consider a family in the present scenario buying a new residential accommodation in a high rise, where the parking lot is sold separately. So to park a Tata Nano, which costs around Rs.1.24 lakh, the customer would have to pay around Rs.2.5-3 lakh for the parking lot.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2011.

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

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Proves Its Mettle Once Again.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

Tuesday, December 27, 2011

India’s Best media agencies 2011 and client expectations

4Ps B&M in association with Indian Council for Market Research (ICMR) brings to you the list of India’s best media agencies – those that are rewriting the rules of the game in today’s contemporary, fast-paced, media-buying world. Additionally is presented a graphical report on client expectations

While consumerism in India is today on an all-time high, product life-cycles are on an all-time low. Even the right product, at the right price point, may not serve the purpose of the marketers sans the right advertising push. Investment is short and in such a circumstance, the companies turn to the media planners, giving their kind more respect and making them more central to the entire decision ad-placement process. Therefore, to zero in on the best media agencies for the year 2011, we initially started with the set of India’s most recalled and successful media agencies. The final list was arrived at by testing each agency on several technical and financial parameters, which included number & quality of clients, billings generated in the recent past and ROI delivered (for their clients). Apart from this, an in-depth survey was also conducted amongst India’s top marketers (which included CMOs and Senior Marketing Executives of companies like Bharti Airtel, Idea Cellular, Fortis Healthcare, Lava International, Ashiana Housing, et al) to understand the factors/parameters they take into consideration while selecting a particular media agency to design the marketing mix of their respective companies. A total of 247 interviews were conducted using a structured questionnaire across five main centers in India namely Mumbai, Delhi, Kolkata, Chennai and Bengaluru. We’ve attempted to ensure that the 4Ps B&M-ICMR listing is cogent, structured and represents the factual positioning of expectations of the respondents.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2011.

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

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Proves Its Mettle Once Again.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

Tuesday, December 13, 2011

How festivals have fed consumerism in India

4Ps B&M brings to you a spectacular analysis on how festivities have transformed the consumer space more than any other factor in the marketing history of India post-liberalisation, and why the years ahead don’t look any different

20 years of celebration
In the post liberalisation era, Indians learnt to earn well, and learnt to spend even better! And 4Ps B&M’s angshuman paul argues that it was the festival season that truly brought the onset of consumerism in India to the marketer’s delight. And consumers aren’t complaining either.

When it comes to defining God, there are numerous typical questions that people have asked and there are as many or more answers that spiritual leaders have come up with. Speculation is never ending on whether God is male or female, does God have a form or is formless, which religion has a better chance at bringing one closer to God, et al. People in India, particularly with the dominant Hindu population, have traditionally worshipped millions of Gods, and speculated on these very questions and come up with even more confusing answers. However, there is one aspect about which we can be more conclusive in comparison – God in the 21st century is, far more often than not, ‘Made in China’!

Surely, there are no surprises there, as most of you who glance at the bottom of those beautiful idols (in organised retail shops as well as myriad gift stores) to check the price tags would have also noticed the fairly ubiquitous name of the country of origin. It may make you feel uncomfortable for a moment, but look at the invaluable lessons in marketing and economics it provides you. When it comes to business, the world (thankfully) speaks one language, belongs to one religion and worships one God (in this case, the God that the customer worships)! The deal goes to the company who is the most competitive and knows the customer best.

From an economy that was supposed to be tapped only if you had a ‘compulsively unrelenting’ death wish, India transformed into a booming customer market for numerous global economies with export surplus, and China is obviously the most well known and prominent. Liberalisation in India was a major inflection point in India that transformed consumer mindset as well as producer orientations in terms of marketing and branding like never before. A study by McKinsey Global Institute in 2007 revealed that if India grows at the current rate, average household incomes would triple by 2025 compared to 2007 and India will become the fifth largest consumer market globally compared to 12th in 2007. In terms of economic classifications, the deprived (bottom of pyramid) households would shrink admirably in number to 49.9 million in 2025 compared to 101.1 million in 2005 and seekers in turn would swell from 10.9 million to 94.9 million and the globals at the top would grow in number from 1.2 million in 2005 to 9.5 million in 2025. Private Final Consumption Expenditure (PFCE) accounted for around 57% of India’s GDP (at market prices) while retail accounted for 37% of PFCE at $291 billion in FY 2009-10 (Deloitte). The report projects that India spends a major portion (59.5%) on Food & Grocery followed by 16.9% on beauty & wellness and 9.9% on Beauty & Fashion. It’s a virtual bonanza for MNCs. “However, liberalisation was not only limited to foreign players coming in but also Indian players, especially small scale players like us could imagine going overseas,” feels Tarang Arora, a Jaipur-based second generation entrepreneur who took his jewelry brand Amrapali to Europe and has 10 exclusive stores in cities like London. During the late 1980s; be it for a scooter or for a sack of cement – demand was high but supply wasn’t, leading to black marketing and monopoly of sellers. So brands like Bajaj, Titan (from the stable of Tatas), Rasna & Onida (from Mirc Electronic) were thriving.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2011.

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

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Proves Its Mettle Once Again.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS

Tuesday, November 15, 2011

“Customers are Filtering Their Media Exposure”

Abraham Alapatt gives his set of 10 mega trends which he believes are Transforming The Market today, and why marketers need to adapt to them

In today’s world, everything has to be quick and seamless. Even the classical brand and marketing concepts are being rewritten completely. Here are 10 mega trends which I believe are transforming the market today and that we, as marketers, need to continually adapt to.

1. We cannot control what messages go out to customers: Social networking, virtual communities, blogs, mobile, et al, have ensured this. So, just make sure you have a lot more good messages than bad to share.

2. The power of social networks has multiplied manifold: Harnessed by technology, the influence of social networks is now, both a potent marketing weapon for those who use it well and a dangerous minefield for those who don’t.

3. Increasingly, customers will try to find you – not the other way round: So, you need to be easily visible to succeed. Use tools like search engine optimisation, listings, key words/tagging, wide retail network, kiosks, et al, to maximise your visibility.

4. DIY (Do it Yourself) customers – who want to evaluate products and services without an intermediary and make decisions themselves will become the norm, especially in services: Marketers should merely be facilitators and providers, not sellers or hawkers.

5. Customers want to own and influence brands, and not the other way around as it was traditionally: Let ownership transfer happen without hindrance. Nike, for example, in US borrows design cues for the next season by inviting youngsters (playing basketball in their neighbourhood) to pick new shoes from an open dumpster, and noting down which designs they go for first. They call it “Bro’ing” (marrying “borrowing” with “bro”). Apple is another cult brand that demonstrates this – Apple users are so involved with their company’s new products that they both ensure their success and/or failure – faster than their rivals. So, Apple knows real quick whether they have a winner on their hands or not!

6. Customers want to be able to choose/filter their media & media environment and not be bombarded. Privacy (or perceived privacy) is critical: Anti spam, DND listings, HD DTH subscriptions without ads, DVRs are symptoms of a growing trend, especially with more affluent customers, who want to filter their media exposure every way they can. Decide time, place, content and delivery to suit their mood and convenience.

7. Young like that: With a young demographic increasingly being the largest consumers, every brand is trying to be young, at least in imagery and metaphorically.

Tuesday, October 11, 2011

Just when you Thought you’d had Enough of Reality

With The Launch of the new Frooti tvc, Parle Agro has Kickstarted a new Genre of Reality TVC through its Clutter-breaking “why grow up?” Campaign series. 4PS B&M takes a first-cut look Behind The Scenes!

Just when you thought reality shows were losing sheen and thus taking away the very element of ‘freshness’ and ‘spontaneity’ (all thanks to allegedly ‘pre-planned’ content), Parle Agro’s Frooti has decided to remodel the concept of reality ‘shows’ into reality ‘TVCs’. Can the concept pack its intended punch? Well, to Parle’s credit, a reality TVC has rarely been done before. In order to dramatise mangoes in an entertaining way while keeping Frooti’s ‘Why Grow Up’ philosophy intact, Creativeland Asia (creative agency for Frooti), along with Equinox Films, has created the mango themed reality game show called ‘Mango Slam Bam Bam Bam’, with an intent to grab eyeballs by showing ordinary people playing innovative and fun games like ‘Mango Rodeo’ and ‘Pluck a Mango,’ and then enjoying a Frooti to refresh and rejuvenate themselves after every crazy round of games. Earning another point is that in this first of its kind Indian reality TVC, the cast has comprised people living next door rather than high profile celebrities or actors or even ‘fixed’ contestants. The set for the game show was created at Priyadarshini Centre in Mulund, Mumbai, where the director, Ram Madhvani (Equinox Films) found a perfect shooting forum with a 17 feet deep pool that could adhere to all the necessary safety norms.

Both the participants and the hosts of the show were made to wear comedic outfits that looked like gigantic mangoes to add to the already high fun quotient of the game show. A set-up of eight cameras was positioned strategically to capture the varied reactions of the participants from all possible angles. Nadia Chauhan, Joint MD & CMO, Parle Agro is confident that these are the differentiating points that make the TVC click. She shares one such anecdote us, “There was a participant who probably had the biggest adrenaline rush of his life just before plucking a mango from a mango wall – and the way he screamed right before grabbing the mango, was enough to scare all those who were standing balanced on the trampoline.” Sajan Raj Kurup, Founder & Creative Chairman, Creativeland Asia talks about another such incident, “There was this one lady who actually fell on the giant Mango Rodeo, and you could not help but laugh your guts out at that visage.” The fact is that when read literally, these incidents don’t perhaps tickle the funny bone to a Chaplin high. But in a reality show, the mere visual of a real life human attempting a comedic move, and failing at that, is enough to achieve at least one critical objective – phenomenal brand recall.

But certainly, the task for Kurup and Madhvani was not that funny as they finally had to go through 150 hours of unedited footage to come up with the two TVCs that are on air currently. Add to it, the post production lasted exactly a month, and Kurup worked closely with the edit members every morning and evening, before and after his office hours. Kurup claims that despite watching the footage for endless hours, he never got bored – and this, he confesses, used to happen to him with other ads. “But this one has only grown on me with time,” he says. In fact, he also talks about how thrilled the participants were when they got to know that their contribution to the show was going to be used in Frooti’s TVCs.