Origin of paper money

During the early day of human civilization, Barter was the system of trade. There was a basic flaw in this system. E.g. I have 100 kg of rice which I can exchange for a one room house. But if the counter party, who has a one room house, wants wheat, then there is a problem. Either I have to search for a person in need of 100 kg rice in exchange for a house or find some method in which exchange takes place. This resulted in the introduction of common mode of payment in the form of common currency. People could exchange this common currency for goods/ services. The next question was what will be the common currency. The currency should be a commodity, equally divisible, equally valuable to everyone and its value shouldn’t change depending on who owns it. 

Over a period of time, gold was the commodity which suited everyone and it became the common currency all over the world. 

As civilization developed, banks were created where people deposited there gold. The banks gave this gold as loans and earned profit and returned it in the form of interest to depositors. This was a very efficient system of monetary usage. But as economies evolved, they faced a problem of boom-and-bust business cycles primarily in the US which was a capitalist system of society. 

Let’s look at how things happened in the early part of the 20^th century. As banks gave loans, business developed, more so due to the industrial revolution. At a particular period of time, the supply of goods/ services exceeded the demand. The entrepreneurs defaulted on their loans i.e. they could not return the gold resulting in losses for the banks indirectly affecting the depositors. Due to this people spent less resulting in a reduction in the GDP. As the scenario changed slowly, demand picked up and demand exceeded supply. The industries started working well again and the economy flourished. 

The central bankers were thinking of a solution to avoid the boom-and-bust business cycles. The solution was to have perennial flow of money into the system so that businesses would have inflow of money for business and consumers to would have it at a cheap rate so that they can spend more. But this was not possible in case of gold since it cannot be manufactured artificially. Paper money was the answer to this problem. Paper money could be printed to keep the flow of money into the economy at cheap rates. Thus they introduced paper money equivalent to an ounce of gold which could be printed. 

This excess liquidity and flow of money into the system resulted in inflation and the money found its way into the stock market, assets like housing and agricultural commodities. Speculation made the asset prices go northwards creating a bubble and we had the Great Depression of the 1930s. The socialists and the communists blamed capitalism for this depression and problems the world over. Ironically, the reason paper money was created was to stop the recessionary cycles but this resulted in capitalism system taking a beating. 

To overcome this problem, the gold standard was overthrown and we had the common reserve currency in the form of the US Dollar at bretton woods in 1940s. This was done under the stewardship of the two great economists of the time, John Maynard Keynes and White Dexter. 

A similar thing has come to haunt us since last year, 2008, after the housing bubble in the US crashed and along with it, big banks such as Lehman brothers which went bankrupt and some others which had to be saved by government intervention. Ben Bernanke, the present Federal Reserve Chairman, was on the board of the federal reserve when free market defender Alan Greenspan as the Federal Reserve Chairman, reduced the interest rates at an all time low for the same reason as before 1930s, to try and stop the recessionary cycles by free flow of money into the economy. 

However the present crisis isn’t due to availability of easy money only. The Complex Derivatives which were described as “financial weapons of mass destruction” by legendary investor Warren Buffet also played a major role in the crisis. They were directly responsible for the Systemic failure due to the exposure of major investment banks and other financial institutions such as hedge funds, pension funds among others to these toxic derivatives. 

The concept of securitization i.e. Originate-to-Distribute (OTD) means transfer of risk from those who cannot afford to those who can afford. The concept is valid and it is a very good financial innovation but its implementation has not been truthful. Loopholes in the laws and regulations or rather the lack of regulation have been exploited and they were bound to fail. 

Both these attributes responsible for the crisis i.e. easy money and derivatives can easily be reigned in if there is political will and prudent policymakers like Dr. YV Reddy, the Governor of RBI who at the cost of being called a conservative and old fashioned, did not allow Indian banks to trade in these type of exotic financial instruments. 

Thus there is talk now of going back on the gold standard or the Special drawing rights (SDRs) by the International Monetary fund (IMF) as the World’s Reserve Currency. The US will obviously object to this and try to use its political and monetary clout over the smaller and emerging nations and thwart it from happening.

This however seems the right time to have a change in the world system of currency. 

3P Elasticity:

3P Elasticity:

 All marketing mangers have trends and plans about the price elasticity of a product. But do they think of product or place or promotion elasticity. I am sure they thing but it isn’t much of a consideration for there plans since price is the factor which produces the maximum elasticity. 

We will have a look at these three types of elasticity and can it be measured. 

PRODUCT ELASTICITY: 

Changes in physical type i.e. Style, Colour, Shape, and Form: these cosmetic changes are influencers for buying FMCG products, cars and white goods and other consumer goods 

Changes in features: this is a major influencer in cars and white goods because features differentiate the products of different brands 

Technology changes it is of influence for technology products. Changes are successful if the early adopters are satisfied with the changes 

These changes can be due to Innovation, Adaptation or Imitation by the manufacturer/ Service provider 

How can this elasticity measured by the company? Elasticity by a line-extension or brand extension can be measured. But if the product is an innovation, then it is not possible since the product will not have a precedent or history of sales to measure against 

PLACE ELASTICITY 

This is of prime importance for customers for whom convenience is the differentiator between competitors.

E.g. fast foods such as Pizzas, Burgers and restaurants who provide free home delivery residential areas near the restaurant’s vicinity

Should exclusive distribution be increased to selective distribution and selective distribution extended to intensive distribution? The factors needed to be considered apart from the cost, which I am assuming here, are going to be considerable.

Factors like the type of product, product life cycle; objective i.e. is it to have market share or profits maximization 

PROMOTION ELASTICITY

Should go all out and do promotions in all types of media? Or should it be selective media? Should it be continuous scheduling or flighting or pulsating? 

This depends on the objective to be achieved. Is it informing the customer or persuading or reminding?

Thus the elasticity impact is to be measured based on the scheduling and the types of media used. Different companies selling the same product will use different combinations of this. Elasticity impact can now be measured 

Sales promotion elasticity can easily be measured. 

Public Relations exercises are an unquantifiable promotion and there impact is not directly measurable. Thus its elasticity impact too cannot be measured. But PR is a continuous exercise since it is for the company as a whole and not for a specific product/ Service. So elasticity in this case need not be considered

Methods to determine the budgetary allocations for advertising:

Methods to determine the budgetary allocations for advertising: 

1. A percentage of sales 

2. Fixed amount 

3. Comparison to competitors 

4. Depending on Objectives 

1. A percentage of sales       

Pros: 

Problems of over advertising or under advertising will be avoided year-on-year 

Ad spend will be consistent

 Cons:

If the profits decrease, you decrease the ad spend and vice-versa

The problem here is that you are not clear about the cause and effect. Is the advertising driving sales or is it the sales driving advertising?

The sales reduction is due to other factors. Reducing ad spend is barking up the wrong tree. It does no good. It just reduces expenses in the short term. 

If you decrease advertising spend for lack of sales, by not advertising, you are hampering even an outside chance of sales picking up 

A downturn or recession is the time when you need maximum advertisement to stimulate sales and to differentiate yourself from the other competitors. This method pours cold water on this logic 

Historically brand managers have realized that a downturn in the economy is the best time for advertising since competitors reduce ad spend and your ads will get more ad visibility with less clutter. 

Consistent ad spend though good, is a problem because if you are not considering the external factors in consideration in your marketing strategy, it becomes difficult to survive. The Strategy has to take the competitors into consideration. 

What if the competitor has deep pockets and he takes up all the media space? The prospect will be exposed to only your competitors’ products. This will exacerbate the situation for your product 

2. Fixed amount every year

Cons: 

Strategy cannot be done without taking into consideration the competitors 

This is the most preposterous of methods to arrive at the budgetary allocation for advertisements 

3. Comparison to competitors:

Pros: 

Keeps the competition at bay and in sync with the external conditions 

Less Ad spend cannot be given as the cause for lower sales by the marketing manager since it is in equal amount to the competitors 

An Equal attempt and opportunity to inform or persuade or remind the prospect about the product. Advertising doesn’t give the competitor an advantage 

Cons: 

It doesn’t look at your strengths i.e. financial muscle 

Decisions are dependent on the competition and not by your own understanding of the market or customers 

Cost structure not considered. Are the margins equal for all competitors? 

4. Depending on Objectives

Pros: 

This is the best method of arriving at the budget for ads spend since it takes into account what are the objectives of the organisation. Without objectives, there can be no strategy 

The objective depends on the PLC. Whether it is to inform or persuade or remind or reinforce the prospect about the product? The budget value changes for each objective 

It also considers the external factors of competitor ad spend 

Cons: 

It is subjective since there is no benchmark 

Suggestions: 

Ad spend should depend on the competition i.e. whom do you think as competition.

Is it product form or product category? 

During times of recession or downturn, you compete with the generic competitors and budget competition as well. At that time, the budgetary spend has to change

Indian Consumer Behaviour: Rational or Irrational?

Let us start by defining rational behavior. Any decision taken logically and with prudence is rational. In emotional parlance, you think with your mind. Its exact anti-thesis is irrational behaviour where you think with your heart. It defies logic and is completely guided by ‘feelings’. Thus what is it that marketers should focus on, rational or irrational? 

How are the marketers supposed to know who is rational and who isn’t? And as we will see further, it is also about when i.e. the rationality and irrationality differs when buying a certain types of products. Theoretically we know that B2B customers are rational whereas B2C customers are irrational (this is generally accepted and true to a certain extent). We will focus on the irrational aspect as it is difficult to predict and manage for the marketers.

Rational customers behave irrationally when it comes to brands. This is truer when the brand in consideration is of a product which the customer can show off to others or flaunt it. The product is more to show the other person the style of living or make a fashion statement.

E.g. A shirt, trouser, shoes, watch, glares, the type of coffee they drink, the type of restaurant they go to, the type of beverage they consume etc. 

If the brand name isn’t going to be visible, then the customer doesn’t consider too much of a difference due to brand name, it becomes a commodity where he buys it from the nearest shop at the lowest price. Only the filthy rich people go for branded stuff in this case. E.g. Adidas Boxers, Victoria Secret lingerie etc. 

For a housewife, the brand of the microwave or the refrigerator or washing machine would matter so that she could flaunt it to her neighbour. But to the man of the house it doesn’t matter. For him, the laptop brand would matter, whether the TV is usual CTV or a Plasma TV hanging on the wall of the Drawing room. 

Consumerism and a fetish for materialistic things have seeped in our psyche due to the availability of international brands and high disposable income. However it is changing a bit due to the present downturn which has made life more difficult for the marketer, as people have become price sensitive. So now the competition would not be just direct competition between similar products but between the budgets of the person. E.g. a family vacation costing Rs. 40000 or a plasma TV worth the same amount.

This is called as Budget competition and more has a more pronounced impact during a downturn when a person spends cautiously and is thrifty. 

Conspicuous consumption is the term which sums this all up.

There are 3 types of customers:

1. Responsive customers: These customers respond to your Sales promotion or Advertising.  But Push strategy works better in this case. The customer is looking for Value-for-money. There is no brand loyalty, no liking or preference. The want is influenced by the cost or the quantity in case of soaps, shampoo, toothpaste etc. obtaining these customers doesn’t cost much to the company. But they cannot be kept loyal to your brand. And keeping them would cost dearly and it isn’t worth the cost-return trade-off 

2. Anticipative customers: they are similar to responsive customers but the only difference is that they postpone their purchase and to wait for any offers from any company. They too are not brand loyal and look for value-for-money. E.g. they always wait for annual Diwali Sales or End-of-Season sales etc. 

3. Loyal customers: As the name suggests, they are loyal to the brand. They go looking out for the bran in the store. Sales pitches by salesmen do not have any impact on them. Advertising plays a key role here. The Pull strategy works in this case. For a competitor, it is very difficult to change the customers’ preference and change loyalty.

Bajaj-Renault-Nissan low cost car:

Bajaj-Renault-Nissan low cost car to be launched in India in Early 2010

Issues Analysis: 

1. Rajiv Bajaj, MD, Bajaj Auto wants that the car should not have a Renault or Nissan name though it is a joint venture between the three companies. According to him, when Bajaj had launched it motor bikes with Kawasaki-Bajaj Brand name, they were not successful to the liking of the company. But when Bajaj went alone with Bajaj Pulsar, it was a stupendous success. 

This is a clear case of attributing the wrong cause to the effect. Pulsar wasn’t a success due to Bajaj brand name. It was a success because people liked the styling of it and bought it. They realized that the performance of the bike is also very good. This resulted in positive word-of-mouth publicity for the bike and it became a super success. He point is that Kawasaki- Bajaj the previous brand name wasn’t responsible for the failure of those bikes, rather it was the performance. So the cause is wrong. 

2. The other problem here is that it seems a comparison of apples to oranges i.e. bikes to cars. 

Bajaj manufactures scoters. It was an organic transition to bikes since the Indian Demographics were changing towards young people who wanted bikes. 

Moreover a four wheeler is a product which Bajaj is not known for and it has never manufactured. So it needs Renault –Nissan brand name to make a mark. 

3. Rajiv Bajaj wants to focus on the Safety attribute of the car.

This could be a perfect positioning since Tata Nano has already positioned itself as the lowest priced car. The safety aspect can be showed in the Ad through safety tests and there presence of Air-bags which no small car in India has at the moment. 

4. Mass customization can be tried for this car. The Indian customers have never experienced it and thus can be a novel idea. This will allow them to increase the price of the car by giving additional features such as upholstery, car accessories etc. By announcing free of cost services, it can act as sales promotion, which is an important factor considering the price conscious customers who are the target market for the car.

Private labels:

Private labels:

 Pros: 

1. Low cost of production since no formal setup of a company 

2. Minimal distribution costs 

3. Product development possible in a better way since purchasing pattern easy to measure 

4. Price elasticity with regards to price conscious customers easy to measure 

5. Most effective for price conscious customers 

6. If the product is a Commodity, then it favours the private label 

7. No advertising expenses 

8. If Sales pitch is an influencer in purchase of a product, then private labels will succeed this is especially true of White goods and apparels although not incase of FMCG products 

9. Customization: customization is possible for a retail store more than it is for a branded product manufacturer. E.g. if in the North of India, housewives prefer thick oil in their food in the form of ground nut oil or Sunflower oil and South of India prefers thin oil in the from of coconut, then the retailer can keep more of that oil which is preferred in a particular area. The Branded product manufacturer too can do it but on a lesser scale since he would have to put both type of products. 

Cons: 

1. The perplexing question is what will make people try out the product which hasn’t been advertised and hence customers do not know about it 

2. Brand conscious customers will not be interested in the product. This is especially true of White goods. With FMCG products or Apparel it may be possible, but very difficult with White goods 

3. Difficult to convert users of competitors’ products to your products since there is no Pull effect 

E.g. If a house-wife likes Aashirwad Atta from ITC, she will not even like to buy Pillsbury or any other brand, let alone a private label, unless the price differential is too high. The private label retailer cannot persuade her to buy the product which a competitor like Pillsbury will be able to do, through advertising

4. Even more Difficult is to convert non-users to users.

E.g. A middle aged man using Shaving cream will not convert to Shaving foam unless he is made aware of the product features and benefits through advertising which obviously a private label will not be able to do 

5. The reach of the product is limited to the number of stores of the retail store.

E.g. Vijay Sales product has reach only in the places where Vijay Sales store is located. Unlike the branded products which normally have Intensive Distribution through its own Dealers and multi-car Showrooms. So the point here is that Private labels cannot be thought of as direct competitors although they would take away a share of market. But the manufacturer cannot do much except for Brand Building and using the Pull Strategy. 

6. After-Sales Service may be a problem if the product has been sold in far-off areas. The cost of personnel visiting there would be more for a retail shop than it would be for a manufacturer 

7. R&D department may not be there. So innovation in product should not be expected. 

8. Attracting talented individuals in the marketing department would be difficult since it will not be a company. 

9. Retaining them would be even more difficult 

10. There is no Brand loyalty, no brand recall and highly susceptible to competitors products 

11. Word-of-mouth publicity doesn’t happen since the customer does not tell his neighbour or his friend that he purchased a private label product from a particular retail store 

12. Early Adopters should have been the primary market for private labels since they look out for different types of products to try out. But it is exactly anti to them since private labels do not have anything new to offer to them and it is sold on price differential 

Mute Advertisement!!

Silent Advertisement!! Can it break the clutter?      

An IPL T20 Cricket match lasts 210 minutes and in between these 210 minutes, the viewer is exposed to approximately 1080 seconds i.e. 18 minutes of advertisements. If you consider the average ad time to be 20 seconds, then you will be exposed to 54 advertisements only.

In spite of so less number of ads, can you tell me the various ads you viewed?

I bet that apart from the Vodafone Ads, you will not remember too many of the other ads.

What is the reason for it?? Had it been a clutter of Ads then it would have been understandable but out of just 54 ads??

 The reason is, the Ads cannot attract the attention of the viewer and even if they do, they cannot hold it till the end of the ad. Copywriters are continuously striving to unravel the secret as to what is it that attracts the viewers’ attention. The ads do not have a Recall value nor is the ad useful in either Informing or Convincing or Reminding or Reinforcing the prospect about the product/ service. What can be done so that the prospect sits up and takes notice?

In a TV ad, both, the Visual and Aural stimuli are stimulated and people have got immune to these stimuli to a certain extent. How about an Ad on TV which stimulates just the Visual aspect? i.e. no sound when the Ad is being telecast.

 Imagine the prospect watching TV and suddenly the Sound goes off but the TV is On. Will he not suddenly look for the remote to check for the volume? When he finds that it is perfectly alright, will he not be interested in what is being played? In this way, the ad has been able to break the clutter and differentiate it among different ads and most importantly, it has become successful in catching the attention of the viewer.

 After this stage, it is upto the ‘creative copy’ of the ad which can take it further and hold the prospect captive till the end of the ad.

 An option could be to make the character in the ad speak through sign language or through his expressions which will make the customer try to understand what is being shown. Sheer Inquisitiveness will get the better of him and make him look at the ad.

 To avoid monotony once the ad has been understood, and to continuously engage the viewer, multiple ads can be used at certain frequent intervals.

With the type of ads currently aired, this experiment would be a risk worth taking.

Management and Marketing in politics

Things which can be learned about Management and Marketing from politics. 

Quest for the formation of 15^th Lok Sabha at the centre in India

 The political parties are the Players (Competition) in the Indian Economy. It is a type of two way fight between the two National parties, Bharatiya Janata Party (BJP) and Indian National Congress (INC) [Dominant Players]. These two, along with the other regional parties (Niche Players e.g. Shiv Sena, AIADMK, BJD among others) are the Products in the market and the Services they provide differentiate them from others. 

The hundred crore plus Indian population is the target market for all the political parties who intend to ascend the throne at the centre i.e. have their government at the centre.

The target market cannot be more heterogeneous and fragmented and clustered than it is in this case.

This type of a fragmented market (consisting of poor farmers, small businessmen, students, big businessmen, young working class i.e. the Real economy, the Main street and the financial markets i.e. the Virtual economy, Dalal Street) having valid demands and sometimes capricious is difficult to convince by bringing them on a common set of ideas

The two dominant parties cannot on there own, get the majority in parliament (high market share) and they need the help or regional players. Thus they have to forge alliances. The alliance is United Progressive Alliance (UPA) in case of INC and National Democratic Alliance (NDA) in case of the BJP. This alliance though has to be formed based ideology of each party (in terms of marketing, Strength, Weakness and Core competency derived from the Services offered). There has to be no cultural mis-match and the service delivered as an alliance has to be more than what can be delivered individually i.e. Synergy has to be achieved

Considering the present election results, the question being asked is whether UPA won or the NDA lost? Is it a vote for stability?

About the UPA:

The National Rural Employment Guarantee Act (NREGA) and the Farm loan Waiver were the USP of the government in its last term. The turnaround story of the Railways by the railway minister is taught in management schools. The nuclear deal with the US was also a success.

The failures were National Security and the accusation that the government is being soft on terror. The ‘creative tension’ (quoted by former RBI Governor Dr. YV Reddy) with the RBI on some Monetary policy issues. Some issues with the Left parties (Communists) were also problematic.

Let us look at some of the considerations in this election:

1. No USP for the services offered by neither alliance, UPA or NDA:

This was an election without a single core issue. It means that both the alliances did not have an Augmented Service for the market. The catch was that any alliance which bought up an issue would have won. But unfortunately, neither alliance did this.

Thus it isn’t understood whether UPA won or the NDA lost

2. Positioning:

For the first time in around 2 decades, the INC announced the PM candidature in the form of incumbent Dr. Manmohan Singh (MMS) in its manifesto. The NDA had LK Advani (LKA) as their Prime Ministerial Candidate. The NDA tried to make it a presidential type election in the US where the elections are fought on the basis of candidates. They tried to make it a man-to-man type of an election.

This was preceded by an onslaught by the opposition where they infamously called Dr. Manmohan Singh as the ‘weakest’ Indian PM.

The error which the NDA did was, trying to project Mr. Narendra Modi (NM) as the future Prime Ministerial Candidate mid-way through the elections. This was a crisis of identity for the party and even the electorate. They did not know the clear leader. Plus both of these personalities are poles apart.

LKA symbolized Babri Masjid demolition and a Hindu fundamentalist (the word may seem a bit harsh for some people) whereas NM is a pro-business and for economic development of the region. He is chiefly instrumental in Gujarat being the place of which has got maximum FDI and even major Indian Industries. This can be proved by the swift handling of the bureaucratic hurdles in bringing Tata Nano to Gujarat after its exit from Singur, West Bengal. Although NM has been accused in the Godhra Riots of 2002, it is yet to be proved and chances are that he will be exonerated for lack of evidence by the Supreme Court. Yet his pro-business stance is more hailed than his shortcomings or failures. This is a classic example of great PR machinery at work.

So it begs the question as to whether it was a vote for stability which the UPA seems to have and the NDA doe not

3. Knowing your strengths and working with your allies:

 The UPA had a fixed set of allies in the form of regional parties. Only the Left parties had some problems with them. The NDA on the other hand was having talks with all parties who were anti-congress. It is good to exploit the competitors’ weakness but without you having some strength, it isn’t going to be enough.

 By going alone in UP and Bihar, what the INC showed was that it was prepared to take risks. It leveraged on the brand name ‘Gandhi’ through Rahul Gandhi (RG). He was projected as the ‘Heir Apparent’ which he is since INC is a family driven party

 4. Promotion:

 UPA was quick to take advantage of the Oscar winning song ‘Jai ho’ and made a video on it highlighting its success stories.

 NDA released a spoof video of it names ‘bhay ho’ highlighting the failure of UPA. This was a good way of exploiting the weakness but it suggested to the electorate that NDA was telling them to vote in their favour, not on NDA’s Strengths or its manifesto but on the failures of UPA. It indirectly sent a message that since you do not have an option, you should vote for NDA.

 The UPA had a well-oiled PR machinery at hand where it made sure that the failures were not highlighted. The tensions simmering between the PM and the Left parties was never allowed to get out of proportion.

 Advertising is to inform or persuade or remind or reinforce about the product/ service. But this Ad did none of the 4 things. It did not say anything about NDA, about the plans it has for the country or the way NDA is going to govern them.

 Thus again the question, whether UPA won or the NDA lost

 5. Youth Leader:

 The UPA had RG as the ‘Youth leader’. He galvanized the cadre in states of UP, Bihar and the cow belt. He also campaigned in other parts of the country. Other youth in the UPA were Sachin Pilot, Milind Deora, Jyotiraditya Scindia, Navin Jindal. Kanimozi Karunanidhi etc.

The NDA on the other hand did not have any youth leader in their campaign. Arun Jaitley was probably the youngest among them all. Varun Gandhi though is a young leader but he does not have a charisma. He portrayed himself too early in the election as a Hindu fundamentalist but giving that hate speech against the minorities in Pilibhit.

 6. Confused Ideology:

 BJP, which is the prime constituent of the NDA, was a pro-hindu party. It was accused of being a communal party as by the opposition. This was partly true due to the demolition of the Babri masjid and the accusation of LKA and Murli Manohar Joshi being involved in it. The BJP has tried to change its image towards a pro-reform party and this change has helped it much more in the eyes of the educated Indian middle class who are pro-BJP.

 This though has impacted it in the cow belt and other parts of India which are Hindu dominated. For them, the Ram mandir is an issue. Amarnath Yatra land allotment problem in J&K is also an issue. Its primary vote bank was the pious people, which the BJP exploited.

 But this confused ideology resulted in it neither being its previous self noe in a new avatar. The people did not understand its working and ideas. This can be seen from the voting pattern in Maharashtra and MP.

Thus again the question arises, whether this was a vote for stability which the UPA provided and the NDA did not

 7. Changing with the times:

 NDA has a strategic cell on psephology (statistical study of elections and trends in voting) pioneered in Indian politics by the Late Mr. Pramod Mahajan. The ‘India shining’ campaign in 2004 was a disaster with the NDA losing the elections. The Campaign though wasn’t a disaster; rather the ground realties were different from those portrayed in the campaign. Thus the methodology was perfectly right.

 Same methodology was tried this time too with an IIM Graduate helping LKA in his attempt with promoting BJPs ideology on the internet thought social networking websites such as Orkut, Facebook and Twitter. They were one step ahead of the UPA which had just a strategic war room with all analysis of day-today numbers and results.

 But as it always the case if you draw an analogy with food, the contents matter rather than the garnishing i.e. the taste matters more than the colour of the food.

 So being ahead of time and your competitors is good but it has to be followed by a good product at a proper price available at the nearest place

 Conclusion:

 The irony of the situation is that no one expected such a clear verdict. All psephologists were expecting a hung assembly where there would be no major party and the two major alliances, UPA and NDA would resort to ‘horse-trading’ to get the numbers. So all this analysis is done in hindsight where we are trying to find the cause and effect of the decisions already takes. It is similar to a post –mortem.

‘The Art of War’ related to Marketing Strategy

Learnings from the 'Art of War':

Strategy in business, primarily marketing is derived from military lexicon. Hence there is no better book to learn strategy from than “The Art of War” by Sun Tzu written 2500 years back. Yet its contents still hold true in military. Since marketing is a war of the mind, the strategies hold true in marketing as well. Thus this book should be made mandatory reading for all the marketing people. Following are the things that can be learned from the Art of war and applied in marketing strategies:

1. Strategy and Planning: Strategy is derived from the Objectives of a company. Planning is required to implement the strategy. All three of these need to be done effectively. A gap in any of the three will be problematic. A study of the external environment which includes political, social, economical, technological and legal environment. Know yourself, know your competitor and know your customer, and you have won the battle of the market.

2. Surprise: This is the most important element of the attack. Blitz Krieg (German) meaning ‘attack with lightening speed’. Catch the competitor napping. This will result in them taking knee-jerk reactions. It will compound their problems which are to your advantage. E.g. Sudden price changes (could be increase or decrease in price), technological break through or radical cost cutting through a BPR effort

3. Innovation: The Best form of surprise is Innovation. Product innovation doesn’t give the competition time to react. It also gives you a first-mover advantage too.

4. Sustainability: Attack with a preparation for a sustained assault. The competitor is expected to fight back. Thus be prepared for a long drawn battle. Test the patience of the competition. Eventually they will give up protecting their other strong areas. I.e. stronger and core areas of the product. Or even stop the fight to save money for R&D

5. Flexibility: Keep a tab on your sales numbers, competitors’ sales numbers, and consumer behaviour. Accordingly change your tactics

6. Confusion: Keep the competitor guessing on the parameter you are competing. Is it the product, or price or the distribution channel?

7. Competitor behaviour: Predicting the type of reactions the competitor will do to your moves, as it happens in chess. This will keep you one step ahead of competition.

8. Back-off: When you go for an all out assault, make sure that you back is safe. The enemy should not have a chance to encircle you from behind. This is also necessary in the eventuality that the competitor has gauged you properly and your assault is going to be thwarted. So rather than continuing, it’s better to back-off and live to fight another day. E.g. Take the product back from the market or reverse the decision with regards to price

Demographics and Psychographics for the Bajaj-Renault-Nissan low cost car

To map the consumer profile and exact segmentation, Demographic and Psychographic characteristics have to be considered: (for the Bajaj-Renault-Nissan low cost car)                                                                                                

 Demographic characteristics are as follows:

 Gender: The car is for the family, so gender is immaterial here. But generally, the male person of the house is the influencer and the decider of the purchase, thus the Ad has to be made considering him as the target market

 Age: 25-35 years

 Income: Rs. 3-3.5 Lakhs per annum for the family

Education: Graduate

 Occupation: Lower level Executive in any organisation

 Psychographic characteristics are as follows:

Culture:

• Attitudes: 

• Values: 

• Beliefs: 

• Ethics:

 [The culture is Indian. Here it isn’t a direct influencer in the purchase]

 Speech pattern: Generally the people at a lower level in an organisation do not speak sophisticated language. But again here, it isn’t directly relevant when it comes to purchasing the product

 Dressing style: it also isn’t directly relevant when it comes to purchasing the product

 Recreational preferences: movies and Restaurants (once every 2 weeks)

 Media preferences: TV (Soaps, reality shows and Cricket). They neither watch English News channels nor Business News channels. They also do not read English newspapers except for a small percentage in Metros. Regional newspapers are read more.

Radio is also frequently heard but more so in Metros.

 Reference group: Aspirational

 Opinion leader: Bollywood actors and Cricketers

 Where do they stand in the Maslow’s Hierarchy of needs theory?

 It is third in the hierarchy, i.e. Social needs

 

 Product features:

 Aesthetics and a Front Engine are the only two things which are real differentiators from the Tata Nano apart from the price. Thus the Safety aspect can be focused on more. Since the Tata Nano has engine at the back. Accident tests can be shown in the Ad. This can be used to show that engine at the front is more preferable as far as safety is concerned. However this has to be done through subliminal messages in the Ad since it should not be seen as a direct competitor to the Tata Nano

 

Considering the VALS Framework, segmentation is on the basis of Believers, Strivers and Makers

 But this VALS framework may not necessarily be used in the industry in India because people may say that it is too theoretical and vague. Vague in the sense that it becomes difficult to differentiate between the three mentioned categories

The Future of the US Dollar as the World’s Reserve Currency

When the G-20 met early this year in London to chalk out a plan to mitigate the current financial crisis, British Prime Minister Hailed is as the 2^nd Bretton woods. This implies that the British regime which is the closest ally of the United States (US) is also considering the thought of The US Dollar as the reserve currency.

Economists the world over last year described the present economic turmoil as the ‘most difficult’ crisis since the Great Depression of the 1930s. They are all calling for fiscal action to get out of this recession. And the various governments have obliged too since that seems the only option left. Monetary actions too have been taken but economists seem to bet more on the fiscal side as of now.

Thus we have all become Keynesians now after John Maynard Keynes being the key person in the bretton woods of the 1940s.

It seems history is repeating itself but its needs to be seen whether it actually repeats itself with the world accepting a new reserve currency.

Let us look at a bit of history. The US held the distinct position of being the only country with highest Exports and highest imports. But it imported less costly products such as durable goods and other consumer goods whereas it exported real costly goods such as machinery and technology know-how. Thus its net impact would be positive on the fiscal side.

The Dollar was the reserve currency because of US being the largest market and the most stable Economy.

This has reduced of late and put pressure on its fiscal deficit due to Consumerism and free inflow of money from China which is the largest holder of US Treasury bills.

Moreover with the Emerging Economies i.e. the BRIC Countries (Brazil, Russia, India and China) and the Euro Zone getting stronger and a bigger market, the US market isn’t as good it was earlier.

With the present financial crisis originating out of the US, people are having second thought s about the Viability and Sustainability of the US Dollar as the reserve currency.

The Euro Zone being one of the biggest markets, Euro as the reserve currency could have a sound standing. However the thing on note is that after the crash and liquidity crisis late September 2008, all the foreign institutional institutions took refuge in the Dollar which was seen from the Stock market Indices of emerging economies taking a beating.

But that could be because they knew of the risk-free nature of the Dollar since the Seigniorage (power to print currency notes) benefits that the US enjoys due to it being the reserve currency. So it becomes difficult to deduce as to what is the cause of the refuge, is it the Seigniorage or the fundamental strength of the US economy.

This seems to be the appropriate time to change the reserve currency since the tough conditions at bretton woods are similar if not worst. Timely action is necessary at this point of time.

The US would do its best to try and thwart this attempt so that it enjoys Seigniorage benefits. They will try and use their political clout not only over the other countries but also over the World institutions such as the World bank, International Monetary fund (IMF) where it has the maximum voice through its monetary help.

The G-20 is a small group to decide on it. More countries need to be included in this attempt where the whole world is going to be directly impacted.

Thus the future of the US Dollar as the World’s Reserve Currency seems to under jeopardy which may or may not be good for the world. Only time will tell its efficacy

Zoozoos all the way!!!!!

Zoozoos all the way!!!!!

The current flavour of the season, IPL being held in the Rainbow nation has turned out to be a rather damp squib, what with the expectations of it being better & bigger than the last season. But this isn’t about the IPL; it’s about the Zoozoos (the new Vodafone advertisements) which have been so charming to the viewer.

They have managed to break the clutter.

The volume of ads are so huge that it seems we are watching the ads and in the break, watch some cricket thrown in for good measure. Yet they do not seem irritating or monotonous. I can bet that they have not turned into ‘white noise’.

This is also because they must surely be having a pipeline of ads for various Value-Added Services (VASs) over the period of IPL. (According to Rajiv Rao, Creative Director, O&M, 30 is the number)

But after a longtime we can see an ad which is not just creative but also an ad which might help Vodafone Position itself as a Value-Added Service provider. This also would have a direct effect on its bottomline because of the high revenues from VAS.

After these ads, I am sure Vodafone would be synonymous with VAS. Vodafone surely is on the way to earn a ‘word’ in the minds of the consumer i.e. VAS. And it will firmly be entrenched in the viewers’ mind

It also has totally annihilated the entry of Aircel in the biggest and most congested circle i.e. Mumbai. It seems to be a ‘Hot-on-Heels’ strategy by Vodafone because it was launched almost immediately after Aircel opened operations in Mumbai

It also seems a strategic move to ‘move’ out of the image of the ‘Hutch pug’ and give Vodafone a new identity of its own.

It’s a long term strategy of Vodafone where Vodafone will earn returns on it when the tide turns and the present downturn ends. Apart from this, as 3G is rolled out in India, the connectivity and speed of the internet over the cell phone is sure to improve which will have a direct effect on the usage of VAS.

This focus on VAS seems to be entirely opposite to the focus of telecom leader in India, Airtel, which is concentrating on the prepaid customer through its customised plans for loved and dear ones (Madhavan- Vidya balan new ad talking about cutting usage in the present downturn).

Airtel is focusing on the vast 90% of the prepaid Indian population by giving them customised offers which, as yet, no service provider has done for prepaid customers.

This is also more to do with customers not switching to other service providers when ‘Number Portability’ comes into effect in September 2009

Tata Indicom on the other hand is focusing on Clarity in connectivity through its “hello…...hello” ads which seem irritating after a certain period of time.

The ad is talking about the technology aspect of connectivity. Although the technology aspect is good, it isn’t a differentiating factor because for a customer, the service matters, not the way in which it is provided. Technology is of no importance to the customer here.

BSNL: it has 2 ads both concentrating on VAS but those are for caller tunes which is preposterous to say the least because caller tunes fad has passed long back

Aircel: though its brand ambassador MS Dhoni, it too is trying to focus on VAS but as I have mentioned above, Vodafone has totally overshadowed it and it surely isn’t going to get noticed although Aircel has the best customization when it comes to VAS

	Vodafone	Airtel	Tata indicom	BSNL	Aircel
Creative content	High	Ok	High	Low	Low
Recollection factor	Very high	Ok	Low	Low	Low
Positioning	VAS	Customization	Connectivity	VAS	VAS
Revenues *	Yes	Yes	No	No	No

* Revenues means whether the ad will result in revenues for the company.

Copywriters' Brief before making an Ad

Brief about the product to the copywriter before writing the Advertisement:

 Product: Bajaj-Renault-Nissan low cost car:

 Price: Rs. 1.4-1.5 lakhs

 Launch: assumed to be launched in January 2010 (six months after Tata Nano starts selling in showrooms)

 Name: undecided as yet

 While branding the car, Bajaj Name should not be present since customer’s recall Bajaj brand name as the company which manufactures 2 and 3 Wheelers and it cannot manufacture 4 wheelers. So it has to be a new brand. It should include Nissan or Renault since both of them do not have a presence in India (although Renault has with Logan but the car hasn’t been successful)

 Also it would be a better idea if this car does not compete with Nano directly since Nano has got the first mover advantage and positioned itself as a low cost car. Thus Nano has been permanently etched in the prospects’ mind. Trying to change that doesn’t seem to be a good idea as its almost impossible to ‘De-position’ it from that low cost attribute.

 Since it shouldn’t compete with Nano and cannot with Maruti 800 (because it is 2 Lakhs +), it has to create a new category in the prospects’ mind.

 Target market: Nuclear families of 4 people (husband, wife and 2 children)

 Segmentation: families who are looking to buy their first car (people who own a bike and want to move over to a car isn’t the target market here)

 Purchasing power of these families is important as the car is going to be purchased on loan and paid through EMIs. So the family having annual income of 3-3.5 Lakhs (conservatively speaking, it can also be Rs. 2.5 Lakhs +) will have to be targeted since their monthly income would be around Rs. 20000-25000. Considering their expenses, about Rs. 10000 would be saved. Thus they can pay an EMI of about Rs. 3000- 4000 per month.

 Positioning: Economical (mileage) i.e. Value for money

 Before preparing the Ad (for any of the media vehicles, the most important thing is to decide the objective of the ad)

 Objective: Inform or Persuade or Remind

 In this case, it is Inform

 Now other factors to be decided are:

 --Budget: this depends on the objective. Since it is informing the prospect about the product, the budget has to be high initially till awareness is made and knowledge about the products attributes and features are given to the prospect.

 --Communication mix: Advertising and Public Relations are the methods of promotion.

 Direct marketing, personal selling, and Sales promotion are not to be considered.

 --Integrated Communications Process i.e. Types of media vehicles:

 Television, Radio, Internet, Outdoor

 --Copy platform:

 Ad Subject: Bajaj-Renault-Nissan low cost car

•    Ad Problem: This new model needs to gain some identity and find its place in the market.

 •   Product Characteristics: Best mileage amongst the 4 wheelers

  •  Advertising Objective: Help model establish itself by building on brand names of Renault  and Nissan in India

  •  Target Market: mentioned above

  •  Competition: low cost cars

  •  Supportive Selling Points: Renault engineering and Nissans Quality consciousness since its Japanese

  Advertising appeal: Profit

  Execution style: Practical and Slice-of-life

  Media Scheduling: Continuous for the initial 3 months in all types of media 

Airtel Ads- good (Airtel broadband) and the ugly (Airtel digital TV)

Airtel Digital TV ads: 

Airtel Digital TV started with the “Come home to the stars” ads where all celebrities such as Bollywood superstars Saif Ali khan, Kareena Kapoor, Cricketers such as Zaheer Khan and Gautam Gambhir and Music director AR Rahman. They tried to say that with Airtel DTH TV, you will get all these genre of channels.  

But isn’t it stating the obvious. Any TV, cable or DTH, provides these channels.

Let alone the positioning, even the USP of the Airtel DTH TV isn’t mentioned.

Tata Sky has USP of “Recording feature”, BIG TV competes on ‘cost’ but Airtel TV doesn’t have any such feature. 

Presently those ads too have stopped and the new ad where the small girl asks her parents whether she can bring her friends in their bedroom. And it ends with all cartoon characters in their bedroom and the ad saying that all types of cartoon, animation and games are present on Airtel DTH TV. The previous ad was on such a magnanimous scale and this ad just flatters to deceive. They should have continued with the old ad compared to this one.  

The child in the present ad doesn’t serve any purpose because they are not the influencing factors while purchasing the DTH platform since they do not know the difference between cable and DTH TV. They just know the various cartoon channels such as Hungama TV or Cartoon network.  

Moreover even if they try to influence, present day parents will not succumb to it because they know the ill effects of exposing the children to TV at such a young age. And Tata Sky gains a slight edge here because it tells the parent that they can record the cartoon for their children while they study and then for a particular period the children can watch TV. It’s like a win-win situation for both, child and parents. 

The latest Airtel digital Ad (as telecasted on 9^th May 2009) does what the two earlier ads could not do. They are showcasing their USP which other DTH providers do not have and that is, a single remote for both the set-top box and TV set 

However the execution of the Ad isn’t very good. There has to be more focus on the feature of a ‘Single remote’  

Airtel Broadband Ad:  

The latest ad clearly positions the Broadband Service for the target market i.e. the ‘Young’ person. They are tapping on the ‘Impatience’ of the young people who can clearly relate to this attitude. 

16Mbps speed for Airtel Broadband v/s 2Mbps speed of BSNL Broadband differentiates it and gives to the customer that feature which is critical for comfortable surfing of the internet i.e. the ‘Speed’