Sunday, November 28, 2010

Google’s Product (P) focus- Other Ps, ‘set to zero’

There has always been a debate among marketers and strategists of which P among the 4Ps of marketing mix is more important. And the answer has always been that it depended on the industry and the market scenario. The answer will remain the same until marketing remains in the corporate world.

Yes, circumstances decide the importance of the individual element in the marketing mix. Looking at the Indian marketplace specifically with an example of the telecom industry, price has become the differentiation factor. There isn’t any attribute or benefit that one service provider offers which the other doesn’t. Thus the customer decides the operator on the basis of the least costly and nearest available.

With white goods and, to a certain extent automobiles, promotional spend has been the major driver. Although there is a product differentiation, it isn’t a compelling reason enough for the product sale. ‘Place’ continues to be the dark and unsung with an exception of FMCG where it is given its due.

Few times, if at all, is the product the focus. In a country like India which is very price-sensitive, marketers have always been focusing on the price, and rightly so. The case isn’t the same in the developed markets. R&D isn’t seen as a off-shoot of strategy. Rather it is thought of as a cost centre with intangible consequences resulting in lack of its effect measured on the P&L. thus the urge to spend isn’t always compelling enough for the marketer. It is seen as a luxury rather than a necessity and the axe always falls first on R&D when the going gets tough in the economy.

Thus we see an Intel, IBM, Oracle or a Google R&D centre in India but not a R&D centre for a Tata or Reliance or a Bajaj. Cost reduction resulting in low-priced products always seems the easier option.

Internationally speaking, Google with its phenomenal growth has always thought of Product development as the focus. Its first product offering i.e. the search engine was free with no promotional spend (all was word-of-mouth). Then came the email service, Gmail. Again it was free with no promotional spend. Other products such as Google Maps, Blogger, Orkut, Youtube followed. All free with only word-of-mouth publicity. It is imbibed in the Google culture where the engineers are given 20% time from among their working hours to pursue their own product for the company. The result is for everyone to see. A gamut of services, all free for the end user.

In an interview, the number 4 in the Company after its founders, Larry Page and Sergey Brin and CEO Eric Schimdt, Mr. Nikesh Arora said that Google was working on Google TV which was the future of TV and internet in a seamless network. The new philosophy for Google is to ‘set to zero’ the 3 Ps-price, promotion and place with entire concentration on product development. Currently if you have a look at the number of services on offer, its quite staggering. A testimony to the Google’s endeavor of spotlight on product.

Thursday, November 18, 2010

Consulting companies- how can they predict the unpredictable?

Consulting companies such as McKinsey, Boston Consulting Group, Booz and Company, Bain and Company to name a few have built they reputation among the industry for their foresight and solutions. There is no question or credibility crisis as far as the solutions that have helped companies tide over their problems is concerned but I have a slight problem when it is related to research and prediction. The prediction can be of demand, supply, trends, consumer behaviour, market share et al.

A recent report by research firm Booz & Company, shared exclusively with Economic Times talks of the change in consumer behaviour. A marked change from thrifty behaviour during and post the 2008 recession to increased conspicuous consumption in the third quarter of 2010 on the back of increased salaries and better economic prospects. No problem with the consulting companies for me. It starts when they predict that the “India’s upper middle class —those with an annual income between 5 lakh and 10 lakh — will grow to 30 million people by 2020 as the economy keeps growing at a healthy rate”. My doubt is that how is it possible to predict a ‘probable number’ 10 years hence when economic fundamentals are so intricately linked to the world markets that there are constant changes. Analysts might say that it is just indicative rather than absolute. Agreed.

But what is the point of such a prediction when the world changes every quarter.

The report goes on to mention about the “FMCG industry could grow at a base rate of about 17% annually to become a 6,20,000-crore industry by 2020”. GDP figures on growth vary per quarter. How can an industry grow constantly in such a scenario? The FMCG industry depends on so many external factors namely the consumer sentiment, income levels, demand supply gap, increased competition from foreign as well as low cost local players (in the Indian context). FDI in retail acts as an indirect factor which bears significant weight due to behemoths such as Carrefour, Wal-Mart and Metro standing in queue to enter India. It bears so much on government policies. FDI, competition law, monopolies act etc. which is so much unpredictable

The concern which I share here is not about the veracity of the report or the credibility of the consulting company. It is about the relevance of such a prediction in volatile markets. Based on such estimates, whatever is the probable value, companies investing or strategizing with the information in mind would take a risk which would have the highest risk factor. As some one famously said “the only constant is change”. And predict at your own peril.

Tuesday, November 16, 2010

Bajaj- only automobiles or more than that?

Taking on the establishment or taking risks, runs in the Bajaj family. From Rahul Bajaj championing the cause of Indian industry to stop foreign players into India to his son shifting focus from the cash cow scooters to motorbikes to take on the Japanese players in motorbikes to the radical thought of making Bajaj Auto from a ‘Branded House’ to a ‘House of Brands’, surely they are a family who think to out-maneuver competition.

Rahul Bajaj was initially averse to the idea the bikes sporting individual brand names and Bajaj Auto will be a house of independent brands like FMCG giants Unilever and P&G. The focus was to be on four brands – Pulsar, Boxer, Discover and KTM. It would not use the parent name on its identity. But with the success of Bajaj Auto as one of the leading motorbikes manufacturers and stopping the scooters with Rajiv Bajaj at the helm, the senior Bajaj has to accept it.

Now with the help of one of the leading Marketing gurus and management consultants Jack Trout of Trout and Partners who has given the positioning bible to us, Rajiv has taken an enormous step. An attempt to associate the Bajaj brand name exclusively with the motorcycles made by his company and the removal of Bajaj name from other products/ services ranging from hair oil, home appliances, insurance to financial services.

The strategy to do this is based on Trout’s thoughts that a particular brand must stand for only one thing in the mind of the consumer. Line extension is the gravest mistake any brand can do. This though not a line extension has similar areas. According to them, Bajaj should stand only for motorbikes in the consumer’s mind. All other Bajaj brands such as Bajaj-Allianz, Bajaj Electricals, and Bajaj Finserv among others should remove the brand name and try to get an individual identity. This would not only help them stand on their own accord based on brand qualities and brand values but also act as a differentiation from competition.

I tend to differ with the thought because the principle which applies to brands in the developed world is being applied to the developing world that have emerged and evolved in a different way. The consumer behavior is starkly diverse and the emotional quotient among brands in the eastern world is far more pronounced than in the west. In India, line extension has worked till now because of the trust that has been instilled in the brand. Tatas, Birlas, Godrejs, Ambanis and a host of other family have run businesses have ventured into diverse fields with using the same brand name. And they have done well and continue to do so.

These brands have evolved since the pre-liberalization days and have a trust and understanding among Indian consumers. New brands have emerged since then but these old brands have stood the test of time. The Tatas cannot even think of removing the name from their diverse offerings to make Tata a ‘House of Brands’.

Changing the automotive business and marketing it individually is one thing but doing it across industries is slightly off target I would presume. One of the biggest brands in the world GE, which has a product offering which no company, can boast of. There are into all products and services ranging from consumer goods to aviation. They have not changed their GE lineage inspite of being in the most competitive and diverse market as the US. Bajaj name is even more important in the rural and semi-rural areas of the country which are yet to be tapped. Bajaj name would give the company a head start over other foreign brands.

All said and done, this is even more difficult since some of the Bajaj businesses are run by other family members who are strictly against the name change. So such a thing happening would be highly improbable if not impossible.

Tuesday, November 9, 2010

The boring DTH TV ads

Ever since the cable operators have troubled the Indian consumer with his whimsical ways and held the consumer to ransom during events such as the cricket world cup which are high in public interest, DTH providers have come up to do away with the ubiquitous cablewallah. Dish TV from Zee Entertainment & Enterprises Ltd. was the first DTH service provider in India. And it maintains its lead in the number of subscriptions.

Currently the industry is going through a price war with as many as 7 players in the fray. Dish TV, TataSky DTH, BIG TV, Airtel DTH, Sun TV and the latest to join the bandwagon Videocon DTH. 5 of them have used brand ambassadors. Shah Rukh Khan for Dish TV, Aamir Khan for TataSky, Saif Ali Khan and Kareena Kapoor for Airtel DTH and the junior Bachchan Abhishek for Videocon TV. But seriouisly, none of them have had any impact. All promotions done by these players in the TV space have been average. Only Tata Sky’s Aamirs ads have been a bit memorable. No one remembers SRKs Dish TV ads or Saifeena’s Airtel TV ads whereas BIG TV and Sun TV have not used any celebrities with below average ads.

The latest Videocon TVC starring Abhishek Bachchan is one of the most senseless ads ever seen. The ad, simply put, doesn’t have an objective. Are they trying to convey the fast service in installing the DTH after getting an enquiry? Is it a fast food service or something? Its understandable if the thought was to show quick after-sales service or repair service but what is the point in showing such boring people jumping. When the parameters to convey of clarity or convenience or cost is a requirement, this comes off as unrelated. Its earlier ad telecast during IPL 3 was also boringly talking of technology.

Abhishek Bachchan as a brand ambassador of Videocon doesn’t fit any attribute of Videocon. Not that the other celebrities are any better among its peers. It’s difficult to understand the rationale that the ad agency making this ad would have put before the client. And to top it, the client bought the idea. I would surely have loved to be a part of this presentation.

Friday, November 5, 2010

Diwali- A Marketer’s Delight

Diwali- the festival of light is celebrated with much fervour across the length and breadth of the country. Diwali is equivalent to Christmas in the North America and Europe, Id in Middle East, Boxing Day & New Year celebrations in Australia and the carnivals in South America. The whole of India is on a a shopping spree during the Diwali week beginning with Dhanteras to the Diwali puja day and ending with Bhau Beej (brother-sister bonding).

Two sets of people wait for Diwali. One, the common people looking forward to a lot of festivities, meeting friends and relatives expecting a lot of joy and happiness. Two, the marketers (you cannot keep the marketer away, they pounce on any given small opportunity and this being the biggest of them all). All product/ services have an exponential jump in sales during this time. Looking at the current Diwali, you will not miss the ‘discount’ ads screaming at you through the newspapers from apparel and white goods brands. Car manufacturers too are giving attractive financing options, low EMIs, and other host of car accessories as freebies to increase sales.

Cadbury is a classic example of a brand which has entered the Indian tradition mould through its replacement of the Indian homemade sweets with Cadbury chocolate packs. The communication of ‘kuch meetha ho jaye’ earlier to the current of ‘kuch meethas ho jaye’ and the ‘shubh arambh’ campaign have really worked wonders for the brand. It has cut across the socio-economic parameters and is gifted by the middle class, the upper middle and the rich alike. May be only the filthy rich use more expensive sweets. Coming back to the market, brands from home appliances, upholstery, home decor, home colour, FMCG products such as scented soaps, scented oils and a ensemble of packaged sweets.

Gold being expensive due to the economic scenario in the world has not dampened the spirits from spending on the yellow metal with Dhanteras recording high sales year on year. Although a commodity, brands such as Tanishq, TBZ, Gili, Geetanjali and a host of others have gone on spending big busks on full from page ads on leading dailies just to the customer attention in the clutter.

Conspicuous consumption is back among the public after the lull last year due to the economic slowdown on the back of good growth of companies. Travel and tourism industry also grows due to people travelling to meet their near and dear ones and extended families. Road, rail and air are all booked pre and post Diwali. Some people take an extended off and have their vacations at tourist hot spots away from the hustle and bustle of daily life.

All brands go on a promotion spree to get the most of the consumers’ wallet. Plans are firmed up months in advance with no stone left unturned to reap in the profits from increased sales. Vodafone has launched a new campaign, and so has Tata Sky DTH. White good majors such as Sony, Samsung, Panasonic, LG, and Videocon are more visible in the mainstream media launching new products and displaying their wide range of product mix. Airtel, Aircel, DoCoMo, MTS, Idea are spending even more. Tata Nano is making a lot of noise and the usual ad spenders FMCG giants have spiked up for the festive season. A very busy week for all marketers but a very happy indeed.