AUGUST 2014
Markmantra MARKETING MAGAZINE OF IIFT
THE INTERNATIONAL MARKETING EDITION
INSIDE THE EDITION
Brand Ambassadors or Brand Characters? Brand Wars Killing in the name of... Advertising - the Humorous Way Xiaomi—It’s here, it’s now, It’s new
CORPORATE SPEAK
Interview with Mr. Saurabh Gupta, Product Manager, Jabong
FOREWORD As someone has rightly said, marketing is everything and everything is marketing! Over the years, marketing has emerged as the most important function in the business sphere worldwide. With increasing competition to win and retain an ever smart and aware customer base, marketing departments of firms across the world have been the busy lot. Moreover, the social media tsunami and the digital boom have brought about a new age for marketers with customer interactions and avenues for marketing reaching levels never imagined before. In this edition of MarkMantra we ask some pertinent questions related to marketing around the globe. We have tried to cover a variety of topics ranging from the choice between Brand Characters and Brand Ambassadors to how the Indian consumer is different from those around the world. Moreover, in our ‘Corporate Speak’ section we talk to Mr. Saurabh Gupta (Product Manager, Jabong) for his views on a range of questions. Apart from all these, look forward to a lot of fun stuff, quizzes and trivia revolving around the marketing world in this issue. We are always eager to hear in from our readers and incorporate their suggestions. You can reach out to us at: iift.markmantra
https:// www.facebook.com/
@gmail.com
SAMARTH VIKRAM SINGH
https://twitter.com/ MarkMantra_IIFT
PRATEEK SRIVASTAVA
ARJUNSINGH MEHTA SAURABH VYAS
ARJUNSINGH MEHTA
Junior Editorial Team
ANMOL GARG
HARSHIT VYAS
MARKMANTRA TEAM WELCOMES THE JUNIOR EDITORIAL TEAM!!
SHATABDI BANERJEE
SUPRATIK CHAKRABORTY
Article
Page No.
Killing in the name of
01
Brand Ambassadors or Brand Characters—The Winning Strategy Marketing to Millennials
06
The Great Indian Consumer
16
Advertising—The Humorous Way
19
Brand Wars
24
Corporate Speak
28
Xiaomi—It’s here, It’s now, It’s new
31
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P&G
plans t o me rg e , divest or discontinue more than half of its brand as the focus shifts to its top 70-80 brands; Google sells Motorola which it bought at $12.5 billion to Lenovo at a price of $2.91 billion; Nokia mobile to be named as Microsoft mobile. The above examples are a few of many, which elucidate the very fact that rationalization of brand portfolios of a company is a powerful tool to maximize profits and serve the customers better. The Iconic 800 word m e m o b y N e il McElroy, regarded as one of the industry’s most sacred texts, changed the marketing paradigm by giving birth to the idea of brand management. It delineates the “Brand Mans” goal to push its brand to the top even if it is at the expense of the business of other brands. But what about the brands ceding ground? The brands leeching on profits and reaping no benefits. It has been more than 80 years that the memo has come out but the topic of portfolio rationalization is still discussed in undertones. In reality, Pareto 80/20 holds true to revenue/brand equations with over 80% of the profits coming from under 20% of their brands in the portfolio. “Will we sell a billion dollar plus brand if it’s no longer strategic?” A.G.Lafley, the incum-
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bent C.E.O of P&G further adds, “We are not selling flies on the tail of a dog.” Major institutions across the world are now re-evaluating companies’ portfolio and undergoing significant pruning of unproductive units Where did it all gain momentum? Conventional marketing school of thought revolved around giving the customers what they want, even if it amounted to cumbersome product lines. But Professor Theodore Levitt had some radical, earth shattering ideas when he published “The Globalization of markets” in Harvard Business Review. He argued that with the advent of globalization, the consumer preferences are converging and globally standardized products will do well in the market. At the time when he was drafting the paper, corporations were extending their product lines to every kind of consumer base: Chrysler was offering over one million automobile configurations and in the year 1989-1990, P&G introduced 90 new products. He was categorical in saying that customization of products for each and every national market was “thoughtless” and export of domestic products without any modification was “failure of global imagination”. Blind acquisitions of local brands by multinational corporations lead to burdening of themselves with highly skewed portfolios. E.g. - Nestlé’s 8000 brands did not contribute significantly to its bottom-line, and shedding the excess weight was of pressing concern.
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increase the strategic and financial flexibility, and also exhorts sellers to focus their attention and allocate more resources to the core businesses. For instance, Unilever’s Mrs. Dash, Static Guard, Sugar Twin and Bakers Joy (collective acquisition from Alberto Culver) moving out of its brand portfolio to B&G Foods, and similarly, Folgers coffee from P&G brand off to J.M.Smuckers’s. Adding to this, companies refocus product portfolio and geographic footprint of their brands which they feel are performing well, but are not seen as a core offering in the future. Unilever’s sale of North America frozen food operations to ConAgra, a move which falls in line with their previous exit from European What drives frozen food “Will we sell a billion dollar this brand segment is divestures? plus brand if it’s no longer one such example. There are strategic?” Again a many drivers strong ecointernal and exnomic downturn, ternal, and can be as diverse as the business also nudges the customers to restrategies they support. Few common forces evaluate their brand preference. Acwhich influence such decisions are focusing recording to Deloitte’s Market pantry sources on core brands/markets/segments or study, 80 % of the consumers say products with higher margins, jettisoning non“Going through these economic times core brands which were acquired, ever changing has made me realize which brands I consumer trends, prevailing pressure to enhance really care about and which are less stakeholder returns and to raise capital for payimportant to me”. ing down debt or to seed future growth. Looks easy doesn’t it or is it? But one glaring driver is that of large multinational corporations, who seek to maximize the shareholder value by concentrating on core products and so called “Mega Brands” while pruning the brands lagging behind. This helps to
But this process of brand deletion is easier said than done; instead of a shot in the arm, this might backfire and prove fatal. This process can turn the
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most loyal customers against the company if not done with due diligence. Several studies indicate the process of clubbing together of brands resulted in a market share of the aggregated brand less than the cumulative of original brands, a record 87% of the time. Brand Managers are directly hit - diminishing their status, if their brand portfolio is reduced or if there is no point of differentiation of their product in the global market or if the merged and acquired companies still struggle to deliver. Emotional quotient can run very high if the topic of dissolving weak flagship brands come into picture. Blockbuster, a videorental chain survived the move from VHS to DVD, but remained inflexible at the time
Source: Google Trends (Netflix vs. Blockbuster)
Netflix started its operations online. The conventional retail outlets of Blockbuster were hopelessly outdated - a classic case of a company which once led the market now chasing it. Another risk associated would be: half-baked incomplete resources leading to
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unwarranted conclusions, which in turn hamper the decision making process of targeting the right brands. Coca-Cola did try to kill
Thums-Up (brand acquired from Parle) in order to gain market share in the cola segment but this resulted in Coke India losing ground to Pepsi and it decided to use it to its advantage instead of killing it. The risk of losing long established and well-loved brands is ever looming. Let’s take the case of Scot-
land’s Creamola Foam. When NestlÊ sold the brand to British Brands Partnership in 1998, new owner neglected to acquire the formula and the recipe is now believed to be lost. Creamola Foam is, now no more than a vanished brand.
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to be removed from the brand portfolio. Some companies resort to very general parameters. In GE, only the brands which are ranked 1st or 2nd in their segment, measured by market share or profits or both, are kept and the rest are discarded. But sometimes the portfolios are tailor made and fast growing industries aim for those products which have potential to grow.
So how do they go about doing it?
There are two distinct but complimentary models: portfolio approach and segment approach. Source: Construction of international brand portfolios – Bruno Godey, Chantal Lai When they use portfolio approach, they keep only those brands which conform to their broad list of parameters. This often results in sweeping reduction in the portfolio. In the market segment, the companies identify the consumers which they want to target in a particular segment. Subsequently, the company identifies the right kind of portfolio to cater to in that particular category. The Portfolio Approach: It starts with the CEO appointing a group of senior executives and company directors to chalk out parameters as to how many brands are
Some companies segment the market based on customer needs rather than the ancillary price and features, which gives them ample room to prune portfolios and contest the rivals more effectively. Electrolux segmented the European market into need-based segments and cut down their brand portfolio from 15 to 4 across Europe. The division sales went up and firm reported record profit over the operating loss it had the previous year. Making it Easier: Solar System Analogy Let’s assume the brands to be a solar system with the “Master brand” as the sun and the sub brands as the planets orbiting it. The “Master Brand” are the major brands which rope in majority of the profits whereas the smaller plants are the sub brands which contribute to the profit of what’s left. If the sub brands are closely placed near to the “Master Brands”, they are very
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likely to be overshadowed and if they stray too far away, the “Master Brand” image association becomes inconsequential. Also, sub-brands with good distinctive identities can be considered to be planets having heavier mass and, thus, have their own dedicated consumer base Keeping all these things in mind, The End Game Brand deletion with all its nuances is a very daunting task and involves not only marketing efforts but also representatives from IT, sales, customer support and finance to work in tandem and tie up all loose ends. Though the profit numbers reflect in a very short span of time in the balance sheet but there are contractions that may take a relatively longer time to settle. After all, there are brands who just refuse to die and you don’t want “white cloud” (product) coming back from the grave to haunt your multi-billion dollar company (P&G).
Kshitij Thakur
Ishu Garg
MBA(IB) 2014-16
MBA(IB) 2014-16
Indian Institute of Foreign Trade
Indian Institute of Foreign Trade
Brand Quiz 1.
Which fast food restaurant chain owned by Doctor’s Associates has the tagline ‘eat
fresh’? 2.
For which American fast food chain did former Soviet Union Premier Mikhail Gorba-
chev appear in an advertisement in 1999? 3.
Which fast food chain in 2009 replaced McDonald’s as the fast food partner of NBA?
4.
Which fast food giant’s campaign by BBDO featured the tagline, ‘There’s fast food,
then there’s _____’? 5.
Which is the only ‘Big Four’ pizza chain to sell Coca-Cola products?
6.
Which hugely popular slogan associated with a fast food chain was launched under the
German title ich liebe es and popularised by a Justin Timberlake song? 7.
Which brand altered its famous corporate logo by removing the woman featured in its
logo when it entered Saudi Arabia in 2000?
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BRAND AMBASSADORS OR BRAND CHARACTERS: THE WINNING STRATEGY A Brand Ambassador is someone who, at the most basic level, represents a brand in a positive way. It is the duty of a Brand Ambassador to express the message of a company to consumers or people who would gain something from learning about the brand being advertised.
F
rom the above quoted definition, it is clear that a brand ambassador is a personification of a brand – a true embodiment of the very basic ideals and aspirations that the brand aims to project to the masses, or its select buyer club. The power of the brand ambassador emerges from his/her personality which rubs off onto the brand. The more credible the personality of the ambassador is, the greater the mileage the brand can extract from the association. And the re have be en thousands of such associations. Marketing landscape is replete with instances of celebrities, and known faces, endorsing products or services. Be it Amitabh Bachchan endorsing the state of Gujarat as a haven of development and tourist spots to Akshay Kumar throwing his weight behind Dollar innerwear no company worth its salt is shirking from spending that extra bit for getting a known face to speak for their brand. Despite not being a recent phenomenon, use of brand ambassadors has seen a major spike over the last two decades with advancements in communications technology and multitude of media of mass entertainment. Scores of companies have
unlocked the true powers of their brand with the help of carefully-chosen celebrities to endorse their products. This, however, leads to some very pertinent questions – Can every brand benefit from a Brand Ambassador? Are Brand Ambassadors the surest way of turning around the fortunes of a company? Are there any alternatives to Brand Ambassadors? Well, while the first two questions can never be answered completely correctly, it is the third that should be of the highest importance to a marketer as celebrity endorsers do not come cheap. Given the high visibility and glamor associated with even the modern day TV actor, the price for getting a celebrity endorser is very high. Also, if the association fails, or the celebrity’s personality is not in sync with that of the brand, considerable damage may happen to the brand sending a lot of effort and money down the drains. Into this gap, Brand Characters step in. If you think you are not really sure what a Brand Character is, jog your memory a little. Remember the slightly creepy, badly made-up hare/rabbit/animal that was the face of Lizzat Papad, 7 Up’s Fido, the Nirma girl, Appy’s cool-talking bottles, the
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Pilsbury or Michelin guys or the very famous and loved Amul Girl? If you are a millennial, you would know what I am talking about. But if you are still unsure, think about the Zoozoos, a character you cannot be ‘not exposed’ to and you will understand what brand characters are. They are all symbols or mascots that do not exist in the real world, as we know it, but are still used to promote and sell consumer products. Now, to choose between an ambassador and a character for a brand, the marketer must make sure that the choice fits well with the brand in question. Depending on the personality and ethos of the brand, a person, living and real, or a fictitious character can be employed to promote the brand. If one thinks of Appy Fizz as a brand, the first words that come to mind are cool, irreverent, innovative and stylish. Hence, they created a character out of their own bottle, did a little CGI and animation, and voila! They had someone who could talk about their brand. But the very beautiful thing about Appy in this context is that they did not stop at the character, but instead, went ahead and hired Saif Ali Khan as a Brand Ambassador too. The TV commercials they created showed the Appy Bottle and Saif fighting over who had the higher coolness quotient. This clever combination helped Appy reach into the living room conversations of their TG. To prove a point the other way round, look at what Aamir Khan did with the Coke commercials some time back. He appeared in multiple
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advertisements in multiple avatars, or characters, and did a brilliant campaign for Coke. In none of the advertisements was Aamir Khan showed as himself, or a star, or an influencer. He slipped into such characters as a social loafer, a tour guide, a Bengali gentleman, a sugarcane farmer and many more for the campaign that was an instant hit and established the common Hindi word ‘thanda’ as a synonym for Coke creating considerable head-ache for competition. While one may argue that Aamir Khan was the brand ambassador for Coke, the marketing truth is that it was the way he created those characters around Coke that shifted the
spotlight away from him and onto Coke – the very reason why brand Ambassadors are hired in the first place. Coke derived the benefits of both at the price of one, a marketing master-stroke. There are, however, some brands that struggle with both Ambassadors and Characters. Castrol, for example, has
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had so many celebrities endorse their engine oils, yet none has been able to make a substantial impact to the Brand Personality precisely because the product itself is such that a realistic portrayal of the brand in a celebrity’s life is very difficult. But, not to get bogged down by individual examples, let us come back to the bigger picture – Ambassadors or Characters? Let us make an objective comparison of the two on a number of parameters. Cost – Celebrities cost way more than a computer-generated graphic character. While the entire Zoozoo campaign costed Vodafone somewhere around INR 30-50 million, Aamir Khan charged Godrej a crazy INR 880 million for the endorsement deal. Shah Rukh Khan too has been apparently offered close to INR 200 million to be the face of a pan masala brand. Longevity – While celebrities come with a shelf life that cannot be controlled by the brand or the marketing agency, characters can continue to work for a brand for as long as the brand can continue to use them, with no worries about ageing or relevance. Bibendum has been the face of Michelin since 1894, Nirma has carried the image of the dancing girl for now what seems like forever and the Amul Girl is as timeless as the brand itself. Contrast this with a celebrity who might age out of the brand, like Sachin Tendulkar for Pepsi, or might no longer be suitable to represent the brand, like Tiger Woods for Nike or many other brands who dropped him after his sex scandals became public knowledge.
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Mass Appeal – A celebrity definitely scores over a character in this field because celebrities already come with a public recognition and aura that the marketer need not embellish in any way. He can just leverage this image for the benefit of the brand. However, characters have to be suitably publicized – you need to create a buzz around the character and wait for the public to like it before its potential can be untapped. However, once established safely and securely in public memory, characters can give a brand tremendous mileage. Adaptability – It is much easier to adapt a character to a brand and show its different facets - all connected to a brand - than it is to work with established actors or public figures The fears of the personality of the endorser overshadowing that of the brand are always present. Also, the fact that most celebrities today endorse multiple products simultaneously dilutes their powers over the mind of the consumer. Loyalty – One of the most important, yet often neglected, aspects of brand endorsement is loyalty. The loyalty of an Ambassador is generally towards the contract and rarely towards the brand. Thus, Hrithik Roshan shunned John Players after the success of Krrish and moved on to Provogue, Sachin Tendulkar has endorsed both Pepsi and Coke and Salman Khan has been the face of Thumbs Up and Mountain Dew. A character, however, is created for a brand and lives and breathes the brand till the brand itself dies or decides to kill the character for something else.
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In light of the above logic, it might appear that brands would be better off if they employed the services of a character than hiring a celebrity endorser. But the trouble begins when one gets down at the drawingboard to create a character for the brand. Zoozoos are not everyday ideas; such ideas happen once in a decade or so. Also, for a character to be successful, the marketers and creators must understand the very ethos and principles on which the brand and the parent organization are founded. Without such knowledge, it is very difficult to create credible and lovable characters. In our opinion, the way to choose between a character and an ambassador is to understand the flow of the marketing campaign and then assessing who would do better justice to the brand. Creating a character simply because it is cheaper and comes with a greater shelflife is a bad idea unless the brand has a
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personality that can be represented by an animated character. Simply saving money should not be a decision influencer in this case. Similarly, no brand should go ahead and hire a celebrity simply because they can afford to do so. Frugality or wastefulness is a secondary consideration when it comes to choosing how to promote your brand. A brand should, ideally, always be on the lookout for innovative ways to connect with the customer and use whatever tool that is essential and suitable to the end.
Amitabh Anand MBA(IB) 2013-15 Indian Institute of Foreign Trade
Swati Dugar MBA(IB) 2014-16 Indian Institute of Foreign Trade
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MARKETING TO ASADASDAD
M
illennial refers to the demographic cohort that reached adulthood around the year 2000. They are not just large and powerful but also the most diverse and educated generation in mankind's history. In as few as five years, they will enter their peak earning phase, and marketing to them will certainly need to be innovative. A lot of people still conceive them as lazy, egotistical, privileged brats who copy whatever Justin Bieber does, but this dismissive attitude will only prevent marketers from truly understanding and fully addressing Millennials' need and thus establishing a strong brand relationship. Understanding them is the first step towards developing an effective and holistic marketing strategy because this generation is transforming consumer marketing itself. Companies that truly "get" them have an opportunity to differentiate themselves in the marketplace and forge long term and engaging relationship with the customers. They are distinguished from older generations not just by their spending habits, brand preferences, values and personalities, but also general outlook on life. They engage with brands far more personally, and emotionally. These are 10 interesting statistics which throw some interesting light on Millennials behaviour.
Women and men aged 18 to 34 are more
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likely than 35 to 64 year olds to engage in nearly every online shopping activity, with 40% of males and 33% of females in the younger age group saying they would buy everything online if they could. (Source: eMarketer ) 37% of millennials claim to distrust big business. (Source: Forbes) 64% of millennials feel that companies should offer more ways to share their opinions online. (Source: Bazaarvoice) 51% of millennials say consumer opinions found on a company’s website have a greater impact on purchase decisions than recommendations from family and friends. (Source: Bazaar voice) Millennial parents buy significantly more based on price than they do on quality. Before being parents, millennial buying decisions were 57% on quality, with children it drops to 50%. (Source: Fort Mill Times) When shopping for products, 50% of millennial parents say they try to buy products that support causes or charities. (Source: Fort Mill Times) 52% of millennials were more likely to make impulse purchases than any other generation. (Source: TIME) Millennial moms spend 4 hours more per week than the average mom spends on social networks. They spend an average of 17.4 hours per week on their social media
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networks. (Source: Weber Shandwick)
re-
45% of millennials spend more than an hour a day looking at retail-oriented website. (Source: Urban Land Institute) Of survey respondents, 92% said that realtime product availability would influence where they shop. (Source: Accenture)45% of millennials spend more than an hour a day looking at retail-oriented website. (Source: Urban Land Institute) Of survey respondents, 92% said that realtime product availability would influence where they shop. (Source: Accenture)
Figure 1- Source: Bazaarvoice
searched it. Any lacklustre, ill conceived special offers and overDiverse, Unique, priced products Knowledgeable won't work like and Extremely they used to. Networked They are highly networked "super
buy-
ers".
The millennials are not only highly networked but are also highly influenced by their peers. The look and feel of a customized product is important to the millennials.
Grey - % of surveyed non-millennials agreeing to the proposition Red - % of surveyed millennials agreeing to the proposition
Following are the reasons which make them different from other generations as well as difficult to market to: They are intelligent and they know this. They might be the generation which can barely remember a word without internet, smart phones but they are the most informed consumer generation ever to face marketing professionals. Before any major purchase they have
They have a strong sense of uniqueness and are not happy with just any product but expect more customized products. Companies have started to come with such strategies forcing other companies to follow the path. They want it fast, and they want it now. Millennials are about instant gratification. They put a premium on speed, ease, efficiency and convenience. To meet the expectation of this
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generation marketers need to rethink their customer service models. They want to purchase online. They want to purchase online and this number is increasing every other day. If your business has been lucky enough to capture their short attention spans, then you should make online purchase as easy as possible, or else they will move on to a company that does so.
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preferences. Millennials represent the consumer market of the future. So companies should develop a marketing strategy for the millennials keeping in view the following aspects: Understanding how Millennials operate within your market: Marketers must understand them by surveys and social media or through outsourced agencies.
Millennials appreciate good socially conscious business.
Turning social media presence into a twoway conversation:
A recent study by Cone Communications, a public relations firm specializing in cause marketing, found that “millennials are hyperaware of, and have high expectations for, corporate social responsibility efforts to make the world a better place -- for themselves and broader society.� Hence, millennials can switch from companies that do nothing in this arena to those that publically share their values.
Millennials usually love cause-driven companies. Companies must share their mission and offerings and ask for feedback. Millennials want to have a say and are generous with feedback. Marketers must take this opportunity to improve their brand, products, and services through them.
Hence firms must address a full spectrum of considerations when developing a strategy for meeting their needs. At one end of the spectrum is short-term marketing, branding, and advertising tactics to engage them while shaping their perceptions and preferences. On the other hand in the l ong e r te rm companies must also develop distribution strategies and tactics to align with their habits and
Marketers should come up with creative ways to capture this powerful audience, such as gamified applications and contests. For example Marriott International's Facebook page,
Engage them in what they are good at and enjoy
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where one can take charge of a kitchen and has a chance to win Marriott Rewards Points.
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number of retweets, Facebook Likes and Shares as well as YouTube Hits.
Digital Marketing strategies for millennials Millennials are the most digital cohort on the planet so digital strategy for them should be properly drafted. Stakes are very high with too many competitors vying for the same customer base. Online behaviour of the millennials as on now is as follows: Social Behaviour of Millennials is characterised by their desire for sharing stuff, even advertisements. Ad popularity is now gauged by the
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Marketing to this diverse, unique, knowledgeable and extremely networked segment is a challenge to every marketer. Marketers should keep in mind below mentioned points to develop a holistic digital marketing strategy for the millennials as detailed in the five pictures.
Thus, marketers must approach a marketing strategy for the millennials with open minds and formulate them considering millennials as the future of marketing.
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Atul Kumar MBA(IB) 2014-16 Indian Institute of Foreign Trade
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The Great Indian Consumer
T
hink of Maruti Advertisements, and the first thing you would recall is a witty line by the middle-aged Indian Guy 'Kitna deti hai', thus leaving the actress at the receiving end fumbling for words. Indeed the advertisement cuts right through the heart of the matter when it comes to the needs of the Indian consumer with the tagline, "For a country obsessed with mileage, Maruti Suzuki makes India's most fuel efficient cars.” Following the lead, many other companies including Honda, Toyota and Renault tried to rebrand themselves as fuel efficient cars. Creating products for Indians in India is a
daunting task. “Innovation”- adapting your marketing strategy for India, requires addressing complex challenges with simple solutions to suit the price sensitive Indian market. The market requirements of India demand a different approach from foreign brands to succeed in a sensitive and diverse environment like India. A typical example in case is McDonalds India which has the most flexible menu from all the other countries. Coupling vegetarian meals with meat burgers was customized to suit only Indian customers. Similarly, Samsung has recently flooded the market with a phone for every segment to reach out to the individuals with different incomes. Foreign brands have a huge scope for flourishing in the populous Indian market, but they have to consider several factors to build a success story in India.
What’s different with India?
Do chutki sindoor ki keemat tum kya jano ramesh babu….. Bollywood has a special place in the heart of every Indian. Indians have traditionally, always reacted strongly to the stimuli – be it reacting to religious advocacies, protesting against corruption, or celebrating and then, abusing our cricketers. Our movies have more or less sold us tons of masala and melodrama, and yeah, we've bought it and thoroughly enjoyed it. Even when it comes to buying we take emotional decisions. Thus over buying behavior is also influenced by emotions. This has been
thoroughly exploited by companies to sell their brand. Google India's cross border friendship advertisement or Tanishq’s latest commercial about second marriage are cases in point these few seconds capturing long human stories are not only touching hearts and minds of all age groups but are also indicative of how multinational companies have been able to create a space for themselves. Coca Cola, has aligned its central theme of spreading happiness to the Indian context by the ‘Open Happiness Campaign’.
Phir bhi Bill hai Hindustani Compared to our eastern counterparts, we Indians are very conservative when it comes to saving bread for tomorrow. And since time immemorial, prudently spending money has
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been on our wish list. Given our culture and traditions like saving money for daughter’s dowry or killing an extra hour for son’s future education, we Indians remain skeptic of spending money on not so essential goods. This price sensitivity has always been a challenge for the companies to address. For this various companies have tried to come up with different innovative solutions to meet our needs. Even companies like Apple which have always focused on the niche customer segment made an exception for Indian crowd, when it continued with iPhone 4 in Indian market to woo them. Whether it comes to selling the product in sachets or introducing the low cost versions of their product, companies have been innovative and are working on frugal engineering to use this characteristic of Indian customers for their benefits.
Sau karod ki abadi India has a population in excess of a billion and is the 4th largest economy of the world when it comes to Purchasing Power Parity. It has a private sector that can return significant gains on foreign direct investment and has people who have strong entrepreneurship interests. India has been witnessing massive drops in unemployment rate which is good news for global marketers as well since they have an opportunity to sell more to Indian customers. India is a kaleidoscope of varied cultures and societies. This makes it difficult for the companies to correctly segment the market and target the audience. UniLever is one of the success stories to have created a legacy in India.
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Legality, a brutality Who buys BagPiper Soda, Johnny Walker CDs or Kingfisher Mineral Water? Legal restrictions prohibit direct promotion of liquor and cigarettes in India. Hence companies try to bypass it by using surrogate advertising. Whenever a scene involving cigarette smoking is shown in a movie or advertisement, an anti-smoking warning message flashes on the screen. Wills Lifestyle and Kingfisher airlines are another way to subtly promote the ITC’s cigarette brand Wills and Kingfisher beer respectively. To overcome the difficulties posed by the government, brands have now turned to social media for promoting their products, where there are no defined restrictions for promotions. In the previous year, Diageo’s Smirnoff, tweeted, “You don’t need an occasion to gift someone
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gold! Treat your friends to the royal taste of Smirnoff Gold today”. Similar witty tweets were posted by Kingfisher as well. Today, the top liquor brands like Diageo, United Breweries, SAB Miller, and Carlsberg are active on Facebook and Twitter. Social Media, thus seems to have solved a big problem for surrogate marketers in India.
What is changing today? Today, the Indian customer is changing. The disposable income in the hands of a young professional Indian is increasing, leading to impulsive buying. Tastes, preferences, notions and thought processes of this population is changing. Also, the increase in the nuclear family structure as compared against joint family structure has broken down bulk purchases to smaller package sizes and refills. The Middle Class is a major driver of the Indian economy now. According to McKinsey, it will grow to 40-60% of the population. Higher Classes are more into personalized buying rather than standardized retail shopping while the Low-Income classes hardly have the purchasing power to drive an economy. Rising educational status, decrease in unemployment, and rise in average annual income has given the Middle Class higher disposable incomes and hence a license to purchase more. Indian women have now become the major decision makers for all consumer purchases despite it being men who do the actual purchasing. It is the women who ultimately use most of the consumer products. Hence, to understand the Indian market, a company has to first understand the Indian woman before deciding upon a marketing strategy.
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has been due to the increased number of options or varieties available to a consumer in terms of product quality, colors, packaging, and brand name. People want to see all available options in front of their eyes, and want to touch, smell and taste the products before shelling out any of their hard earned money this has shaped the market which was previously led by kirana stores to being replaced by multibrand malls.
Conclusion As the lyrics of one of Enrique Iglesias’ very popular song go – ‘You can run, you can hide but you can’t escape my love.’ Taking a cue, foreign brands across sectors who want to be perceived as global leaders can’t ignore Indian market. They also need to improvise and innovate to meet the expectations of the ‘Indian consumer’
Rahul Pawa MBA(IB) 2014-16 Indian Institute of Foreign Trade
Daksh Uday Shah MBA(IB) 2014-16 Indian Institute of Foreign Trade
Another paradigm shift in consumer behavior
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Advertising - The Humorous Way “I am one who believes that one of the greatest dangers of advertising is not that of misleading people, but that of boring them to death.” ~ Leo Burnett
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ith this thought in mind we take a perspective on the advertising of today – the way it has changed to employ techniques that not only pitch a product to the people but also aim to entertain them in the process and win laurels. Advertising in the due course of time has changed leaps and bounds. The traditionalist theory of keeping advertising and humour as distant as possible is no more accepted. Gone are the days when humour was branded risky for inclusion in advertisements and was believed to hamper the product image than r e d e f i n e i t . In today’s advertising industry, humour is considered quintessential to effective communication with the targeted customers. It is being increasingly used by brands all across the world, including India, to redefine the features and objectives of their product. The trick is striking the right balance between humour and content in the advertisement so as to tickle the consumer’s funny bone and yet convey the purpose and usefulness of the product. The objective is simple but definitely not easy – to translate consumer gratification to consumer loyalty. The reason why humour works? We must note the fact that, of late there has been a shift in consumer orientation. More and more consumers are believed to be more impacted by light-hearted funny commercials rather than dull ‘no-nonsense’ types. The reason is quite evident - humour gives the cus-
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tomers a latent feeling of entertainment which shifts the balance in favour of the brand. Rather than being blatantly pitched about a product, consumers prefer to be entertained. This grabs the attention of the people and in the process opens them up to be influenced about the product. In effect, humour serves as a liaison between the viewer and the brand . This is the single biggest factor that makes humour so effective in advertising. However, having said that, a really arduous task for the advertisers is to convey the right message to the viewer. They should not get completely lost in the theme of the commercial and sideline the core message. The message to be conveyed should be effective and bang on. The key here is devising humour that is appropriate and germane to both the consumer and the product. The demarcation line between humour that’s relevant and one that gets obnoxious is thin and hence should be dealt with utmost care and delicacy. Know your target Humour, by nature, is subjective- different people have different humorous dispositions.. An advertisement that makes a person laughing his heart out and gripping his sides might offend someone else to the extent of disowning a brand. This makes it imperative for the advertisers to know their target customers well, so as to not end up offending them. This becomes even more important in a culturally sensitive country
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like India. Humorous ads, therefore, must ensure that the cultural sensibilities of any group are not encroached upon while trying to be humorous. The idea here is to carefully tread the line between being funny and being imposing. Why some ads work ? Let us examine a few of the most successful and humorous ads in the Indian market which were loved by the people for its content and by the businesses for its efficacy and impact.
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screaming in a very similar manner. The only difference is the place where they are – a walkin-fridge packed with Heineken beers! The success of the advertisement can be attributed to its ability to showcase the comparison between the stereotypical choices and preferences of
Naukri.com – This is one of those advertisements that communicate directly with the target segment. The Hari Sadu ad campaign was very effective because it gave the job hunters a vicarious sense of being in that position and dealing with grumpy bosses. The commercial showed a grumpy assertive man reprimanding his junior colleague at work. At the same point a women informs her of call for a hotel reservation. Unable to get through his name, the boss turns furious. It is then when the junior colleague turns to offer help and spells out his name – “H for Hitler, A for arrogant, R for rascal, I for idiot, that’s right”. It leaves the boss simply dumb struck. This idea of portraying the image of a relentlessly nagging boss, who is full of ire all the time, struck chord with the youngsters who perceived their bosses similarly. It turned out to be one of the most successful ad campaigns for Naukri and did wonders for them. The commercial, however, because of unmindfully targeting a specific name also garnered some opposition.
men and women in a humorous way to promote its product. Men celebrating and evincing their emotions in a manner which is generally considered more feminine also gives it an amusing effect. The International Angle Not just India, humour is used as a tool to advertise products internationally as well. Globally about half of all ads (44%) fall in one of the two categories – ‘light-hearted’ or ‘funny’. It is even more so in the North American and European regions where funny advertisements constitute 52% and 49% respectively of the total number. The graph presented on the next page gives a clear picture.
Heineken: Walk in fridge – This commercial begins with an in-house party featuring welldressed characters having a casual conversation. Just then the hostess takes her friends to a walk -in closet filled with clothes, footwear and other women accessories. The ladies feel exhilarated and begin shouting with excitement. At the same time, there are noises of men shouting and celebrating which bewilders the women and puts their celebration to a halt. The next scene shows a group of men cheering and
As a matter of fact, humour in advertisements is used extensively by International brands. The internet penetration in Latin America and Europe is way higher than it is in Asia. As a result, companies look to create humorous content which is more likely to be shared on social platforms owing to its funny quotient. The companies try to leverage this factor in making their commercials go viral over the internet and pro-
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mote their product. Many companies via informal surveys have even found out that funny and light-hearted ads are twice more likely to be shared on the internet than serious ads. Humorous advertisements also give the companies a chance to make their customers more loyal to their brands by giving them reasons to follow them on social platforms. Thus, the
Cultural sensibilities of any group must not be encroached upon while trying to be humorous
advent of social media can be considered to be one of the biggest factors for making funny commercials gain base internationally. However, with internet penetration in India on an increase, we can expect the Indian advertisement industry to follow the same trend. Another important factor to be mentioned here is that unlike in India, where people are more conservative and radical in their opinions, the bent of mind of people abroad is more liberal which gives humorous advertisements a greater acceptance there Since such advertisements are also easier to remember, they tend to have a greater impact on the viewer in the long run. For example, in the North American region a
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whopping 69% of the ads that are known to have had ‘High Impact’ on the people are more on the funnier side. On the contrary, of the total number of ads that are categorised as ‘Low Impact’ in the same region, only 38% have some humorous content embedded in them. This clearly brings to the fore the fact that most of the effective advertisements have some humour quotient in them which appeals to the people.
A
word
of
caution
Everything said, utilising humour in advertising is delicate and one needs to be cautious that the humour employed does not dilute the value of the brand or the product being offered. One needs to ensure that humour is in accordance with the product and relates directly to it. A typical example of perfectly placed humour is the famous Happydent advertisement where individuals chewing Happydent gum were used to light up spots in the king’s palace - from the hall to the dining area to the ball room - due to their incandescent whitening smiles! Had the humour in the advertisement been misplaced the effect could have been largely different. If the humour doesn’t embed a positive image of the product in the minds of the viewer it can very well happen that the people have a great laugh, enjoy the ad but forget the product altogether. This would defy the entire objective of advertising because the end outcome expected out of any form of advertising is increase in sales.
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The second aspect to be cautious about is the idea to be conveyed which should be very clear and striking so that the viewer doesn’t struggle to connect to it. This also becomes important because ads perceived with a
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attention - everyone loves to laugh and stay cheerful. Whether or not the advertisers are able to build upon it depends solely on them and the underlying brand. always caught attention - everyone loves to laugh and stay cheerful. Whether or not the advertisers are able to build upon it depends solely on them and the underlying brand.
An Innovative Ad by Nokia to congratulate the Indian medal winners at CWG 14 held at Glasgow wrong message can do more harm to the product than good and result in negative promotion which is a nightmare for any brand. Advertisers must also note that advertising through humour is an expensive exercise and should be regularly revisited, revamped and re -launched because old jokes tend to lose the sheen like old brands do.
Conclusion Thus, humour from an advertising perspective is a mixed blessing. Though it has some downsides, the upsides far exceed them. It not only helps the product to reach the customer’s green zone of wilful consideration by creating more brand awareness but also builds on the brand loyalty quotient because of the permanent humorous imprint it leaves on the individual’s mind. Humour has always caught
Amul as always comes up with a brilliant way to commemorate India’s victory at Lord’s after 28 years with Ishant Sharma claiming the bragging rights. BRAND Rewind “It felt like gasoline was on my leg and someone set a match," said Paul George, about the pain he felt when he broke his leg. Still the player hopes to return to play next season.
Harshit Vyas MBA(IB) 2014-16 Indian Institute of Foreign Trade
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Brand Quiz Answers
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1.
Subway
2.
Pizza Hut
3.
Taco Bell
4.
KFC
5.
Dominos
6.
McDonalds
7.
Starbucks
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inners tell jokes, losers hold press conferences’ this is a famous quote from the book ‘Marketing warfare’ which is considered a timeless classic in the world of marketing. To everyone’s astonishment it is not written by academicians but wartime generals. The first question that comes to your mind is what the connection between war and selling soaps is. But everything boils down to just one thing, winning.
between America and Britain in 1859) and in terms of marketing the stakes are very high.
Everything is about winning, no one aspires to be second and no one should. There are two schools of thought when it comes to marketing a product. The first believes that marketing is about understanding the needs of the consumer and designing a product which will serve this need. But if everyone does the same thing, how will one differentiate oneself from another? This is where the second school of thought comes in; they stop at nothing and will not hesitate to do whatever is necessary to reach the top and stay there. They believe that a firm should be competitor centric rather than customer centric. History is testament to the fact that wars have been waged for everything from love and power to something as trivial as a lost pig (War
Brands have fought for products ranging from Rs 10 to 10 crores from a Candy Bar to a Bentley. Let us analyze a few ad campaigns and try and understand the rationale behind them.
Being a brand is not always enough, staying a brand is important. Brand wars have been going on in the industry since the inception of marketing and will continue to happen. Some brands pass a subtle remark on a competitor while others blatantly humiliate them. Wars are usually fought on the pretext of peace but here the only agenda is total domination.
BMW versus Audi, April 2009 This campaign was one of the greatest advertising wars of all times. It all started when Audi placed a billboard in Los Angeles, California unveiling their latest model and giving the caption ‘Your move BMW’. This left the viewers and the media stunned as no one was used to this kind of aggressive campaigning. BMW had two options; either give a fitting reply or concede defeat and loose its respect in the market. This advertisement by Audi forced BMW to respond and it did respond. It rented a bigger space right next to the Audi billboard with a picture of BMW titled ‘Checkmate’. The billboards grew bigger and so did the popularity and the media coverage. This was more coverage than either of the brands had ever received on TV. They spent around 50% of their advertising budget on TV advertisements and now they were in the news without shelling a dime. The picture on the right captures the essence of the situation. This campaign had a temporary effect as well as a long lasting profound effect. The sales of both the brands dropped in the year 2009, signaling that this
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campaign was a failure and negative publicity never did help anyone. The sales of Audi dropped by is 6.38% and that of BMW dropped by 11.1%. Taking into consideration that US was still dealing with recession, such a campaign did not earn any brownie points with the customers. The numbers from the next year tell a different story. Sales of both Audi and BMW increased by huge margins reaffirming people’s faith in the brands. All the potential customers were given the impression by the campaign that only Audi and BMW were the biggest players and others were not on par with them. The graph below shows the sales of Audi and BMW W in USA.
(*All data is taken from the financial statements of the companies from their official website) Mc Café versus Starbucks – Attacking the POD (Point of difference) of a brand
Starbucks has been the market leader in coffee for quite some time. McDonalds made a strategic move by launching Mc Café nationwide during the recession of 2008 to attract those customers of Starbucks that were looking for economic alternatives. Mc Café tried to convince the public that they were being ripped off by the pricey coffee and that McDonalds could provide same quality at an economical rate.
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McDonalds capitalized on their market hold by providing free samples of coffee along with food purchase and word of mouth publicity. The campaign started showing effects by the end of the month. The stock price of McDonalds increased by 0.59$ and that of Starbucks fell by 0.10$. McDonalds reported a 5.1% increase in sales worldwide. Any other player would have reduced the price to retain the customers but Starbucks took a stand to defend its pricing and tell the customers the reason for charging the amount they do. ‘It’s not just coffee. It’s Starbucks’ this is the tagline that they came up with. They created advertisements depicting their quality, how they choose the best quality beans, about their CSR activities like green initiatives and employee insurance programs. Social media was brought into play; they urged their 183,000 supporters to spread brand loyalty and earn a free voucher. The CSR activities increased the goodwill of the company thus increasing their credibility. They did not make any direct attacks at Mc Café but made posters warning people against ‘cheaper cup of coffee’.
Starbucks reaped the benefits immediately in the 2nd quarter of 2009 with an increase of 3% in the same store sales where they had encountered a loss in the previous quarter. This was just a scare for Starbucks but the strategy by McCafé was commendable. It attacked the market leader in its own backyard and the strategy worked for a while.
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ventured into food products as well. As far as sodas are concerned, Coca Cola is the market leader, followed by Diet Coke and then Pepsi.
The Cola Wars Another set of popular brand wars that we've seen in the past were the Cola Wars. Coca Cola and Pepsi have now been at it for over a century. They constantly try to get back at each other, sometimes subtly, other times not so much. A major difference between the two is that Coca Cola always concentrates on the family friendly aspect of soda, of coming together and that of happiness. On the other hand, Pepsi has always positioned itself as a brand for the youth. Thanks to the Pepsi Challenge of 1975 where customers were asked to take a blind taste test and pick the cola they liked better, Pepsi was overselling Coca Cola in supermarkets by 1983, leaving Coca Cola dependent on Soda Machines and Fast Food Tie Ins. This was one of the very few times that Pepsi took over Coca Cola in the market. After the Pepsi Challenge, Coca Cola wanted to listen to their customers. They found out that the customers had connected to them not just because they liked the taste but because of the years of marketing during which Coca Cola had become a familial, homely experience for the average American household. When they listened to the customers, their sales went up from 9 billion a year to 15 billion a year. Today, the revenues of PepsiCo are higher than that of Coca Cola but that is because PepsiCo has
Indian Scenario In the Indian scenario, we've seen Desi versions of Brand Wars from Horlicks vs Complan to Pepsodent vs Colgate. One of the prominent HUL vs P&G examples is that of Rin and Tide, other than that of Dove vs Pantene. Tide had been trailing until in 2007 their market share grew and posed a threat to Rin. They not only engaged in an Ad War, but they engaged in a price war as well, slashing prices to retain and increase market share and market penetration. In opposition to Tide's 'Chauk Gaye' advertisements, Rin introduced a series of advertisements where a young boy used to get startled and say, 'Aunty Chauk Kyu Gayi?'. The 'Safedi Challenge' from Rin also encouraged the companies into situations getting worse and both the parties being dragged into courts.
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Another instance would be when Reckitt Benckiser’s product Dettol Kitchen came up with advertisements comparing it with HUL's Vim. HUL appealed to the Calcutta High Court for a stay order, saying the ads were untrue, but was denied. HUL then came back with advertisements on all the mainline newspapers claiming Lifebuoy is better than Dettol. The Indian consumers are greatly concerned by the image the company has and directly associate it to the quality of the product. So the PR department is always on toes and has to see that the image of the company is untarnished. After analyzing these cases which include all range of products from luxury cars to beverages, we see a pattern emerging. These types of campaigns give a temporary setback to the victim or the competitor and the advertiser gets a momentary advantage. This phase is particularly good for the buyers as the prices become competitive and major players try to regain lost ground. But in the long run this affects the industry as a whole; the industry is promoted and is brought into the limelight. People are able to associate the brands with these aggressive campaigns which lead to the growth of both the advertiser as well as the competitor. The industry expands leading to the growth of the major players
in it. References: http://www.pepsico.com www.coca-colacompany.com/ www.audi.com/corporate/en/investor-relations/ financial-reports.html www.bmwgroup.com/ www.investor.starbucks.com Parth Potdar,
MBA(IB) 2014-16 Indian Institute of Foreign Trade www.statista.com Shivani Bagani MBA(IB) 2014-16 Indian Institute of Foreign Trade
JUZZZ FACTS‌ 1. Seven percent of the American population has never heard of Facebook. 41% hasn't heard of LinkedIn. 2. Twitter was originally called Twttr The name was changed a few months before it launched. The first tweet was "Just setting up my twttr" by Jack Dorsey. 3. Pharmaceutical companies spend twice as much on marketing and advertising as they do on research 4. There are 6.8 billion people on the planet at present. 4 billion own mobile phones. (But only 3.5 million use a toothbrush. Oy!) 5. 90 percent of text messages get read within 3 minutes of delivery 6. Data from JumpTap STAT reports men are more inclined than women to click on ads. 7. Companies with an active blog generate 67 percent more leads per month 8. About 86 percent of B2C companies use content marketing 9.B2B marketing teams spend 33 percent of their budget on content marketing 10. 93% of Marketers use Social Media for Business
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Corporate Speak MarkMantra is glad to have Mr. Saurabh Gupta as the corporate guest for this edition. He is an alumnus of IIT Kharagpur and is currently working in Jabong as Product Manager. He shared his views with us on a number of topics like the Indian e-commerce industry, online social gaming in India and entrepreneurship. Here are some excerpts from the interview: Q1You have had a long entrepreneurial
companies
journey so far, which started with Crazy Emperor. Can you throw some light on what it is all about and your inspiration behind it?
Q2You have been in the e-commerce in-
I was; very-fortunately; associated with lots of entrepreneurs during my college-days & hence was always actively involved in multiple challenging projects & ideas even before I formally entered the market/industry. I founded CrazyEmperor; just after passing out of IIT; to promote/nurture Entrepreneurship. Ever since I; via CrazyEmperor; have co-founded/mentored/consulted 30+ startup Indian/international companies (in education, gaming, retail, art, design, software, advertising, advertising, ethical-hacking, entertainment, fashion, etc. domains) where I now serve in the Board of Directors. Inline I have spoken and conducted trainingsessions/workshops at Technology & Business colleges (IITs, NITs, BITS, GCs, VGSOM etc.), at National/International summits (GES, Startup Camp, etc.), at Companies (APTECH, etc.). CrazyEmperor; as of today; is a consultancy that helps entrepreneurs in establishing their (IT/non-IT) startup ventures and provides Product Management services (managing end -to-end Product-life-cycle) to IT Product
dustry for a couple of years now (Flipkart & Jabong). What, according to you, are the biggest problems faced by the industry in India? How do you see the future of the industry? I am trying to cover both the questions in one answer. Right now, the major ecommerce players in India have their customer base coming from tier-1 cities – customers who are already familiar with online shopping. So, Indian eCommerce of the near-future will be striving towards acquiring the customers from tier-2 & tier-3 cities by creating perfect online experience for these people. And when I say perfect online experience I mean having merchandise relevant to people of these smaller cities, fast-loading-website (these cities still have connectivity problems) and an relatively easier-to-use website (people from these cities are not as websavvy as the people in metros. Pricing will; definitely; always be a gamechanger for new players. But price games in ecommerce player can’t be played for long for everyone has limited depth in their pockets. So, services (operations) will be the game
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-changing-driver in the long run – one who serves (great post-order services, timely delivery, easy return policies etc.) customers better will be the winner. And as we all know for sure, Mobile & Tablets will rule. So, mostly all players have started investing time/resources in building their mobile-websites and apps for tablets/ mobiles. Q3“Product Manager” is relatively a
new and a very niche profile which is on the rise in e-commerce companies. Can you please throw some light on the roles and responsibilities that you, as a product manager, are expected to undertake? How important is a product manager for any e-commerce company? If asked to summarise Product Manager’s role in any product company, in one line, s/ he would be the person who wears the customers’ lens i.e. the person who is customers’ representative while s/he; obviously always; adhering to the business guidelines. His continuous efforts are into ideating/ making/simplifying/optimizing the products/product-features to solve customers’ problems/issues and to simultaneously increase business profitability (by increasing sales or by improving internal processes). Why is he important? He is a ‘must have’ because he is the one who researches to identify the business/market/customers problems, does technology and competitive benchmarking around the same, ideates products/features to solve the problems, works with engineering teams to build the products and then works with sales/ marketing teams to launch/sell the product/ feature. This holds true for each IT product company around – be it gaming or ecommerce or mobile.
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Any eCommerce company has multiple critical functions like merchandising, order fulfilment, warehousing, logistics, customer service, website search/navigation, website content, etc. And a given PM would be responsible for handling one/more of these areas. For example, the Search PM is accountable for internal search on the site, optimizing both the feature function and resulting revenue. Q4You have had an illustrious career so
far, having served at the highest management levels, without having an MBA degree. How important, do you think, is an MBA degree in terms of climbing up the corporate ladder? What would be your suggestion to the young and bright folks who want to make it big in the business world? First step is to find what it is that you want to do specifically. When you know what you want from your professional life, MBA can be a great option if you have found out your career goals and if you have complete understanding of the skills and knowledge gaps that you need to close to succeed in your career goals &/or if you have a comprehensive understanding of the specific resources (classes, clubs, unique learning experiences) that the MBA program has that will address the knowledge gaps that you need to close to succeed in your career goals. But, if entrepreneurship is in your blood, you would be knowing it by the time you complete your bachelors, and so don't wait because any time you spend doing anything (even an MBA) else will feel like a waste later. You won’t need a resume if you'll the
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boss. Experience will come with the mistakes you make, not by career moves or the schools you attend. Q5You have previously served as the
Country Head & VP (Products & Operations) at Oxylabs, developing games for online social media. How do you see online social gaming as a market in India, in terms of revenue growth and scope of expansion? Some people consider online gaming as a "fad" and investors are shying away from the industry ever since Zynga faltered. What are your views on this? Right now Indian gaming social gaming market is in very nascent state. People go social on-web/mobile/tablets and play games but shy away from putting in real cash for playing or for buying in-game virtual-items online. So, right now, the only way to make money via the online -social games; targeted for Indian audience; is by charging some minimal charges; like 1Rs; but getting millions of Indians to play the same – hence making money by volume. No comments on/around Zynga, but yes, I would surely like to say a few words on what I see happening/trending/promising in the online-social gaming industry right now. I see most of the online-social-gaming companies now competing in the mobile/ tablet games space - companies will either win the mobile race or will get acquired for their awesome talent-bank. Also, I see more & more use of virtual & augmented reality in games. And most importantly, gambling (non/monetary) is what I see will be the next big thing in the social space. Q6What are the revenue generation
sources for online gaming sites world over? Can we expect any innovations in
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time to come? Multiple sources of revenue generation exist. Prime ones are: Subscription (pay to play), Freemium (play for free with some limitations, and pay to play full game), Ingame advertising (show ads to players and generate money per ads’ impression/clicks), Microtransactions (sell virtual items/ currency to players for cash), Merchandise (selling game-related merchandise like posters and t-shirts offline) and the like. Kingdom of Loathing is a game that uses this model. Some companies are trying new innovative models like Offer walls (instead of selling items for cash, you show your players a list of offers from your partners - like "Participate in this online survey, and receive some in-game currency) and Server leasing (sell virtual space in your game) One mode that has not been explored is Donations (play for free & pay if you wish) Q7A lot of MBA graduates these days
dream and prefer to launch their own ventures instead of taking up job offers. What advice and caution would you give to that lot? You can find lot of words of advice/ caution on web. I would like to add some that usually get missed out: Have great public speaking skills (you should be able to sell your idea), prototype your idea before you actually start your startup formally, fail fast after you have launched something, be prepared to manage your own psychology because being an entrepreneur is in no ways related to being an employee, and do not work on any idea unless you have identified at least some customers who critically need what you're making.
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Xiaomi– IT’s here, IT’s now, IT’s
T
he name Xiaomi means millet (literally Xiao - "little", mi - "rice"). But there is nothing little about this Davidhoping-to-beat-Goliath company. Xiaomi releases a new phone model every week and has a super-selective, almost exclusive distribution. They also incorporate -at an astonishing pace- the user feedback on the released model and ensure that the new model is better than the previous. The speed of this crowd sourced incremental innovation offers
tive, fluent on specs, value conscious) that ensures diffusion of sales to the mass market? Or is it a confluence of all
these factors? We take a look at Xiaomi’s marketing excellence by the simple prism of m a r k e t i n g m i x
Top of the Line Hardware and Crowd Sourced Design
them a huge advantage in the marketplace. So much so that Xiaomi has the 5 t h largest share of the global smartphone market Anyone who has read the specs of the Mi phone knows that they offer the best in-class product. But is it actually the price which knocks your socks off? Is it selling to the niche of innovators and early adopters (tech savvy, internet ac-
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So how does Xiaomi differentiate itself from the market leaders like Apple, Samsung and Co.?? The strength or (let us get a bit geeky :P) the POD of Xiaomi lies in providing the best specifications at the given price providing the best camera, storage space or the processing speed. Further each particular models sells for a period of eighteen months which is quite more as compared to at most six months by the other smart phone companies. This helps Xiaomi to make profits as their margin are substantially less and it takes time for the company to achieve economies of scale. Hardware is not the only thing which is
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great about Xiaomi, it scores on the user interface (UI) front as well. To connect to its users it has come up with the concept of MIUI which stands for ”Me You I” highlighting the Android powered customizable interface on offer. Regular weekly updates are released on Friday’s and within hours the forums are filled with feedbacks and bug fixes. This serves two purposes: First, it maintains the popularity of Xiaomi as a brand and second, it helps the company to strengthen its UI or rather MIUI offering.
market it looked towards Flipkart as its sole distributor and the phone was sold off in a flash when the Indian ecommerce giant put it up for sale. This exclusive distribution allows Xiaomi to
“We are the only company who does that: being super open and embracing user feedback and upgrading (our software) every week. We are the only company; no others.”
hive off its lot in a very short span of time as layers of distribution channel are eliminated. The company uses the feedback to improve its hardware and comes up with better products each time. It has followed The company primarily sells its phones through so-called flash sales, stimulating demand by touting that thousands of devices like its Mi3 smartphone have sold out within seconds of being offered to the public. The scarcity strategy not only boosts the desirability of the Xiaomi brand in the eyes of many consumers; it allows the company to avoid keeping pricey, unsold inventory i n w a r e h o u s e s .
Bin Lin, Co-founder and president
Penetrative Pricing by Squeezing Margins: Aggressive? Irresistible? Predatory? Nothing truly describes Xiaomi’s pricing strategy. The phones are sold at a fraction more than the production cost. The next question that comes to mind is that how on earth does Xiaomi make profit? The answer lies in its other offerings –accessories, software services, MIUI based offers. How does Xiaomi go about it? Xiaomi allows users to cross sell anything to everything when it comes accessories be it custom cases or headphones or plush rabbit mascot. Through its MIUI offerings it earns a substantial portion of its profit by selling hundreds of custom themes for a nominal fee.
Exclusive Distribution and Agility: When Xiaomi aimed to enter the Indian
“Instead of bringing large quantities of products every few months, we bring small quantities of our products all the time. As soon as we get it, we sell it.” - Hugo Barra
The Xiaomi Tribe and Starting Small: Gone are the days of the “Black Berry Boys” who have run over by those of the fast and dynamic Xiaomi tribe.
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This legion of fan boys and girls don’t just like the brand they swear by Xiaomi’s awesomeness. They are more than fans when it comes to co creating upcoming models. The impact of this evangelism campaign is so great that Xiaomi doesn’t spend a single buck on traditional advertising. Its “just for fans” slogan truly captures the consumer base on internet It is more than a distribution channel – a tool to connect with consumers and make them one of the Xiaomi tribe members. That’s the reason why Xiaomi has a super loyal fan base. Enthusiasts don’t get any reward by giving feedback and trying things. The sense of ownership and a sense of being part of the effort to improve the system improve the handset, make them feel being respected and engaged. Xiaomi leverages this engagement and uses it’s ecosystem to boost device sales by pushing advertisements and promotions through its network. Word of unbelievable phone sales prompt proud users to share such information with friends.
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This information snowballs and each user becomes a seed for viral promotion. For its marketing and promotion tactics, they are not very different from a Google or Amazon. Compared to any cell phone maker this strategy is as unique as it is low cost. Going Global and some Pitfalls to Watch out For Xiaomi definitely has plans to take over the world, as is evident with its recent launch in India via e-tailer Flipkart. Xiaomi is looking at value seeking, cost-conscious markets. It has plans for Brazil, Russia, India along with south-east Asian economies as well as markets of U.S and Europe. But Xiaomi will have to address certain key challenges:
Brand Recognition:: It goes without saying that value seeking customers exist in every corner of the planet but the challenge would lie in converting these apple-ites/Samsung-ers to Xia-
MARKMANTRA
om-ians. This is where Xiaomi would need to convey a compelling brand preposition along with its already solid product preposition. It would have to break the “inferior commodity” association that goes for most Chinese products. Effective country/region specific branding would be the way out.
Bespoke Go-to-market strategies : The market conditions, online consumer habits, and the entire internet industry and e-commerce came to bring about the company's success- it is not a given that the same conducive forces will exist throughout the world. Thus, the marketing communications, distribution and channel tie-ups would be some areas Xiaomi will have to figure out, to ensure smooth sales and the sort of numbers it is accustomed to hit.
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vices. Xiaomi needs to invest in physical setup in the target market for after sales services if it aspires to be a market leader in the future. This is especially important when it comes to the large and diverse market like India. References:
http://www.nytimes.com/2012 / 10 /29/technology/challengingapple-by-imitation.html?_r=0
http://busi ness.financialpost.com / 2014/07/19/with-a-smartphonebusiness-built-for-china-xiaomieyes-the-world/?__lsa=f4ca-c795
http:// www.chinaeconomicreview. com /Xiaomi-Google-Barrasmartphone-China
http://www.tech-thoughts .net / 2013 /09/xiaomis-growthstrategydetailed.html#.U9v7VfmSxiM
http://www.chinaeconomicre view .com/Xiaomi-Google-Barrasmartphone-China
Dependence on MIUI : “To be or Not to be “ is the question for Xiaomi When it comes to MIUI .What works as its strength in mainland China is losing its charm worldwide. Xiaomi must think beyond the MIUI concept- the consumer chosen channel to access its rapidly developing app store, and come up with more such disruptive ideas to woo Xiaomi tribe worldwide
Selling products vs. Service focus:
Dr. Rishi Sen MBA(IB) 2013-15 Indian Institute of Foreign Trade
What emerged as a game changing strategy has its own limitations when it comes to after sales ser-
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INDEPENDENCE DAY WISHES
ARKMANTRA TEAM EXTENDS ITS BEST WISHES ON INDIA’s 68th INDEPENDENCE DAY
INDEPENDENCE DAY CELEBRATIONS AT IIFT !!