IIPM- News Articles

Tuesday, December 21, 2010

COST CUT OR CARTELIZATION?

But the verdict on whether the deal will pay out or boomerang will take this year at least. Prof. Timothy Calkins, Clinical Professor of Marketing at the Kellog’s School of Management, tells 4Ps B&M from Northwestern, “I suspect this deal will have little impact on media spending budgets, at least in the short run. By working together the companies will try to stretch the planned spending. I suspect the individual business units at the companies won’t adjust spending levels until it is clear precisely how much there is in terms of savings. Companies are aggressively looking for ways to stretch marketing dollars and this is one promising approach. I suspect we will see more companies teaming up to negotiate with the major media companies, particularly if this venture delivers real benefits”

The deal’s specifics include that a team of executives from each company will review plans and priorities, concentrate on common areas of spending in media apart from their other supplies and negotiate purchases on behalf of both companies. But the media planning of the two companies would continue to be handled separately. There are rumours galore that the advertising agencies of the two companies might also face the brunt of this deal despite repeated statements by the two companies that advertising budgets and decisions will be handled solely by the respective companies as earlier.

But early signs that the new terrain for the brothers-in-arms would be treacherous are already appearing. Recent rumours suggest that big media companies like Turner, NBC, Conde Nast and Time Inc. have all rejected the proposal by the duo to jointly buy time and space at sharply discounted rates ranging up to 50%. The networks might just be right on this one. Omnicom, the parent advertising giant whose sister firms like TBWA and DDB are the agencies for PepsiCo and AB-InBev respectively also handles PepsiCo’s media buying through its media arm OMD. OMD handles more than $13 billion worth of media budgets for a plethora of big and small advertisers in the US. If the deal has to work, not only will OMD lose its bargaining clout with networks, networks themselves will be risking the ire of their other advertisers demanding similar rates. “This program will have the biggest impact on traditional media outlets such as network television and print. Since everyone understands how to evaluate these vehicles, it is an easy place to go after savings. The deal could have a big impact on events like the Super Bowl, since both companies have been Super Bowl advertisers over the years,” says Prof Calkins.

But the biggest issue that might just end this tryst between the giants sooner than later is the culture collision. Both Pepsi and Inbev come with legacy baggage, and that would be a bigger worry than actually making money out of the alliance. Come to think about it, when did a puritan aficionado of white beer ever allow itself to be mixed with Pepsi and sold as a new combo?

Anchal Gupta

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

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Tuesday, November 30, 2010

Technology has become the USP of many players in the banking sector

Today, electronic banking refers to the use of technology that allows customers access to banking services electronically – whether it is to pay bills, transfer funds, view accounts or to obtain information and advices. It refers to the electronic services that are made available to the customers through phone, personal computer, television and the Internet. Customers can perform banking transactions such as balance enquiries, bill payments, transaction histories, and transfer of money between accounts, obtain quotes and submit equity option and mutual fund offers without having to step into the office on the branch. Payments can be made in India in the form of cash, cheque, demand drafts, credit cards, debit cards and also by means of giving electronic instructions to the banker who will make such a payment on behalf of his customers.

Given all that, technology is actually helping the banks to reduce transaction costs and improve efficiency. The Reserve Bank of India (RBI) as the central bank of the country has creditably been playing this developmental role and has taken several initiatives for a safe, secure, sound and efficient payment system under electronic banking, as these systems are used by individuals, banks, companies, governments, etc. to make payments to one another. In other words, anybody who has to make a payment to any one else can use one or the other form of payment system to make such a payment for which IT enabled channels create a platform.

Clearly, technology has become the Unique Selling Proposition of many players in the industry as it facilitates innovations in all functional management activities – accounting and finance, production and designing, marketing and customer management, research and development activities, and so on. All these innovations have helped the banks to provide seamless, cost effective and world class services to Indian consumers at the same time from Kargil to Kanyakumari and Kutch to Kohima.

Prashant Singh, Vice President & Country Head – FOS & Agency, Royal Sundaram Alliance Insurance Company

Monday, November 15, 2010

Haven’t we had enough of it?

It can’t be that Lalit Modi did not know what he was getting himself into when he wrote those historical tweets on the micro-blogging site, Twitter, on April 12, 2010, revealing the ownership pattern of Rendezvous Sports Group, the owner of the Kochi team. He also perhaps knowingly revealed the stake owned by Shashi Tharoor’s ‘close friend’ Sunanda Pushkar. After all the brouhaha created, the dagger is now hanging over Modi’s head. While Tharoor has already lost his ministerial post, the IT Department is now digging out the hidden skeletons in Modi’s closet. The BCCI too is orchestrating the ouster of Modi as the Chief of IPL. So after all the mud-slinging, what remains of brand IPL? The current season of IPL is scheduled to get over on April 25, with semi-finals starting from April 21. So, it is unlikely that the splash of the dirty linen wash will have any impact on the ongoing season. With consumer hysteria on a high, putting stakes on the winning teams, the TV viewership will gain firm grounds in the last four days of the series. And then again, the sponsors of Mumbai Indians, Deccan Chargers, Chennai Superkings & Royal Challengers (the semi-finalist teams) will under no circumstances withdraw their support. Therefore, to say that the current hullabaloo has, in anyway, impacted brand IPL in the eyes of cricket-lovers in this season is a fallacy. But what happens after the IPL season is over? Who helps us get over the post-IPL tamasha depression? Ladies, don’t worry, Indian Idol is just around the corner!

Monday, November 01, 2010

JUVENILE SMOKE? NO MORE!

A US law, brought into force after 15 years, has banned the display of tobacco advertising to non adults. But the tobacco companies are not going to give ground so easily.

The law is yet another attempt in the world’s biggest tobacco products market to curtail the easily avoidable deterioration in health of coming generations. In 1964, the Surgeon General of the United States released a famous report that linked tobacco use with cancer and other diseases. This report led to laws requiring warning labels on tobacco products and restrictions on tobacco advertisements. In April 1970, US Congress passed the Public Health Cigarette Smoking Act banning advertising of cigarettes on television and radio. As such laws began to come into force, tobacco marketing became subtler, with sweets shaped like cigarettes put on the market, and a number of advertisements designed to appeal to children, resulting in increased exposure to and adoption of smoking among children. Then in 1998, the historic legal settlement between four major tobacco companies dubbed “Big Tobacco” and 46 US states, prohibited tobacco companies from selling tobacco products to children.

But, anti-smoking groups and public health organizations stand their ground and argue that tobacco companies, which spend $35 million on an average each day on marketing, have continued to direct advertising to teens and children in subtle ways. According to the Campaign for Tobacco-Free Kids, about 20 percent of high school students smoke. Children are a critical target population for anti-smoking efforts, with studies showing that 90 percent of smokers hooked on to it before they reached 18.

In fact, the secretary of Department of Health and Human Services, Kathleen Sebelius, recently stated in a press conference, “Every day, nearly 4,000 kids under 18 try their first cigarette and 1,000 kids under 18 become daily smokers”. The rules will “help our kids stay healthy by making it harder for tobacco companies to target them with harmful and addictive products”, says Sebelius. The retaliatory noises, however, have already begun.

In the first legal challenge to the new law, R.J. Reynolds Tobacco and Lorillard, the country’s second- and third-largest tobacco producers, argued that certain provisions violated their rights to free speech as per the First Amendment. The complaint was filed in Kentucky, the state with the highest number of adult smokers. The Kentucky court struck down a rule that would have limited advertising to black text sans graphics except in adult magazines or retail establishments open only to adults. The judge ruled that companies can use imagery and colors to communicate the purpose of the product and name of the producer. Such ruling allows, for example, Reynolds to continue use of a camel drawing in its advertising for Camel cigarettes.

Monday, October 25, 2010

WHAT’S BUZZING THE BUZZ?!

The latest product and gadget launches that garnered the biggest brownie points with respect to the interest they generated in the market

SWATCH JAQUET DROZ

TECHNICAL SPECIFICATIONS:
• Minutes counter
• Price: Rs. 4,30,000/-
IT’S A WATCH; IT’S A SWATCH: Onyx as a stone has always been admired by expert dial-makers for ages. The magical allure of Onyx is captured by Jaquet Droz in the Grand Heure Minute Onyx for the first time. The minutes counter, off-centered at 9 o’clock and a bright gleam of steel add to the panache. Yet, it still boasts of the essential aesthetics in the product, and shows time too!

Monday, October 18, 2010

BIG LEAGUE OR NO LEAGUE

Moving up the value chain has been an aspiration for Indian IT brands for quite sometime now. Now it may well be deemed an unavoidable necessity!

In the 2006-08 phase, Wipro, TCS, HCL and Infosys brought their BPO units into the parent company in order to go after deals with IT and BPO components (the same reason why TCS and Wipro picked up Citi’s assets). But as Sahni of IDC Asia Pacific says, “Indian IT SPs are not as competitive as their global counterparts for business consulting services. Indian IT SPs can provide advisory services as it links to IT operations and vertical specific solutions. However, in the true sense of business consulting i.e. People and Change Management, Corporate Strategy, Branding and Marketing, it doesn’t make sense for Indian IT SPs to enter that realm.” The best Indian IT firms can therefore do is to hire business consultants and leverage on their IT expertise. Two opportunities are hot property for Indian firms over the next few years in this regard. The first is the IFRS implementation, which is going to give them big business across major markets, barring the US (still continuing on GAAP). However, Europe, China, Japan, Australia et al, are gold mines in this regard, as some 60-70% of IFRS implementation is IT. The other big gold mine is intelligent ERP, the reason why HCL went all out to take over Axon.

Then there is the aspect of going deep into specific verticals. Financial services was a mainstay of major Indian IT companies till the recent recession taught them valuable lessons on the same. Now it has become important to diversify and Indian companies are adapting their models to cope. As an Indian IT analyst says, “In terms of deal innovation, Indian players are catching up with global leaders such as IBM and they are learning how to effectively use price innovation and business outcomes based models for winning contracts (eg TCS with Indian Passports Office). Creating a business model around this is complicated and a closely guarded ‘trade-secret’ as each vendor has their own pricing philosophy which is at the core of their sales and client engagement strategy.” Talent related to domain specialization is also getting increasingly sought after. Ravi Shankar, Senior VP and HR Head, India Operations, HCL, explains, “Domain-related specialisation is needed, for instance, in retail and banking (since the IT sector divides itself based on industry verticals). IT industry has always struggled to find domain specialisation.”

It is also important to gain larger deal sizes, in order to break the linear relationship between manpower and revenues. Chakraborti cites an example, “Not more than 3-4 companies are in fact billing more than $300 million deals. When deals become large, you don’t have to put an apple to apple kind of manpower addition. If 50 people are needed for a $30 million deal, that doesn’t mean you need 500 people for a $300 million deal. You may just have to put 150. So realisations are much better.”

Saturday, October 16, 2010

THE CREATIVITY ABNORMALITY

Despite being populated with innumerous product categories, the Indian FMCG sector has invested dramatically in promoting creativity to ensure a distinct brand imagery that has broken the clutter

“How can FMCG product categories create a unique brand promise when they are promising the exact same thing to the consumers?” questions Neeta Walia, Director, Brand Talk. “But they can certainly communicate it differently so as to create a distinct brand image in the minds of the consumer,” she adds.

Most FMCG products are low-involvement products and are required by consumers on a day-to-day basis. The buying pattern is more habit-led as compared to high-involvement products whose purchase requires more research. And hence, within a 30-second spot on TV, the advertiser previously was more concerned about communicating the functional benefits of the product, which left a minimal scope for creativity and therefore led to a fatigue in advertising. However, since creating a unique brand promise was/is difficult (considering that most of the products in one category provide more or less similar functional benefits), advertisers since then have gone radically ahead and created unique brand imagery, in fact moving away from the actual qualities of the product.

Take the case of Tata Tea’s Jaago Re! campaign. The Indian tea market has been predominantly captured by HUL with its brands Brooke Bond, Red label, Taj Mahal and Taaza. In an endeavour to replace HUL from its leadership position in the tea category, Tata Tea launched a disruptive insight and generated the big idea in the form of ‘Jaago Re!’ deduced from a research of young Indians over their perception of ‘waking up’ – considering that tea is essentially a wake up drink. A breakthrough integrated communication strategy helped Tata Tea’s volume share grew by 2.5% over HUL’s entire tea portfolio with over 50% market share in each of its variants. A recent ad by Emami for Boroplus decided against using the cliched style of communicating soft and beautiful skin and instead cast men who fall short of words to describe the skin of women in their lives and metaphorically (by comparing the skin to flower petals) explain their emotions.

Re-positioning of products has also led to the creation of some creative masterpieces, the classic example being the re-positioning of Perfetti Van Melle India’s Happydent chewing gum. First launched as a teeth whitening chewing gum, the product positioning failed miserably as Indians could not accept the brand. The product was then re-launched and re-positioned with the breakthrough commercials such as the Photographer Flash and the Palace ads. The Happydent Palace ad went on to win EFFIES Gold in 2007. In fact, a cursory glance at the winners of EFFIES in the last 2-3 years reveals that FMCG product categories have invariably ruled the charts. In 2009, as many as 10 Consumer Products won EFFIES – the maximum in all other product categories.