Brand Loyalty

Wow! Film stars who are loyal!

In today’s highly competitive environment, brand loyalty is a topical issue, for it becomes difficult for a brand to engage customers for long. Those who do succeed tend to get rewards in terms of customer retention. Loyal customers are also likely to spread positive word of mouth to other consumers, thus becoming advocates of the brand. For the second year running Airtel has topped the Brand Loyalty Index. Airtel continuously engaged its customers with innovative product offerings, VAS and its high value customer retention programme.

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Source : IIPM Editorial, 2010.

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

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IIPM conceptualized the grand final of Dare ‘10 — the most prestigious of international B-school student quizzes

Jagran Prakashan Ltd.

IIPM conceptualized the grand final of Dare ‘10 — the most prestigious of international B-school student quizzes

Entry Price: Rs.86
Target Price: Rs.108
EPS: 4.8 (FY10E)
P/E: 17.9 (FY10E)
Time Duration: One year
Rationale: While slowdown in the economy and ad-spend cuts remains cause of concern for print media companies, Jagran Prakashan is expected to post steady growth (up-tick post 2HFY2010E) owing to its strong foothold in the Hindi belt (Dainik Jagran), focus on local advertising and rising colour inventory. Company’s margins are also expected to improve by 750 basis points over FY 2009-11E driven by lower newsprint costs (declined 35-40% from peak of $950), lower losses in new initiatives and higher operating leverage (as ad-rate hikes get absorbed). Further, the company’s 2QFY2010 and 3QFY2010 will register sharpest gross margin expansion due to base effect. This certainly makes Jagran Prakashan a stock to hold on.

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Source : IIPM Editorial, 2010.

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

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The response towards IPL this season is much lower than last year

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Having said that, companies are also significantly subdued in their marketing push with IPL this time, especially when the so-called ‘Slowdown Blues’ are riding the sentiments in the economy. “The response towards IPL this season is much lower than last year. This is a natural transition, as there was a lot of hype around the first season of any event, which tones down by the second season; the economic slowdown has made the situation even worse,” feels Anita Nayyar, CEO, Havas Media. It’s not that the brands are no more interested in IPL season 2; viewership figures (TRPs as high as 10) for last year’s IPL are tempting enough for marketers to take a closer look at, even this season of IPL. But clearly, brand investments are becoming difficult. Although the difference may not be huge, marketers are certainly more cautious this time. Shubhoshekhar Bhattacharjee, CEO, Planman Motion Pictures, comments, “One has to realise that the economic downturn does not mean that this cricket crazy nation will stop watching cricket, especially IPL, which in turn provides an opportunity for good brand visibility.” Utkarsh Singh, Head - BD, Rajasthan Royals opines, “There are surely lesser number of brands investing in IPL this time as compared to the last season. But the level of engagement of those investing is much deeper.”

However, unlike the last season, marketers have become very choosy in their approach and very cautious about the teams they are associating with because they want to make the most out of their dear money. While many teams have already bagged a handful of licensing and co-branded deals and other innovative brand associations, many teams are struggling to get to open their innings on this front. For instance Mumbai Indians are yet to finalise one as Tushar Pania, Media Manager, Mumbai Manager confessed to 4Ps B&M “We haven’t finalised any deals, so far. We are in middle of talks with marketers and advertisers. ”

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Source : IIPM Editorial, 2009

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

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Focus on your communication

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Seen the latest ad from India’s leading insurance provider LIC. Haven’t? Well, it talks about the needlessness of adding two K’s to your name to change your professional fortune. Okay, caught the latest Tata Safari Dicor commercial? This one pointedly rubbishes office politics in these troubled times and asks consumers to ‘Reclaim your life’. India’s largest private bank ICICI is doing a lot of ‘rely on us in bad times’ ads; Honda City’s sedan cruises along rough terrain with an ‘enjoy your challenges’ tag line...

If you are still not getting the point – guess its back to the schoolroom for you. Fact is every marketer worth his salt (or should we say 4Ps?) is sending out ‘loaded’ missives to his consumers these days. He’s trying to build a common agenda with consumers and make a moot point about the emotional connect in these unhappy times so that the consumer should buy his brand. Agrees Anisha Motwani, Executive VP-Marketing, Max New York Life Insurance (MNYL): “Times are cautious. Therefore, the message should have a ‘re-assuring’ communication strategy. The tone and content of advertising should be re-assuring that your money is safe with us.” To communicate its credibility, MNYL recently began spreading the message that their international partner, New York Life is the only American financial organisation that has been untouched by the US economic turmoil.

And that perhaps is the reason for all the optimism floating around in the air. Yeah! You guessed it right – because people want to hear good things (especially the overtly optimistic, never say die, Indian people!!).

Big 92.7 FM, the biggest private FM player as per the number of channels and reach – is similarly attempting to cash in on consumer apathy to negative messages. Their ‘Don’t Worry; Be Happy’ theme is receiving rave response. Says Nirupam Sonu, VP – Programming, BIG 92.7 FM, “Honestly there is a lot of negativity in the air. So, we need someone to tell them to be happy and take them a little away from their troubles.” Besides the daily doses of laughter, the station has a programming line up that hosts visionaries and CEOs who give tips on how to stay motivated at the workplace, how to secure jobs, manage expenses, et al, during these tough times. “It is not just about recession and gives no gyan as to when the bad times will end. Instead it is just our initiative to help our listeners,” says Sonu.

Besides the message itself, medium choices and exorbitant ad rates are other niggling worries for marketers. The trick it seems is to review your media budget allocations to maximise value. Little surprise that a host of marketers are lining up media houses to review their options. Chirantan Chandran, Partner-Client Leadership, Mindshare adds that “clients are of course looking for better rates but moreover, the major deciding factor for them is ROI and the accountability of investments. They have become more careful about each step they are taking, they are seeing what they are receiving in lieu of what they are doing in fact what they are investing.” Titus, ex-Senior Creative Director, O&M suggests innovative media vehicles for generating better bang for their bucks. “Communication is changing. We are all awakening to the fact that television can’t solve all the problems,” he says.

TV sure can’t solve problems. Just like chanting, praying and generally invoking the God of good times to banish those depressing thoughts, TV can at best play along the tunes of hope. But the fact is that there is a lot of hope for marketers and companies that can think out-of-the-box. Out-of-the-box need not be out of the world; but it does mean you actually end up feeling good in these so called bad times.

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Source : IIPM Editorial, 2009

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

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2009 IS THIS THE DO-OR-DIE YEAR FOR Anil D. Ambani?

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While his energy plans may need a boost, Anil Ambani’s BIG plans in entertainment and media are going great guns at the moment. The year 2008 saw Reliance BIG Entertainment reach two significant milestones. The first was the dream like deal with US based DreamWorks SKG controlled by the legendary Hollywood film maker Steven Spielberg. The deal, worth $1.5 billion has both ADAG and DreamWorks equally sharing equity in a new vehicle based in Los Angeles that will deliver six movies every year. Considering that an average Hollywood movie costs at least $100 million to make, you are again reminded that Anil Ambani thinks BIG all the time! The deal with Spielberg was not the only connection to be established with Uncle Sam. BIG Entertainment also acquired more than 220 movie theatres across United States. And these are not the niche ones that show Bollywood movies to NRIs! Many in the industry think this move is a gamble that could prove costly in the long run. In fact, the original promoter of Adlabs (which Anil Ambani acquired and absorbed into his entertainment empire) publicly aired his unhappiness with these strategic moves and resigned from the board. Not that Anil Ambani was fazed!

The other milestone for BIG was the launch of Reliance BIG DTH services (through the RCOM platform) with a lot of hoopla. Apart from old players Dish and Tata Sky, Anil Ambani will battle it out here with familiar rival, Sunil Bharti Mittal. As per market reports, the venture has already captured 15% market share in just three months and crossed the magic figure of 1 million subscribers. Says Sanjay Behl, Group Head, Marketing & Branding, “Our features are designed for easy manoeuvrability in the most user friendly manner. Such user friendly initiatives will help us maintain our leadership position in the evolving Indian DTH market.”

That’s good news no doubt. But Anil Ambani will not really find much time to celebrate such “small” victories this year because really BIG challenges and hurdles lie in 2009 and beyond. His ambitious forays into energy, infrastructure, power and telecom will require huge investments, both in terms of equity and debt. Take the power sector for example. Just 1 MW of capacity needs a capital investment of Rs.5 crore or so and we are talking of more than 50,000 MW! By any yardstick, the younger one in India’s most famous sibling rivalry will not find it easy to raise the money, especially with liquidity troubles plaguing all and sundry. His backers can only hope that he draws inspiration from his father and pulls up many rabbits from his hat. He has a huge incentive: after all, if he fails, it is Mukesh who will well and truly inherit the Ambani legacy!

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Source : IIPM Editorial, 2009

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

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Beat this – 10 million in 2010!

IIPM set to beat economic slowdown

Tourism has not forsaken India, and hoteliers can only rejoice. Leela Nandan speaks to 4Ps B&M...

Qs: Last year was not so good a year for tourism in India. What’s your take on that?
Ans: First of all, I will not agree to the fact that 2008 was not a good year for tourism in India! When we look at ourselves, we may have grown by just 6% over the previous calendar year, but then compare it with the world average – it is far more, because the world grew at only about 2-3%! Definitely this is despite the fact that there was a global meltdown and that there were terror attacks. So that is definitely a very positive thing for us, and in numerical terms, we had 5.37 million arrivals in 2008 as compared to just 5.08 million in 2007. That itself is an indication of the fact that people are continuing to travel to India, and in the month of December ‘08 alone, we had 5.22 lakh people who came to India as compared to 5.96 lakh in Dec 2007; and all this despite the fact that the Mumbai incident happened just before the month of December. So, I think that all this indicates that people the world over do take tourism in India very seriously.

Qs: But what has been the price that Indian tourism and hospitality Industry paid for ‘terror’?
Ans: When you talk of price paid, you can only look at it in numerical terms. We continue to have visitors coming to India in December and in this New Year. We also had more foreign exchange earnings. We also had more than Rs.50,000 crore earnings accruing to our foreign exchange exchequer because of tourism. Therefore economically also the sector has done well.

Qs: It is said that proactive marketing pays off well during times of recession. So how are you marketing tourism as a brand?
Ans: We have launched a very aggressive marketing campaign and we have tweaked our campaigns with new creative in the print and a new online commercial. We have also launched an all India campaign, which is happening as we speak throughout the world, through our offices. We are using the image of a tiger for promotions as the animal is well-identified with India. This communicates a brave and strong image of an ‘Incredible India’. We are also focusing on highlighting the diverse features of India. So while our culture and heritage are well acknowledged and acclaimed the world over, we are also focusing on the fact that our adventure tourism, cruise and rural tourism are products that have a huge appeal in themselves.

Qs: What is the target of tourist inflow set for 2009?
Ans: We don’t fix any year-on-year target as such, but yes we are looking at 2010 giving us 10 million arrivals. Really, the mantra for making this initiative successful is to take full advantage of globalisation.

Dr. Lalit K. Bhanot
Secy. General, Organising Committee, Commonwealth Games, 2010

Qs: With Commonwealth Games round the corner, a huge influx of tourists is expected. Is the Indian hospitality and tourism sector ready?
Ans: The Government of India and the Tourism ministry has formed a committee which is looking after the fact that more and more hotels are built for the same. During the time when this project was started, we had 10,000 rooms in Delhi and NCR regions (including Five stars, three stars and budget hotels et al). The target set for Commonwealth Games was 40,000 rooms. Thus many new hotels are coming up in the same league in the Delhi and NCR regions.

Qs: How many tourists are expected to come in during the Commonwealth Games 2010?
Ans: The number of tourists that are expected to come to India during the Commonwealth Games in 2010 is equal to the number of tourist who flew into Melbourne during the last Commonwealth Games, which was around 5 lakh.

Qs: Last year gave the hospitality and tourism sector in India many hiccups, like the global slowdown and terror attacks . So how do you see Commonwealth Games attracting tourists in the country in the current conditions?
Ans: When there is a big platform like Commonwealth Games, wherein 71 nations are ready to participate, then the tourists can’t help but visit India. Moreover, the whole marketing campaign, including the publicity in 71 nations, makes India an attractive destinations for tourism.

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Source : IIPM Editorial, 2009

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

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2008 HITS & MISSES

1500-plus IIPM students placed across the country with 44 bagging international offers

It was a whirlwind of a year. The nation’s sentiment moved from India shining to India pining to India whining; political certainties were challenged like never before and the Mumbai carnage plunged the nation’s middle class into an abyss of dismay and despair. Wrapping up, Aditi Prasad gives a snapshot of the year gone by...

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Source : IIPM Editorial, 2008

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

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Is that what you just said?

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In other cases too, retailers have either relocated their stores (Big Bazaar has changed the format of one of its stores and relocated another in Ahmedabad), or are pruning and resizing their retail space (Reliance has shed upto 40% of retail space in its hypermarket store at Iskcon Mall in Ahmedabad). Retailers are also in the process of negotiating rentals (primary reason for cutting down on retail space) with the landlords and may even go in for revenue sharing models.

It is true that tough economic conditions have made the retailers realise their folly and amend their mistakes. But given the kind of investment that has already gone into this sector, it may not be possible for all to sustain. As Vedamani puts it, “Retailers who have been in existence for more than five years, or those who have strong capital backing can withstand these conditions, but for others it’s going to be tough.” And indeed, a host of other retailers are left with no option but to pare down on the number of stores they are currently operating. Indiabulls retail has shut down two stores in Ahmedabad, apparel retailers Arvind Brands, Reebok and Raymond too have started pruning their operations.

Certainly Indian retailers seem to have got a good lesson and are now making no two bones to accept that they were wrong in their super fast expansion plans and huge investments within a short span of time. As Goenka says, “In the course of any business, you’ll have decisions which are not always right in terms of location, vendors and demographics. It’s always best that if you’ve made a mistake, correct it.”

Earlier, the focus was only on increasing the square foots and therefore there was a certain level of delegation that happened in selection of areas to open the stores. But now, the retailers have taken the onus on themselves to carry out a proper research on the demographics and demands of consumers in different places. Based on such studies, the retailers are now being extremely careful on where to open their stores. “In future, due diligence will definitely pick up,” concludes Goenka. Well, it better pick up, as only then it will be determined whether the previous mistakes were stepping stones or indeed ‘mistakes’.

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Source : IIPM Editorial, 2008

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

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It’s all about having a purposeful fizz!

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PepsiCo’s top honchos are now paying special heed to environmental initiatives. Angshuman Paul finds out more...

PepsiCo’s latest corporate report also talks about environmental sustainability. Can you elaborate on it?
SAL: Our group policy has always been to maintain the eco-system of the locality where we are operating. But now we would be doing that with a clear cut mission under ‘environmental sustainability’ and specifically for the South Asia, Middle East and Africa (SAMEA) region.

So, what exactly are you planning for this region?
SAL: We would be planting more trees, especially citrus-based fruit trees. We also plan to preserve natural water resources and achieve positive water balance by 2009. In India we will save and recharge more water than what we will use in our plants. MK: Millions of people in this region are suffering from major deficiencies of key nutrients like iron, Vitamin A, et al, which is leading to serious health problems. Thus we plan to launch healthy products to address such issues.

How are these green initiatives helping Pepsi?
SAL: This is not a part of our branding and promotional campaign. We believe we are responsible for the resources that we use in our production process and as such we can’t deploy them. In fact, our multi-pronged approach to reduce water usage across production plants includes innovative reuse and recycling of water. We are also tying up with farmers to save water.

How much are you planning to invest for environmental sustainability?
SAL: PepsiCo Foundation’s commitments to safe water initiatives will reach nearly $15 million in the next three years. The funds will be utilised to address critical water scarcity issues. We will also take up some agri-partnerships projects with farmers. MK: We would also be reaching young women to make them aware of health issues. Our vision is to sell products which are healthy and in the process we will also ensure that we are not deploying any natural resource during the manufacturing process.

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Source : IIPM Editorial, 2008

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

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will Viacom-TV 18 venture Colors be able to spread its hue for long?

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The strategy that Colors has deployed is quite similar to what Star Plus did eight years ago. Star Plus created a hot property in the form of Kaun Banega Crorepati (KBC) and weaved other clutter breaking [the K politics serials were very much clutter breaking and refreshing eight years ago ;-)] programmes around it. Similarly, at the time of its launch, Colors promoted Balika Vadhu heavily and built other engaging content around this programme. Anita Nayyar, CEO of media buying agency, Havas Media says, “Colors offers a great package with refreshing content like Balika Vadhu, Mohe Rang De, even Big Boss, which is a completely different take on reality.” From its beginning Colors has focused on experimenting with fresh content (like the Indian version of Fear Factor – Khatron Ka Khiladi with real Khiladi, Akshay Kumar as the host) and it has worked well for them.

So can Colors actually displace the invincible Star Plus from its number one position in coming times? Well, Colors surely promises that. Even Star Plus’ Adhyanthaya agrees, “We are aware of the fact that Colors has launched well and has been growing on a week-to-week basis.” He further iterates that Star Plus has faced such situations earlier too and there have been various contenders to the channel’s leadership from time to time, but it has held strong. “Star Plus has been in this position with Zee last year and successfully managed to come out of it,” he explains to this magazine.

But first Colors needs to sustain its position over a period of time to be in any leadership rank in the GEC segment. Experts feel that the biggest challenge for Colors is to sustain over 200 GRPs for the next few weeks. Once that is done and they become a clear number two, they can be a serious threat to Star. K. Ramesh, VP- Mumbai, Mediadirection – Specialist Media Services Group of R K Swamy BBDO – offers kind words of caution, “Colors has done extremely well in their launch phase compared to other new players in the category and that’s why it becomes even more difficult for them to sustain it over a period of time.” Havas Media’s Nayyar argues, “Neither Zee nor Star Plus is going to keep quiet. They’ll constantly upgrade content. So it’s too early to comment on whether Colors can overtake Star.” And this has already started happening, with Star Plus’ Kahaani... going off air and Kyunki... to soon follow suit. The channel is revamping its programming, with new shows to replace the older drab ones. “We are coming up with content, which will have relevance & potential to change the GEC game further,” adds Adhyanthaya confidently.

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Source : IIPM Editorial, 2008

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

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The Detroit debacle…

IIPM Ranked No. 1 B-School In Global Exposre - Zee...

With GM ready to hive off its Hummer operations, Chrysler no longer showing much interest in its Jeeps business and Ford rethinking its F series vehicles, there is serious shift in American car buying patterns. It was just a few months back that the Detroit three were still so much infatuated with the SUV dream. Today, after back breaking losses year after year [GM, FY 2006 largest global loss making company; Ford, FY 2007 largest global loss making company], a future based on SUVs is beyond the realm of even dreams. Of course, the Audi Q7, Porsche Cayanne Turbo S, Cadillac Escalade range of SUVs would continue ad infinitum, for the obnoxiously snobbish class they attract would continue to demand these cars, irrespective of fuel prices. But a mass strategy with SUVs? I’ll then need more space on my shuttle. Since the first quarter of 2005 [when the US SUV sales plummeted a whopping 20-30%], sales have only been declining!

There is a fare amount of insecurity among the end consumers, who have found their money incomes depleted with respect to the purchasing power. As per a survey by National Association of Convenience Stores, 45% of American consumers reported a decline in their spending power because of rising petrol prices. While 19% wanted to buy a more fuel efficient car, an astonishing 13% had already reduced their driving on the back of $3/ gallon gasoline prices! As a result of the earlier oil shocks, consumers have increasingly adapted an ‘aftermath attitude’ and eventual demands for automobiles have sagged significantly through out the world.

Even though the idea of hybrid cars is generally believed to be more of a lifestyle concept rather than being that related to fuel efficiency, a total of 38,214 hybrids were sold in the American market alone in March 2008, proof that even fashion is now related to oil. Hybrid SUVs such as Ford Escape Hybrid had initially gained popularity but not for long, since better alternatives are beginning to hit the market. Though oil prices will eventually come down [on a downward spree, they had broken the $90 mark per barrel on October 6, 2008], the mentality of consumers – who were once used to $50 per barrel prices and who would be extremely averse to future vagaries of oil price hikes – would remain focused on fuel efficient cars. While the Japanese per se have succeeded with their fuel efficient taglines and the prejudices they had been associated with through out their history, the Americans still seem to be reading the Big Moose chapter in Archies too many times for comfort. But if misery loves company, one should say there’s at least one tubelight in the land of the rising sun fighting to switch itself off... er, whatever! Basically, if Mitsubishi Outlander is a top seller, I’ll eat my cook’s food... Is this going to be printed?!

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Source : IIPM Editorial, 2008

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

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When will the future come, Sir?!

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Next, let’s talk about competition. The scenario for AEBC is not getting any easier in the country with all multinationals and national players like Citi, Standard Chartered, ICICI Bank, SBI et al eyeing the large untapped credit card market pie. To first talk about the national banks, ICICI Bank has established a huge reach by issuing credit cards across 125 cities. SBI being the largest bank in the country with over 19,000 branches, has its credit card business spread across 110 cities across the country. Amongst MNCs, Citibank is the most widely present with its operations spanning 40 cities. The bank further plans to take the count to 94 cities in which group company Citi-financial operates. In this regard, AEBC faces an uphill task with its strategy of focusing on just the high-income segment, with offices only in ‘four’ cities preventing it from reaching out to anyone beyond audiences in the Tier I and Tier II cities. While this puts a constraint on AEBC’s growth, the other players in the market are merrily grabbing larger chunks of the market while at the same time poaching on AEBC’s customer base. So is the giant planning to move beyond to smaller towns as well? Not soon, as Dutta professes, “As of now we plan to concentrate our operations only in the four cities – New Delhi (including Gurgaon), Mumbai, Chennai and Bangalore. In the coming future we might plan to take our services to Tier I and Tier II cities...”

When will the future come, Sir?!

The competing banks have not only raised the bar in terms of both quality and customer services, but they also have formulated aggressive growth strategies to bag-in higher spending on cards. Moreover, keeping aside the segment they cater to, AEBC has a lot of catching-up to do where customer base is concerned (Refer box titled ‘Plastic... Dangerous?!’). Operating as an restricted entity, AEBC’s role has been limited to just marketing and distribution of co-branded credit cards with little exclusive identity of its own.

When it comes to marketing plans, the entity has some in its bag. It has developed a closed-loop ‘global’ network with 1,700 locations in more than 130 countries, which enables it to effectively design global marketing programmes and benefits for card members in association with merchants. It has clubbed its products and services with various facilities like Protection Package, Membership Travel Services, Membership Rewards Programme et al to attract more eyeballs... “We did an in-depth study to understand the mindset of affluent customers in India. We used these insights to tailor our products and services,” explains Hennin. Well, here the player does not lack what some of its competitors do. Its ads are loud and frequent, therefore ensuring maintainence of the ‘trusted’ brand appeal for AEBC. The player is also looking to build the most extensive network of sales, service infrastructure and collection mechanism for credit cards to boost its services.

Though officials claim negligible credit defaults in India, the increasing outstanding on credit cards (which went up by a massive 87% to touch Rs.265.96 billion by May 2008, as per RBI) clearly threatens to spoil the party for AEBC. This also further threatens to worsen AEBC’s earnings India-specific (and global thereof) figures in the short-to-mid term; a repeat of what happened in the most recent quarter (Q2, 2008) when its earnings fell globally by 37% q-o-q to just $653 million after it was left with no option but to ‘set aside’ earnings to cover up for credit losses on worse-than-expected consumer defaults.

“The darker side of the story says that in course of utilising the facilities provided by credit cards, one keeps on postponing the payment, due date after due date. Many of these users then finally refrain from any future payment, thus hurting credit card players where it hurts most,” explains Robin Roy, Associate Director, PwC. To add to this, AEBC also lacks retail banking facilities, as other players can back their collection activities through their account holders’ deposits and savings. Thus it becomes imperative for players like AEBC to keep an eagle eye on its customers. With McKinsey predicting that by 2010, India would have $7 billion in credit cards outstanding, AEBC has to be more than careful in choosing its clientele! For now though, it’s got to expand beyond just four cities! Four might be even, but it’ll not help AEBC get even with challenges and challengers!

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Source : IIPM Editorial, 2008

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

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Google Chrome, rather than a stand alone strategy, seems to be another step towards making Windows more irrelevant, says arun roy

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Harry S. Truman, former US President, once said that he preferred one armed economists so that they would not be able to say, “On the other hand”! But let’s not blame economists for the way they insure themselves from the embarassment of being proved wrong in their assessment. Predicting the future with certainty isn’t exactly a walk in the park for anyone.

Take, for instance, the uncertainty surrounding the fate of the internet browser Chrome, Google’s latest salvo at Microsoft. Industry experts have started discussing of its future and aspirations. A number of tech bloggers have already started analysing whether Google Chrome will be able to dethrone Microsoft or kill Mozilla. There’s a general consensus as to what Chrome means, namely, it is Google’s way of eroding Microsoft’s dominance in the browser market. An analyst has quoted Google as an 800-pound gorilla, and when an 800-pound gorilla jumps in the pool, it tends to makes ripples. But will Chrome really give IE8 and Firefox a run for their money?

Google Chrome, a “fresh take on the browser”as the company claims it to be, does have some interesting features, differentiating it from other browsers available in the market. The most important feature it offers is its high level of user friendliness and keeping each tap in an isolated “sandbox” to prevent one tab from crashing another, and improve protection from rogue sites. The browser’s JavaScript engine enables the software to run the applications in a faster mode compared with other engines.

In an era, where Internet has become the primary medium to get connected across the world or real-time access to information, the importance of the web browser industry remains inevitable. “Google’s foray in the browser industry depicts more of its vertical expansion strategy. The dominant factor will be decided by the business models or long term strategies that Google would adapt to dent Microsoft’s dominance in the industry” avers Shushmul Maheshwari, Chief Executive, RNCOS E-Services Pvt. Ltd.

Some experts feel that this is merely a part of a larger strategy by the search engine giant. “Google only dominates in one area and that is in online ad revenue due to their search engine. Chrome isn’t initially designed to dominate the browser industry; it is designed to be a front end for an emerging application class,” says analyst Rob Enderle, Enderle group. Chrome’s main target is more Windows and Office than it is Internet Explorer (IE) initially. Chrome is designed to help make Microsoft Office obsolete and make Windows irrelevant.

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Source : IIPM Editorial, 2008

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

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Break-ups hurt. But who?

The Star-Balaji affair has ended. Ekta Kapoor will have to rejig her plans

Till some time ago, the mirror on the Indian teletube wall always said that Ekta Kapoor’s K-recipe was the fairest of them all. But times have changed. Falling TRPs of her ace serials are leading many to conclude that the charm of Balaji’s kitchen-politics was wearing off. So now when we hear that Star Network and Balaji Telefilms Ltd. have broken their 2007 JV to launch regional channels together, the development demands attention. What’s more, Star has also announced an exit for its 25.99% stake in Ekta Kapoor’s production house, valued at Rs.1.23 billion. Clearly, something is brewing.

Says R. Karthik, CEO, Balaji Telefilms: “It was an investment which has been called off. It was a strategic move which had to be realigned.” But this tragic love story would certainly hurt Balaji, at least in the short run. For one, a majority of Balaji’s revenues were coming from Star, thanks in part to the prime time exclusivity agreement that the two shared. Balaji currently airs six shows on STAR Plus and derives around 65-70% of its revenues from the channel.

On its part, Star has nothing to lose from this break-up. “There are multiple content providers in the country, from which content can be sourced anyway. Moreover on the competition front, while Star faces intense competition in the GEC domain, it continues to maintain its strong market leadership with GRPs in excess of 300,” asserts Salil Pitale, Head-Media & Telecom, Enam Securities.

And although Star CEO Uday Shankar says that the “relationship between Star and Balaji as broadcaster and content provider will not be affected,” fact is that the end of their contract allows Star to re-negotiate the premium rates it pays to Balaji. Given that Ekta’s soaps are no longer ruling the charts – Bidayi, Star’s highest TRP grosser in recent times is not a Balaji production – the respite for Star will come in the form of not shelling out premium rates to the under-performing production house. In fact, 2009 may turn out to be an immensely challenging year for Balaji, as the production company has also launched a very high production cost shows - Mahabharata - and in the absence of premium revenues from cash cow Star, its margins are likely to be impacted.

However, all is not so bleak as it sounds. There are some positives for Balaji too. As per Angel Broking, Balaji will post a CAGR of 12.5% and 10.35% in consolidated top line and earnings driven largely by volume growth. Counting on such numbers even Jagat Dave, Director- corporate finance of Ambit Corporate Finance (exclusive financial advisor to Balaji) asserts, “Balaji Telefilms is a cash-rich company having around Rs.2.2 bn of cash reserves, as on March 31, ‘08, and it continues to evaluate various strategic opportunities in the Indian Media & Entertainment industry.” In the current scenario, wherein all broadcasters are vying with each other for premium content, Balaji Telefilms, with its track record is uniquely positioned to cater to this demand. Rumour has it that Anil Ambani’s ADAG may be up there in the race to net Star’s abandoned equity. Confirms a source in ADAG: “Yes, we are definitely looking out for production houses to add synergy to our channels and Balaji’s stake would definitely provide an edge to us.” And why not! This step by the company will provide aid to ADAG, as it plans to launch 20 channels to supplement its DTH venture (Big TV) and this deal will provide them an exclusivity of content to their channels.

If Anil Ambani’s ADAG hops on board, Balaji will certainly be able to tide over this unique quagmire that it finds itself in. And not to forget, the leading lady of Hindi soaps may still be able to make good on her dream to rule the regional content space.

Neha Saraiya

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Source : IIPM Editorial, 2008

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

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Hitachi CP-RX70

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Technical Specification

Lumens: 2000 ANSI; Contrast: 400:1;Technology: Triple LCD technology
PRICE: N.A.
WARRANTY: 2 Years

The impressive facts about Hitachi CP-RX70 include – an uncomplicated unit giving you the options between an Easy and Advanced users, the triple LCD technology presenting alluring pictures with visually pleasing colours and the price being quite a bargain. The product’s look is slim and silver which is rather critical but these by no means lead to a ‘wow’ factor. The remote is quite bland, stout and hence, lacks luster. The noise level of 35dB in Normal mode is sometimes invasive, but you can be tension-free as you can turn to the Whisper mode a considerably quieter and better mode for conference rooms. Not the best pick but a great value for money!

Marketers’ delight: It’s a zero complexity product.

Tester’s note: Pros – User-friendly. The mono 1-Watt speaker seems completely sufficient with no distortion.

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Source : IIPM Editorial, 2008

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

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Lenovo Thinkpad T61 Wide Screen

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Technical Specification

Operating System: Microsoft Windows Vista Business; Processor Name: Intel Core 2 Duo T7700; RAM: 2 GB; Screen Size: 14.1 inches; Storage Capacity: 100 GB.
PRICE: Rs.85,000
WARRANTY: 3 years

With Intel’s fastest Core 2 Duo processor, 2GB RAM, storage capacity of 100 GB and discrete graphics from the available nVidia Quadro NVS 140M , the 5.4 pound Thinkpad T61 is impressive. It has the distinct ThinkPad features of built-in fingerprint reader. Key features of T61 include ThinkVantage Rescue and Recovery™ that helps keep software crashes or virus attacks from slowing down the system and a host of options like WWAN, IEEE 1394a and 4-in-1 Media Card readers which boost versatility.

Marketers’ delight: Performance is the key with dual-core processing and a faster Intel architecture.

Tester’s note: Pros – Apt for spreadsheet applications. Wonderful battery. Cons – Standard colours to choose from. Looks too bulky.

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Source : IIPM Editorial, 2008

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

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Bedazzled @online

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To put in simpler words, the whole idea was to operate at a loss and just focus on garnering maximum market share in the initial phase in the hope that profits would follow soon. However, due to this flawed strategy, profits never followed and eventually, when the companies had burned most of their capital, they started falling like a house of cards.

A report published by Forrester Research in early 2000 predicted the demise of most dot-com retailers by 2001. The report’s major prediction was that the brick-and-mortar spin-offs will regain their footing. It also outlined that online retail will actually become a losing game for the traditional merchants, based on the assets like customer history, product selection, fulfillment and manufacturer relationships, which are a given in the case of brick & mortar retailers.

Casualties of the dot com bust were most new Internet start-ups, which boasted of a unique business model. Companies like online grocer Webvan became the poster children of the dot com burst. Webvan had a unique idea of selling groceries online and wanted to grow very fast. Indeed, it became a $1.2 billion company before low grocery margins took a toll on its flawed business model. Similar was the case of Pets.com, a company that sold pet supplies online. Problem with Pets.com was that when it came to the shipping cost, it undercharged its customers, which resulted in a high pressure on its margins, leading to a collapse, nine months after it raised $85 million through its IPO.

Interestingly, according to analyst Sebastian Rupley, “Even the dot-com sites that survived often came perilously close to severe setbacks and have had to retool their businesses quickly. During 2000, hundreds of dot-com companies, such as drkoop.com, received notice from the NASDAQ stock exchange that their stocks could be delisted, because their share prices had dipped below $1!”

If one considers all the above examples and the trends that led to their debacle, the global Internet economy looks to be heading towards yet another dotcom burst. “Today, everything from YouTube to the local church has a social-networking angle. And this doesn’t even consider the actual social-networking sites, from MySpace to LinkedIn to Facebook to even ‘Second Life’. This scene is totally out of control and will contribute to the collapse for sure,” says Dvorak.

Well, shouldn’t the Internet economy take lessons from the 2000 bubble burst and see that the Internet giants are not moving in a similar direction? If they do not undertake well informed strategic decisions, they are going down the same road. Well, its too hard to predict the next bust and its severity, but people are no longer denying the possibility. As Dvorak adds, “Each succeeding bubble has been worse than its predecessor. Thus nobody is actually able to spot the cycle... I can assure you that after this next collapse, nobody will think of the dot-com bubble as anything other than a prelude.” So, in essence, we could perhaps safely conclude that not much has changed.

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Source : IIPM Editorial, 2008

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

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MOHAMMED BIN AL ALABBAR - Building new india

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MOHAMMED BIN AL ALABBAR
Building new india

Kolkata property market has grown by leaps and bounds over the years bygone and is today one of the most lucrative investment destinations in the country. The city has allured around Rs.250 billion in real estate investments over the past two years. As compared to other Indian metros, the capital of West Bengal offers cheap cost of living which serves as its biggest attraction to residential properties.

Kolkata has seen the entry of many foreign players in the market during the past few years. Leading Middle East firms have joined the list of global companies, targeting investments in India in hotels, malls, healthcare, housing, IT Parks and integrated townships. Several leading UAE real estate companies such as Al Ghurair Group’s ETA Star, Al Rostamani Enterprises’ KM Properties, Nakheel and Dubai Properties have announced gigantic developmental plans in the country. Of these, the name of Emaar stands tallest when it comes closest to contributing to what India achieves in this field during this century.

Emmar has reached the pinnacle of its success under the aegis of its current Chairman Mohammed Bin Al Alabbar. Emaar, which not surprisingly is also the largest property developer in the Middle East, has announced a joint venture in India with MGF for developmental projects in the states of Delhi, Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra. It is also coming up with a lucrative real estate project on the EM Bypass of Kolkata.

The entry of a company like Emaar shows the strength of the Indian Economy & also the scope of Indian real estate industry. A report by Jones Lang LaSalle estimates that $10 billion foreign direct investment will be injected into the Indian real estate sector in the next 12-18 months. Now this is huge and precisely where the entry of such big-ticket foreign players comes in. Entry of such players definitely brightens up the real estate scenario in the country and for the country, but is accompanied with a simultaneous challenge for them too – either shape-up or ship out. The benchmark of quality production, marketing, and every possible aspects of a business has automatically risen with the entry of Alabbar into the country. And where we talk about infrastructure defining what this century holds for India, the message is clear – the entry will definitely affect the real estate scenario in our country, whatever the predictions be; and Alabbar will be the key man defining the moments.

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Source : IIPM Editorial, 2008

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

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