Don’t forget the seat belt!

Small surprise that the CEO is like a man possessed, packing in nearly 14 hours of work in a day. He starts his day early (at 5am) and after finishing his hour long exercise regimen, he gets on to work, taking only five minutes off for lunch in between. Given that the luxury car market is expected to grow even higher than the average growth of the passenger car market (around 8-10%) in India, his agenda perhaps would be to corner more market share for Mercedes. Aulbur even seems to have a plan to make reality meet his expectations. Apart from the new E-Class that Mercedes plans to roll out over the next couple of months in India, in a bid to expand its market, the company also launched the improved version of its M-Class SUV in March this year. And to hit back at rivals, Mercedes has kept the pricing of the new model almost similar to the old one, despite added features. Combined with the volume puller C-Class (that accounts for nearly 40% of Mercedes’ total sales in India), the company expects to stay on top of market developments. Hopes are particularly high with the coming festive season. If Mercedes manages to register similar sales figures (banking on the new E-class) as in last fiscal, the going will be smooth for the company.

Importantly, Aulbur is taking a leaf out of his competition’s winning strategies. Despite its late entry, BMW’s dream run in the Indian luxury car market in large parts stems from creating a large network of truly luxurious dealerships, benchmarked to BMW’s global network. An average BMW dealership in India today almost offers a similar retail experience as in Munich or Tokyo. Aulbur is moving along a similar path, with plans to open more showrooms in metros as well as in the Tier-II and III cities to “offer a better retail experience to consumers.” Along with associates, the company is now investing close to Rs.150 crore in its distribution network “to ensure that the Mercedes Benz retail experience is the best in the country,” says Aulbur. Land has already been purchased across the country to build these new showrooms. The show of muscle does not stop there. In a bid to win back its undisputed top slot in India’s luxury automobile segment, the plan is also to ramp up its Bangalore-based R&D facility significantly. The company has already announced that head count is set to go up four fold in the facility.

From new launches, retail reach, pricing controls to unabashedly adopting the winning strategies of its rivals, Aulbur is clearly leaving no room for a mess up in the Indian market. Sure, there is professional pride involved, but there’s also a personal connection. Married to Radha Srinivasan since 1997 and a self-proclaimed follower of democracy, India is second home for Aulbur. And isn’t the taste of success on your home turf always sweeter?

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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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Sanjay Behl knew what he was letting himself in for when he took on the ceo’s mantle at big tv two months ago.

But it will take much more than a few tough rivals, nonplussed consumers and a late-mover disadvantage to dissuade Behl from the task at hand. Surbhi Chawla meets up with Ambani jr.’s key man...

The first thing that you notice when you meet Sanjay Behl, CEO, BIG TV is his height. At 6 feet plus, and fair as fair can be, his personality dwarfs the room that we sit in. Behl’s marketing charisma however has nothing remotely dwarfish about it. But we are not the first guys to discover that. Anil Ambani discovered it (much to his advantage) almost five years ago when he plucked this marketing wizard out of Nokia and made him the branding centre point of his maiden consumer facing business – RCOM. Behl’s stature within Anil Dhirubhai Ambani Group (ADAG) soared when RCOM surged ahead of its rivals in the mobile telephony segment, within striking distance of market leader Airtel. So when Arun Kumar Kapoor, the then CEO of ADAG’s Big TV (the DTH arm of ADAG) jumped ship, Ambani predictably zeroed in on Sanjay Behl to step in as CEO.

High on his success with RCOM, Behl was only too happy to tap into his experiences with the mobile telephony venture to make the DTH business a viable proposition for Ambani junior. Just two months into his new role and Behl is really making serious strategic inroads. “Our experience in enriching the mobile screens of over 80 million customers through popular, interactive and utility value-added-services makes us confident of creating similar excitement, never seen before on millions of TV screens in India,” he says, with barely unsuppressed enthusiasm.

But, Behl’s task is both easy and difficult at the same time. Easy because the DTH industry in India is still in a nascent stage with just 13 million subscribers (while there are more than 403 mobile subscribers) and with growth pegged at 18% q-o-q, there is immense space for Behl to make a play for potential consumers. But the difficulty comes from the persistent non-acceptance for DTH by the masses. A key reason for that is that consumers have not really realised the value proposition that DTH seeks to offer and so see no need for change. Big TV’s obvious late entry into the segment, where Dish TV and Tata Sky have already taken the lead, is another disadvantage.

Recite any number of difficulties and challenges ahead, but it is tough to dampen Behl’s gung-ho attitude. In fact, Behl is confident of changing perceptions about the generic nature of this industry (with pricing being the key differentiation between players till now) by creating BIG differentiations for BIG TV’s offerings. Says Behl, “Value proposition would always be the key differentiators in a customer centric entertainment market.”

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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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Revival instinct?!

the maharaja has lost its smile as Air India has been bombarded with problems one too many. The state-owned legacy carrier has been hammered with mounting losses anticipated to cross a heartrending Rs.53 billion in FY 20008-09 along with a Rs.30 billion wage bill forcing the national airline to serve salary forgoing notice to its employees. Air India has also reportedly sought for a bailout of Rs.140 billion from the government with the hope that the government will come to its rescue. But why should the government save Air India? For the simple reason that Air India is not the only victim of the ongoing unprecedented turmoil that the aviation sector is going through. Market leaders like Kingfisher and Jet Airways have suffered losses crossing the thousand mark in the current fiscal. The government has asked for a complete restructuring of the airline and Air India has been directed to operate as a low cost carrier to all its destination except for metros, which have high load factor. “Economic slowdown has made travellers more sensitive to price. The low cost model is likely to become even more attractive in India as airport infrastructure improves and allows for greater efficiencies. Low cost airlines are likely to continue to increase their market share to as high as 65-70% over the next few years,” explains Binit Somaia, Regional Director, CAPA. With its current restructuring plan and the visible sign of economic recovery, the revival of the airline wouldn’t be tough ask and we could once again see the Maharaja smiling away to glory.

Ratan Lal Bhagat

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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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There can be an Easyday store opened in small towns and cities, unlike Best Price

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Some, however are not too optimistic, arguing that cash and carry constitutes a small percentage of India’s total organised retail business. Although it registered a 100% growth in 2008, it needs to be remembered that the operating base of the cash and carry business itself is still small in the country. Raghav Sehgal, Retail Analyst, Angel Broking opines that Bharti’s retail business has the potential to provide that next big leap to Bharti Enterprises, if they focus on their B2C model viz. the Easyday chain of convenience stores and hypermakets. “Every brand is driven by consumption led by the end consumer and B2C model has the potential to reach out to rural markets as well,” agrees Sehgal. And here, there is a lot that Bharti’s retail venture can learn from its telecom stint. Airtel is the market leader in the sector and there were a few primitive requirements that helped it scale this feat – vast reach and coverage, a strong network and price competitiveness. Applying these principles in retailing, the B2C model has the potential to reach out to the mass market. There can be an Easyday store opened in small towns and cities, unlike Best Price. Secondly, Bharti Walmart has invested extensively in its back-end over the last two years. Taking expertise from Walmart, Bharti is sourcing fruits and vegetables directly from farmers in Punjab. “With telecom, they understood the nerve of India and so were able to expand even into the hinterlands. Their retail venture will require them to do the same,” asserts Wadhwa of SKI Capital. Moreover, managers at Bharti are already in sync with retailer psyche (thanks to Airtel) and they can play on that. Crucial perhaps is the slow but sure manner in which Bharti is going about its retail ambitions. Organised retail is a political potboiler in India. Mukesh Ambani’s experience with retail shows the level of resistance that can be evoked with the merest whisper. No wonder Bharti has only 27 stores operating till date - a majority of them in Punjab and Haryana. Unlike Ambani, his strategy seems to be to acquire critical mass and then flex muscles. Mittal surely knows how to learn from the mistakes of others, especially the ‘big boys’ of India Inc.

But here’s the most pertinant reason why Bharti-Walmart has the potential to become the number one player in its segment. It’s the incredibly potent combination of Walmart and Bharti stupid! With annual revenues of $405 billion, Walmart is the most successful retail business in the world and the Walton family dwarfs even Bill Gates in terms of personal wealth. Their well-oiled retail business operational skills are stuff of global legend now. Sunil Mittal and his brothers on the other hand have already shown proof (with Airtel) of their acumen for succeeding in sunrise businesses. If anyone can work magic in the sector - apart from Mukesh Ambani of course - it is this combine. “Bharti group is known for its scale and all its business ventures have the ability to become cash cows. Given the nature of partnership, the chances of success of the ventures are much higher,” agrees Jagannadham Thunuguntla, Equity Head, SMC Capitals. Even the Mittals are banking heavily on at least one or more of these businesses to firefight its way to the top. They’ve tasted success once and are not happy remaining a one trick horse anymore. Their diversification strategy seems set to reap results - at least in the organised retail biz. Ready to usher in India’s next home grown conglomerate then?

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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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Would you ‘yamakasi’ for Thums Up?

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Brand: Thums Up
Agency: Leo Burnett

Well, Akshay yamakasi’ed in the Taste the Thunder campaign for a bottle of Thums Up in 2007 and the brand is tasting its success with over 16% market share in sales (AcNielsen report) till now. This Khiladi lad re-inforced the attributes of Thums Up and quite impressively. Anand Halve, Co-founder, Chlorophyll, “The proof of this campaigns’ effectiveness is that this brand has fought two of the most reputed brands in the world - Coke and Pepsi - and beaten them!” Burp, Burp...

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

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