Why the Indian Rupee isn't appreciating anytime soon

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I might not be wrong to say that at no point in time since India attained sovereignty, has the Rupee depreciation seen such a public discourse. Social networks have played a part in this. It also points to a fact that the Indian masses are much more educated and aware of the economic scenario in India and the world over. They are discerning to the issues affecting their lifestyle and savings. India was always known for its scientists and mathematicians, from Aryabhatta to Bose among others. Indian economists were not too revered. It was always about the Keynesians & Hayekians. Things have changed now with Nobel laureate Amartya Sen to the Prophetic Raghuram Rajan and Ex-RBI governor YV Reddy, who got accolades for his iron fist in insulating India from direct damage of the 2008 economic tsunami.

Getting back to the vertical descent of the Indian rupee, it’s slightly difficult to give weightage to the factors for this slide. Global economic scenario and India's economic policies are to be blamed. It was a foregone conclusion that as soon as cheap money through US quantitative easing starts reducing, it will have direct consequences for the emerging markets where majority of this money flowed. The timing though was not factored in. Among the BRIC countries, India is the only country with most diverse democracy. It can be strength and equally a weakness. The economic loosening for the Indian industry expected as early as 2004-5 never occurred. Foreign institutional investors (FIIs) and Foreign Direct Investment  (FDI) in India was ‘despite the policies rather than because of’. The overflowing coffers of cheap money from developed nations had to flow in India. The developed markets were saturated with predictions of a laboured economic recovery. Economists again got it wrong this time with US showing more than just green shoots. Naturally the money was going to flow out at the slightest hint of recovery. This was exacerbated by the India's obsession with gold and the ever-burgeoning import bill for energy- oil & gas.

India has flattered to deceive more often than not on the economic front and this time was no different. With the desired policies not on the anvil, the rupee will continue to fall or abate slightly but appreciation seems a far-off. A year to go for the General Elections 2014, economic policies would be the last thing on the minds of the government. With so many allies to answer to, arriving on a consensus on policies which are harsh in the short-term but good long-term is extremely tough. The focus will be on cobbling their allies to stick together during times when there will be heavy horse-trading. The government and the bureaucracy will go in auto-pilot mode with no major reforms allowed to go through.

Increasing interest rates too cannot be an option because the domestic industry has been calling for reductions from the Reserve Bank of India to facilitate growth. Interventions by the central bank in currency markets will be a temporary balm. It cannot be sustained. Thus they too have been wary of meddling with the markets. Good economic outlook in US/Europe, coupled with lack of reforms and significant energy increases - all these factors are heavily against the rupee strengthening anytime soon. It might recover about a percentage point or two but to levels about a year back seem improbable. 

A clear path might start be visible once the General Elections are over and economics takes precedence over politics. That too would depend on the overall economic strength of the developed markets. Till the time, India has to survive with a weak rupee and hope to live to fight another day.

Pepsi & Coca Cola – contrasting TVCs

Pepsi and Coca Cola are fighting for the same market through the same media. Such a stark contrast in its communication. Coca Cola’s TVC is a continuation of its Open Happiness message. A melodious and hummable sound track about all the crazy things we do. A good blend of young and old characters can be seen in the ad. Pepsi’s TVC, on the other hand, has a peppy tune. It uses its three brand ambassadors, Priyanka Chopra, Ranbir Kapoor and Mahendra Singh Dhoni. Clearly they are targeting the young audience. Coca Cola’s ad though is sans any brand ambassador. Over a last couple of years, Coca Cola seems to have moved away from using any brand ambassadors.

Pepsi’s ad is more a reflection of the current thought-process of the young Indian. They want to live in the present, enjoy in the present without much future planning. It may seem reckless on the face of it but it shows a couple of things – one, they are confident about the money flow in their future i.e. with respect to their careers and two, confidence in the Indian economy to outgrow any downturn and churn out high paying jobs. Coca Cola is the more sedate of the brands and its communication mirrors that. 

Pepsi has a slight upper hand in the coming summer due to its title sponsorship of the IPL and it will go all out to leverage this. Plus having MS Dhoni as its brand ambassador, arguably IPL’s Most Valuable Player over the last 5 IPLs, will catapult it over Coca Cola in the short run at least. 

Mahindra and its font change

When Mahindra launched their vision of ‘Rise’, I hailed it as an outstanding though-process. Mahindra was getting ready to catapult itself into one of the biggest brand for automobile manufacturing in the world. It already was the largest manufacturer in terms of Tractors with the acquisition of Ssangyong.

With the aim to continuously strive for more, and rise in terms of everything- volumes, numbers, brand awareness and brand equity, Mahindra was charting its way on its own accord. The type of communication through Television, print and online showed that Mahindra had marketing and brand managers attuned to the highest forms of creativity. Mahindra has changed their font in its latest communication change. The ad released in national dailies talks about the rationale behind selection of the font. Creative renditions of fonts are subjective like all creative outputs but the adjectives used to explain the font are slightly haywire. How can hunger be attributed to that font. Or for that matter, nimbleness. Quite strange reasoning. Plus it mentions that the logo is subtle in change, which indeed it is. But if it was subtlety was to be kept, why change it in the first place.

Another thing of note is that the full page print ad doesn't show the Mahindra symbol. Wonder about the future usage of that symbol. And if it is going to be used in future, why make its absence conspicuous. In the complex jargon of advertising and abstract thoughts, basics or obvious interpretations are given a miss. 

Source: Mumbai Mirror - 30 January 2013

Hermes - Absolute luxury

Only a handful of brands command the kind of awe, adulation, aspiration and unqualified love as Hermes. The mere mention of the name gets ooh-and-the-aahs from the audience. Wearing a Hermes accessory is a sign of arrival on the uber-luxury scale. A favourite amongst the fairer sex especially the page 3 socialites from Sydney to Mumbai to London and New York. Hermes gets unparalleled attention.

This full page ad just showcases the carefree attitude of the Hermes user. It is of note that nowhere in the ad is there a mention of a product/accessory of Hermes. The question arises that if it has so much of a brand value, why does it need to advertise. The objective of the ad is only to increase awareness of the brand in the nouveau riche and the aspirational-wealthy class. Thus although an ad, it hardly has the requisites of a print ad. Just the contact details to know more about the brand. It isn’t loud yet subtle and classy in its appeal. The target audience of Hermes doesn’t differ in any of the attributes required by a buyer based on location.  Undoubtedly, it is an international brand. 

No wonder then that the creative rendition, by Publicis EtNous, isn’t from the Indian arm of Publicis and uses an international model. Luxury brands have to be extra-careful in its communication because the awe is its unique selling proposition. It is intangible. It is priceless. And it’s tender in its image. Handle with care. Hermes it is.

The only slight disappointment - it should have been on the first page rather than the last.

Source: Times of India - Bombay Times- Last page - 16 January 2013

Mercedes – downgrading the elusiveness

Everyone feels the pinch of the downturn. Luxury brands feel them the most since they are conspicuous consumption. Luxury brands chose the communication of conspicuous consumption to stand apart and be a luxury brand. The secret of a luxury brand is to always remain aspirational and elusive. And yet have a target market to generate your profits. Louis Vuitton, Hermes, Gulfstream, Porsche, Gucci, Rolex, Jimmy Choo among others are brands who stand for absolute luxury.

These brands command a premium for the badge value. And the only way it is lost is if it becomes ubiquitous and thus loses the aspirational value. There is always the pull factor associated with such brands. They should never go for push. Discount, sale, freebies, value-for-money should never be associated with luxury brands. Mercedes was most luxurious known brand in India for a long time before Indians started knowing about BMW, Ferrari, Porsche, Rolls Royce. Having already lost this tag, Mercedes is doing itself no good by having the ad as above. Zero insurance cost, zero maintenance cost and zero interest cost seems like an ad by any of the other mid-level car brands such as Maruti or Tata or Hyundai. Anyone owning a Mercedes wouldn't just have that car but at least one more. Such costs wouldn't matter to the targeted audience. Reduction in these costs wouldn't be the deciding factor or compelling factor to buy a Mercedes. Although it seems that this ad hasn't been done by Mercedes but by the Distributor, Mercedes shouldn't have allowed it. Building a luxury brand takes eternity but losing it doesn't take more than an ad like this one.

Source: Times of India – Bombay Times – January 06, 2013