Consulting Research Entrepreneurship Strategy
Issue 6
Oct ’09
Crest
The E-Magazine of CRESCENT, XLRI
This issue On the job P.2 Why are websites so confusing? P.4 Green shoots in consulting P.6 Luxury Marketing P.7 News Watch P.9
Crescent The Committee for Research, Strat‐
Editorial
egy, Consulting and Entrepreneur‐
It seems that not being in the scheme of things isn't an option anymore. These are some of
ship (CRESCENT) is the result of the
the busiest times for B school campuses across India. Competitions, summer placements,
endeavor of the student community
festivities, sports meets and the usual quizzes and assignments– the month that went past
of XLRI to promote an environment
would have seen them all.
of creative solution building amongst the students of the institute, while
Now that we find some air to breathe, team CREST is here with another issue to ensure
reaffirming high ethical standards
that you stay updated on all the happenings in the business world. Here we would like to
and values, and fostering personal
introduce you to an IIM entrepreneur who ensures that the placement procedures in cam‐
development in the pursuit of excel‐
puses remain smooth and you are always on the hunt for more after the first job. His por‐
lence. It works with the two fold
tal iimjobs.com may certainly host your CV a few years down the line. An interesting arti‐
agenda of creating a brand presence
cle on marketing tries to explore the mechanisms used not only by high tech search en‐
of XLRI among the corporate and to
gines but also the local supermarket groceries to connect more eyeballs to the goodies for
help nurture ideas of budding entre‐
sale. The Harvard research paper would certainly give some insights to the budding mar‐
preneurs by providing a platform to
keters of the future. We also want our readers to explore a new area of consulting which
them to showcase their Ideas
not only has potential for milking more dollars but also make earth much better in this issue. Green consulting is a new area that we must all be aware of, especially after the Kyoto Protocol and carbon credit initiatives taken by companies. The Research section brings you very interesting work in the field of luxury goods marketing. Newswatch re‐ mains your old friend which would inform you of some important happenings, and fun
Editorial Team Mandar Kulkarni Manoj G. Kamath Himanshu Saxena Miti Vaidya
corner promises even more laughter this time. As we get closer to Ensemble, one of the most awaited showpiece events in the B‐school circuit, the campus excitement is certainly rising, and we hope to provide an excellent cov‐ erage of the entire event. Watch out for Strategikon, an innovative strategy based game organized by CRESCENT and sponsored by Cognizant, for an exciting battle of minds. As CRESCENT grows along with Crest, we hope to provide even better information on Strat‐ egy, Consulting, Research and Entrepreneurship for our discerning readers.
1
‐ Editorial Team
The Editorial Team of Crest invites articles from readers for publication in forthcoming issues. If you have articles/ experiences/ studies to share in the areas of consulting, entrepreneur ship, research or strategy, please do send them in to crest.xlri@gmail.com mentioning your name and institute name.
ENTREPRENEURSHIP
On the job An IIM graduate recently quit his job to nurture his venture iimjobs.com, a portal for job seekers. Meet Tarun Matta ..
What’s iimjobs.com all about? I started iimjobs.com last year as a hobby project to help out close friends with their job search. It started as a blog where I used to post any job openings I received for everyone to view and apply. It grew by word of mouth without any marketing or promotion. Recruiters started posting jobs looking for MBAs from premier business schools. Looking at the interest and growing audience, I launched it as an exclusive job portal for IIM and other premier business schools few months back. Its been growing at over 30‐40% every month without any invest‐ ments/effort in m a r k e t i n g / p r o m o t i o n . iimjobs.com is now the portal of choice for MBAs from IIMs/ISB and other premier business schools. Why did you choose to create a job search portal? Please tell us how your IIM exposure helped you in the venture. Big job portals do not address the needs of MBAs from premier busi‐ ness schools. Most MBA graduates get job leads through their social/ professional networks or through alumni mailing lists. But there wasn't any structured platform for both job seekers and recruiters. I started iimjobs.com as a blog where I used to post any job openings I received for everyone to view and apply. It grew word of mouth without any marketing or promotion. Recruiters started posting jobs looking for MBAs from premier business schools. Looking at the interest and growing audience, I quit my high paying job to focus on building and growing this platform. What were the problems you had to face while setting the project up? How did you resolve them? We operate in a very competitive market dominated by big players with huge marketing spends. The challenge is to be able to grow without spending any money on advertising/marketing/ promotion. We've been able to overcome this challenge (to a large extent) through very targeted and effective PR. We had hundreds of students from graduating batch upload resumes on iim‐ jobs.com during the placement process. This was unprecedented and a testimony to the fact that we've been able to carve out a niche in an industry that is dominated by bigger players throwing tons of money to attract job seekers. What kind of research did you do before setting your site up? How do you expect to generate revenue? Since I ran it as a blog for a while, before taking the plunge, I didn't need to do any structured mar‐ ket research. Looking at the interest and growing audience, I was convinced that there is a huge demand for such a service (Contd. on Page 3)
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ENTREPRENEURSHIP (Contd. from Page 2) Was finding people to finance your venture easy or tough? How did you go about it? The focus has been on growing the business rather than raising money. We operate on very low cost structures and I believe that it'll be a source of competitive advantage. We are not looking at raising capital at this stage.
Aren’t you scared of starting a new venture in times of recession? Its never a bad time to start a venture if you are solving a real consumer problem. These are great times to be starting up. Bigger job portals struggling during these tough economic times. We've been growing at over 30‐40% every month without any investments/effort in marketing/promotion. These are exciting times. How can your site be best used? Please explain its features. Primary target market is MBAs from IIMs and other premier business schools in India. We post jobs that are relevant only to that community. They can use it to search for jobs of their interest. It also offers a structured platform to recruiters looking for MBAs from top business schools in India. They can post jobs and get access to a very well targeted audience. We also offer resume booster service to job seekers. As part of that service we send job seeker's resume to over 500 recruiters in our data‐ base. The key value proposition is that it is targeted towards recruiters who hire MBA graduates. What are your future plans regarding the site? The future plan to scale further without building any cost structures. We also plan to offer few other services to recruiters. We just need to keep our focus on execution excellence and grow further.
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STRATEGY
Why are websites so confusing?
Just as bread and milk are often found at far‐away ends of the supermarket, Web sites that match con‐ sumers with certain products have an incentive to steer users to products that yield the highest margins. The result: a compromise between what users want and what produces the most revenues, A look inside the world of search. Do you sometimes get the feeling that Internet portals, search pages, social networks, e‐commerce, and other Web sites are not necessarily designed in order to maximize user convenience and bene‐ fits? We do, too. Why—you might ask? For a fundamentally similar reason to why some retail stores place the most popular items (e.g., bread, milk) in the furthest possible place from the entrance; that shopping malls seem designed to make sure you get lost at every single visit; and that popular magazines drown the content they carry in a sea of advertising with no clear table of contents and split stories.
Indeed, all of these intermediaries are in the business of matching consumers with products. Trouble is, prior to visiting an intermediary, consumers are interested only in some products, which may not necessarily be the ones that yield the highest margins for the intermediary. If the latter was offering a perfect information service (i.e. one that enabled consumers to find what they want most quickly and efficiently), it would be losing valuable potential revenues. Hence the incentive to attract users with products that they want a priori and then divert them towards products that they might be in‐ terested in ex‐post (i.e., once there). Thus, consumers coming to the supermarket to buy daily staples (say, bread and milk) might be in‐ duced to also get expensive chocolate if they have to walk past the corresponding aisle anyway. Shoppers visiting a mall for its anchor store (say, Macy's) may decide to stop by a small design store while walking around the mall. And while flipping through the pages of a magazine in search of the article promised on the cover, readers are exposed to advertising, which produces most of the reve‐ nues. In the same way, Google faces a subtle issue in designing its search result pages: consumers are mostly interested in the "objective" (i.e., middle) search results, but all revenues come from the sponsored search ads on the right hand side. The result is a compromise between what users want and what produces more revenues. For any given search, the 11th objective search result might be more relevant than any of the sponsored search results displayed on the right; yet it will be dis‐ played on the second search page only—well beyond the reach of most users.
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STRATEGY Most e‐commerce sites nowadays (e.g., Amazon, iTunes, Netflix) use recommendation systems to suggest to each individual user products or content which might interest him/her, as inferred from their past behavior or the behavior of users with similar profiles. How much should you trust those recommendations? Not entirely, of course: while consistently irrelevant recommendations would eventually drive people away, the sites have an incentive to steer users to the products that yield them the highest margins—which may not always coincide with the ones that best correspond to users' preferences. So how bad is this apparently insidious form of "search diversion"? (It started in the brick‐and‐ mortar world but the digital economy provides many more subtle ways to divert search.) Well, it may appear that users lose whereas some vendors (and the intermediaries) benefit, but in a world without perfectly efficient search, potentially valuable product‐consumer matches might go unreal‐ ized. Thus, enabling those matches through search diversion may, to a certain extent, provide a net benefit to society. Turns out, there are benefits which go beyond that. A recent and thought‐provoking Science article ("Electronic Publishing and the Narrowing of Science and Scholarship") shows that as library search has gotten vastly more efficient with the advent of digitized libraries and online search tools, the depth of scientific research has suffered. Scholars in a variety of fields tend to reference fewer arti‐ cles and cast a narrower net when conducting their background research. The old, inefficient search method, which relied on index cards and inevitably entailed flipping through pages of not necessarily relevant journals, had the benefit of exposing scientists to a wider range of ideas, which could potentially also widen the scope of their research. This kind of serendip‐ ity can turn out to be a vastly more valuable consequence of search diversion than stumbling upon new products at the supermarket or while browsing aimlessly through Amazon.com. Source: HBS working papers http://hbswk.hbs.edu/item/6303.html
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CONSULTING
Green shoots in Consulting Consulting also is going the green way. Interest in carbon neutrality has grown dramatically over the last few years and is no longer a field confined to the few enlightened companies and individuals look‐ ing for an opportunity to 'do the right thing'. Rather, it is becoming an environmental commodity mar‐ ket, catching up with public interest. Seizing this opportunity, green consulting is fast gaining momen‐ tum. Here, we introduce Gensol, a green consulting firm. Gensol Consultants Private Limited was founded in 2007, and is a 360 Degree Green Solution Pro‐ vider. They have four divisions under their umbrella : CDM Advisory, Strategic Consulting, Asset Management & Solar. The CDM (Clean Development Mechanism) Advisory Team structures and guides greenhouse gas emission reduction projects from beginning to end, working with both project developers and buy‐ ers of emission reduction credits. It has experience with projects in a wide range of sectors, including Wind, Hydro, Cogeneration, Natural Gas based Trigeneration and Fuel Switch The Strategic Consulting division is making a foray into the emerging Carbon Neutrality and Busi‐ ness Continuity market. It encourages the consumers to offset their entire personal & business Green House Gas footprints. The Asset Management team projects carbon credits as an investment portfolio. With the inherent volatility and wide variety of trading instruments, the Carbon Assets make themselves an ideal in‐ vestment opportunity with great returns. The Solar Team provides concept to completion solutions to fulfill all energy requirements using Solar Photovoltaic Tech‐ nology. Their knowledge and technology is directed to en‐ able customers to make "Sun" a reliable source of power gen‐ eration in India. GreenKarma ‐ a brand promoted by Gensol Consultants is making its foray in this emerging market and encourages the consumers to offset their entire personal and business GHG footprints including specific activities like air flights, confer‐ ences, car travel etc. GreenKarma offers a wide spectrum ser‐ vices including Carbon Offsetting solutions, market analysis and a host of green products blended in a transparent system.
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RESEARCH
Deciphering the mysteries of luxury marketing This article is based on a research paper authored by Angshuman Ghosh (PhD Scholar, Marketing Man‐ agement) and Prof. Sanjeev Varshney (Assistant Professor, Marketing Area) of XLRI, Jamshedpur. The original paper has been selected for the Third International NASMEI Marketing Conference to be held in December, 2009 Introduction: In the popular sense ‘luxury’ is something which is not a necessity. Though tradi‐ tionally luxury was meant for the ‘happy‐few’ currently it is not only restricted to elite class of the society and the concept of mass‐luxury is getting popular (Nueno and Quelch 1998, Silverstein and Fiske 2003). In this context, one research manager at Euromonitor International said: “Luxury has always been a relative concept, but there is no doubt that luxury has gone more mass market in recent years” (Perez 2008). Luxury goods, in spite being a huge industry (sales of 170 billion euro in 2008 as per Bain & Company) as a subject has received limited attention in marketing litera‐ ture. Studies have focused on definition of luxury, have commented on the characteristics of luxury buyers and some others researched buying motivations of luxury consumers. But no study inte‐ grates them all and presents a holistic model of luxury consumer behavior study. This paper is an attempt to bridge this gap. Detailed literature review throw three perspectives to explain luxury consumer behavior: product perspective, consumer characteristics and their buying motives. The Product Perspective: Luxury brand has been defined as: “evoke exclusivity, [have] a well known brand identity, [enjoy high] brand awareness and perceived quality, and retain sales levels and customer loyalty” (Phau and Prendergast 2000) and “timeless, modern, fast‐growing and highly profit‐ able” (Wetlaufer 2001). But these features are mere outcomes of what luxury brands are and not their inherent characteris‐ tics. Beverland (2004) defined luxury with six dimensions: value‐driven emergence, culture, history, product integrity, marketing and endorsement. Dubois et al. (2001) found out six key dimensions of luxury: excellent quality, very high price, scarcity and uniqueness, aesthetics and polysensuality, ances‐ tral heritage and personal history and superfluousness. Later De Barnier et al. (2006) also found these six dimensions to be important in their cross‐cultural study. Based on above find‐ ings following six key dimensions to define a luxury product/ brand is proposed by the current study: perceived premium quality, aesthetics, expensiveness, history, perceived utility and perceived uniqueness/exclusivity. The Consumer Perspective: Dubois and Duquesne (1993) found that both income and culture are important factors for luxury goods. The recent cross‐cultural studies (Dubois et al. 2001, De Barnier et al. 2006) reiterated importance the cultural factors. Hauck and Stanforth (2007) found that there is significant difference in perception of luxury goods among different cohort groups. The Buying Motivation Perspective: Literature further identifies motives behind purchase of luxury goods. The contrasting philosophy of Epicurus and Aristotle give two opposing motivations for consuming luxury. While former considers self‐pleasure as the motivation and supports luxury, latter condemns luxury considering show‐off as the motivation for consuming luxury. In the end of 18th century Veblen (1899) pointed out that people tend to emulate leisure class or upper‐strata of society. (Contd. on Page 8) 7
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RESEARCH (Contd. from Page 7) In modern time researchers have emphasized impact of conspicuous consumption motivation in the context of luxury consumption (Bearden and Etzel 1982; Mason 1981). Taking it further Vi‐ gneron and Johnson (1999) used the term ‘Veblenian’ to explain this and highlighted that this type of consumers are publicly self‐conscious people and puts a greater importance on high price. On the other hand privately self‐conscious people will give more importance to product quality and aes‐ thetics. Both hedonist and perfectionist motivation defined by Vigneron and Johnson (1999) de‐ fines this group and ‘hedonist’ motivation is used in this study to define this motivation. Leiben‐ stein (1950) came up with the con‐ cept of ‘bandwagon’ and ‘snob’ ef‐ fects. In case of former the demand of a product increases when other consumers also buy it and for the later demand of the product goes down if others also buy the product. While a ‘snob’ consumer tries to avoid an unwanted reference group membership, ‘bandwagon’ consumer wants to enhance her self‐concept by following her aspired reference group: in both the cases people try to express themselves and enhance their self‐concept. Consumers can also buy a particular luxury good for its symbolic value and thus try to ex‐ press herself or her values. ‘Self‐ expression’ motivation captures ‘snob’, ‘bandwagon’ and ‘symbolic’ consumption motivation. Conceptual model: Based on the literature review current study proposes the conceptual model presented in Fig 1. It proposes direct impact of luxury product characteristics, consumer character‐ istics and buying motivations on luxury consumer behavior. In addition it also proposes interaction effects among luxury product characteristics, consumer characteristics and buying motivations.
Research implications/limitations: Luxury as a concept is quite complex and context specific; even one single person might have conflicting opinions about luxury (Dubois et al. 2001). Culture, country and even individual variables will have a huge impact on the perception of luxury and a general model is difficult to conceive. None the less based on extant literature this paper presents a comprehensive model to be tested empirically in different paradigms and clarifies many apparent contradictions in previous research.
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NEWS WATCH Global Consulting Market — Irreversibly Changed Kennedy Consulting Research & Advisory’s definitive annual study, Global Consulting Marketplace: Key Trends, Profiles and Forecasts, indicates that what few drivers of demand there are will now serve to sustain, rather than grow, the overall market. By all accounts, knowing how and where to devote resources has never been more critical for consultancies looking to capi‐ talize on scarce client demand. "Given the market contraction in 2009 which is only expected to flatline in 2010, well‐positioned consultancies are smart to vie for clients with stimulus and/or bailout money," said Kelly Matthews, Associate Director of Kennedy Consulting Research & Advisory and lead analyst for Global Consulting Marketplace. "However, circumstances dictate that such rewards may be realized only in the short‐term and consultants will face severe fee pressures due to unprecedented competition." Looking forward, Global Consulting Marketplace shows that toward the end of the 2009‐2012 forecast period, increased client demand for engagements in the areas of sustainability and business intelligence will drive the need for consulting services. Companies seeking to expand their own business opportunities or alter production processes will demand consulting support in emerging markets such as China and Brazil. As firms vie for what little opportunities there currently are, competition within the overall global consulting marketplace will only be expected to increase. Source: http://www.consultantnews.com
FUN CORNER Top 5 things you’ll never hear from a consultant 1. You’re right; we’ are billing way too much for this 2.
Bet you I can go a week without saying “synergy” or “value-added”
3.
How about paying us based on the success of this project?
CRESCENT MEMBERS Faculty Advisor Prof. Munish Thakur
Secretary Vishal Agarwal Senior Executive Members Abhinav Singhal Ankit R. Agarwal Anwar Syed Mandar Kulkarni Manoj G. Kamath Sandip Shinde Junior Executive Members Aalok Sanghvi Ajanta Anindita Himanshu Saxena Indrajit Yadav Miti Vaidya Mohammed Quraishi Siddhesh Ajgaonkar
4. This whole strategy is based on a Harvard Business case that I read
CRESCENT email id
5.
crescent@xlri.ac.in
Everything looks okay to me
Cover Photo Courtesy Varun Madan
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