Sutanu Guru analyses how the fascinating wars between Indian and global companies and brands maintain a blistering pace Marketing wars have always been exciting. Legendary stories have been built around marketing whiz kids and advertising brains scripting scenarios as if in a war. At the end of the day, the war is all about capturing a larger market share; just as real warriors in ancient times fought to capture more territory. But a special flavor is added to these marketing wars when we provide an interesting and thought provoking context. Perhaps the most thought provoking one at the moment in India is a series of brutal marketing wars being fought by "desi" and "firang" firms. In simple English, that would be territorial wars between companies that have origins in India versus companies whose headquarters are based overseas. You think desi versus firang is not happening in India? Look again at the market place around you and you will be amazed by the extent and intensity of these no holds barred battles between the desi and the firang. Say you have fallen in love with taxi aggregating services: like millions of urban Indians have. While there are lots of choices in offer, the real war is between desi Ola Cabs and firang Uber. No trick is being ignored, and no stone unturned by Ola and Uber as they furiously expand across India and come up with strategies to lure-and keep- more and more consumers. Estimates and projections vary wildly, but the fact is that Ola and Uber are fighting to be top dog in a market that could be worth as much as Rs 25,000 crores a year by 2020. There is another cruel choice aspirational Indians face as they live out their online dreams. Most analysts reckon that the online shopping industry could touch gross revenues of $60 billion by 2020. Dozens of players are jostling for a slice of the explosively growing pie. The company Snapdeal is indeed a force to reckon with. But we all know who are the two rivals fighting it out to be numero uno. Yes, we are talking about the unending and unrelenting marketing war between desi Flipkart and firang Amazon. In the years to come, this one will undoubtedly be a case study that will be taught by marketing professors in B schools across the world. Don't for a moment think that these desi versus firang marketing wars can be found only in the brave new world of the Internet and Apps. They are very much a part of even traditional segments of the marketplace. Recently, Café Coffee Day listed its share on stock exchanges. This is no place to comment on the listing and its aftermath. The really interesting story is how the desi Café Coffee Day is taking on competition from a globally iconic brand like Starbucks. As India becomes more and more urban, this will be another riveting war to witness. But perhaps the bid daddy of them all when it comes to marketing battles is between two former partners turned rivals, Hero and Honda. Between 1984 and 2011, the desi Hero group and the firang Honda forged a strategic partnership that became a global success story. Hero Honda emerged as the largest two wheeler company in the world. The two parted ways in 2011 and have since been locked in a brutal marketing war. With annual sales in units expected to cross 5 million in fiscal 2016, Honda is breathing down the neck of Hero which expects units sales in excess of 6.5 million in fiscal 2016. There are dozens of similar battles being fought across the Indian market. And each one is unique and fascinating in its own way. But a look at how marketing wars have evolved over the last three decades in India reveals two things. The first is the enduring strength of many Indian brands. Just one example will prove this point. After fighting a pitched and brutal war with Pepsi for years, Ramesh Chauhan, who promoted Thums Up, Limca and Gold Spot, sold off his brands to Coke when it re entered India in the early 1990s. Everyone, including marketing whiz kids at Coke thought Thums Up would die a natural death in a few years. But so powerful was consumer loyalty towards Thums Up that Coke bosses had to eat humble crow and continue the brand they had planned to kill. Many such desi brands have survived the onslaught of foreign Giants and tell a story of their own. The second thing is that with increasing globalization, there is a blurring between pure desi and firang brands. Since the company was originally promoted by an Indian, Sunil Bharti Mittal, Airtel can be considered to be a desi brand. But then, Bharti has expanded to many other countries and is considered a firang brand in many African countries. Then again, if you add institutional and other strategic investors, the firang ownership quotient at Airtel is perhaps bigger than the desi one. Perhaps it is worth doing a series of stories on these individual marketing wars between desi and firang brands. They always make for an interesting read anyway!
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Retail entertainment zones will figure in cities’ master plans and development control regulations, and get up to 50% additional FSI writes, Ashutosh LimayeConsidering retail to be an essential amenity, the Maharashtra state government recently shared the draft of a new retail trade policy. To help retailers achieve optimal potential, the state government has suggested making some exceptions and relaxations in the current regulatory framework. Among the key suggestions is the introduction of retail entertainment zones (REZs).Why REZs Are NeededThe development control regulations (DCR) shall reserve spaces for retail and entertainment on the same lines as reservations for essential services and restaurants, in order to make retail more affordable. Currently, the urban policy does not clearly reserve spaces for shopping and recreational needs of citizens, so shops tend to be set up in a haphazard manner. More importantly, shops compete for spaces in commercial locations, which are extremely expensive and untenable for the retail industry.Creating a zone for retail and recreation will help increase consumption and simultaneously raise the standard of well-being of citizens. With this new policy, the state government will aim to recognise the need for shopping and recreational areas to create a much-needed balance between residential, commercial, industrial, shopping and recreational areas in urban places.Accordingly, efforts will be made to:· Provide retail areas with direct access to mass public transport systems,· Secure a traffic plan designed for the long term,· Ensure year-round electricity, water, gas, sewage and IT connections.REZs will be large retail developments where many big-box and other retailers will come together and give families an opportunity to spend an entire day out. The state government will consider such a ‘retail park’ concept under its master plans to give the advantage of choice to consumers, increase competition (which will help reduce prices for consumers) and also reduce vehicular usage by eliminating the need to travel to different parts of the city merely to compare retailers.These retail parks would preferably be adjacent to highways and have an integrated public transport system. This will support connectivity, ease traffic in and around the city, provide customer convenience and result in cleaner cities.Retail Zones To Figure In Regional/Town PlanningCity master plans shall reserve land for retail development on the lines of Delhi, where they have been able to create specific centres in South and West Delhi for retail.Benefits1. Large malls of international standards require larger land parcels. Earmarked spaces in master plans will help them maintain high standards of development2. The earmarked spaces for retail / entertainment development would also rationalise land prices3. Infrastructure like roads, public transportation and power will be planned in advance.Development Control RegulationsRequirements for retail and other businesses are different, and there is a need to incorporate such specific business needs. The following modifications will be done to enhance viability and quality of development for retail centres:· Higher ground coverage: Malls house various retail components across floors but customer movement reduces on the higher levels, making them less productive. Retail development shall be allowed higher ground coverage up to 70% (subject to setback and fire safety regulations as also FSI norms being followed).· Recreation ground: In a retail environment, organised players offer various types of recreational facilities and activities on a commercial basis. Such activities, within the applicable norms, should be allowed to set up in a ‘recreation ground’.· Floor to floor heights: Retail developments, being public spaces, get crowded. The availability of higher floor-to-floor height allows the common areas and shops to look spacious and provide a relaxed and comfortable shopping environment to customers. The floor-to-floor height limit shall be raised to 5.5 meters, as is allowed in several other states.· Parking norms: Malls, depending on their sizes and locations, receive a large number of vehicles. Limited parking space not only reduces the number of people visiting malls but also creates traffic hassles in and around them, leading to public inconvenience. The parking rules, which currently consider parking in excess of regulation as FSI, will be changed to allow larger numbers of car parks – without FSI implications.· Services: Unlike office spaces, retail spaces need more services due to movement of goods and customers throughout the day. Retailers need to replenish their stocks in the store to service customers’ needs, and thus require higher storage space in a mall. Moreover, to cater to large numbers of customers and to provide ease and comfort of movement, high capacity air-conditioning, escalators and lifts are required. 15% of development will be allowed as services including storage areas in the basements, etc.· Changes: Space requirements of retailers and demographic profiles of customers both keep changing. Changes in use of spaces - for example, from fashion retailing to restaurants to entertainment or vice versa, are frequently seen. To address these needs, spaces for retail and other uses will be allowed to amalgamate, divide or interchange with simplified approval processes.· Building height: Currently, there is a height restriction of 30 meters for buildings that house a multiplex or auditorium. Retail developments generally do not work at higher levels. Therefore, to use the entire eligible FSI of the land, alternate commercial use like hotels, service apartments, offices, etc. are required to be developed on upper floors. Restrictions on building heights will be relaxed as done in neighbouring states.· Additional FSI for retail zones: To enhance the viability and quality of development for retail centres, up to 50% additional floor space index (FSI) will be admissible over and above the base FSI subject to payment of full applicable premium, as per the prevailing ready reckoner rates.The author is National Director – Research, JLL India
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After more than a century of air travel across the world, airports have transformed radically from simple transitory stations to sophisticated commercial hubs, which are as complex to operate as small cities. Fast-moving technological developments in aerospace infrastructure, flight operations and managerial intelligence are serving to usher in a new era of airport functionality. Further, with the proliferation of more pervasive connectivity, access to more bandwidth at lower costs, reduced data storage maintenance as well information processing and comprehensive analytics - a new paradigm for aircraft and airport connectivity has been created.Here in India, airports across the five major metros of Delhi, Mumbai, Bangalore, Hyderabad and Chennai have experienced a rapid transformation and any recent traveller will testify to their international standards. The Airports Authority of India (AAI) has put in place a laudable goal of upgrading all of the country's airports within a span of 10 years to ensure better connectivity within the country as well as to international destinations. This is a crucial move as passenger numbers across the country are expected to reach 540 million annually by 2025 up from 169 million witnessed in 2013-14. However, operator margins have remained tight despite continued growth in passengers. Thus, lowering of operational costs has become one of the key challenges in the Indian aviation industry.To cope with the country's growth, new airport systems need to be adopted to significantly streamline the growing air traffic. There has to be a closer synchronization between the facets of air traffic flow management, air traffic control, aircraft operators, ground handling and airport operations. In essence, creating an ecosystem of next generation, satellite-based technologies that provides flight crews, passengers as well as maintenance and operations personnel with real-time seamless access to information is pivotal. Further, airports must be able to know their future resource needs by traffic forecasting done by simulation softwares. In other words, India's airports of the future need to become smarter.It would serve the authorities operating these various aviation hubs well to make note of some of the newer technologies that would assist them to address multiple situations being faced by operations staff and travellers. For instance, Near Field Communications (NFC) can make the experience of flying seamless by reducing processes and allowing direct contact with the passenger. For example, unmanned boarding will automatically admit travellers by reading the boarding pass stored on their phones. In addition, providing phone notifications in the event of travel disruptions and immigration procedures will ensure a more tranquil travel experience. Hence, airport operators should ideally look at investing further in solutions that further consolidate their current Wi-Fi networks and enhance their cloud infrastructure to allow for better movement of passengers through an airport terminal. While the journey towards completing the defined target of upgraded aviation hubs within the next 10 years is a formidable one, the right steps are being taken to guarantee its completion. Thus, various stakeholders in India's aerospace sector should look to streamline the sanction and implementation processes to put in place solutions that can greatly increase the overall capacity handling of airports as well as reduce their respective carbon footprints and enhance safety. By doing so, the country's aviation hubs would also be able to handle a larger volume of air cargo and remove the current challenge of transport aircraft competing for take-off and landing space with commercial aircraft. Hence, various market players should aim to develop and offer the AAI solutions that will aid in creating a smarter airport ecosystem, which will in turn power both the local and national economies.The author, Arijit Ghosh, is president, Honeywell Aerospace India
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Sutanu Guru pays tribute to Brijmohan Lall Munjal, patriarch of the Hero group The year 1982 will always be a checkered one in contemporary Indian economic history. The year marked the arrival of "flyovers" in Delhi along with the Asian Games. It also marked the arrival of color television, now such a ubiquitous presence even in lower middle class households. The government of Indira Gandhi de licensed the cement industry; the first major "economic reform" policy announced in India. Of course, work began in a factory in then undeveloped Gurgaon to roll out the first Maruti car. It was around this time that Brijmohan Lall Mujal started dreaming big. The Union government encouraged its own version of "Make in India" then by allowing Indian entrepreneurs to form joint ventures with foreign companies to assemble, and eventually manufacture consumer electronics and automobiles. Back then, Rahul Bajaj of Bajaj Auto was the unchallenged king of the Indian two wheeler industry. Many public sector units and some private sector upstarts like LML had tried hard to break the Bajaj stranglehold. They had all failed. It is hard to believe now, but there actually was a long waiting period for Bajaj scooters at that time. The wait sometimes extended as long as three years. Into this scenario entered a clutch of Japanese companies with Indian partners. And they all launched motorcycles using the latest technology while the dominant consumer preference was scooters. TVS tied up with Suzuki; Bajaj tied up with Kawasaki; Escorts tied up with Yamaha and a little known entrepreneur named Brijmohan Lall persuaded Honda to form a joint venture. Hero Honda was formed in 1984. The rest, as they say is history. In hindsight, what is truly remarkable is the ability of a "son of soil" entrepreneur to not only understand consumer preferences, but display a mastery over communications, advertising and brand building. Thirty years ago, Lall had figured out that the era where outdated scooters dominated the two wheeler industry (aka Bajaj) were coming to an end. Lall also figured out what an aspirational middle class young Indian wanted from his two wheeler apart from convenience: fuel economy. And thus was born the legendary advertising slogan: Fill it, Shut it, Forget it. Hero Honda motorcycles offered an unheard of fuel economy of 80 kilometers to a liter of petrol, and it used aggressive advertising to keep driving the point home. It was a matter of time before Hero Honda dislodged Bajaj Auto as the number one two wheeler company in India. Bajaj has never been able to recover the mantle. It was also a matter of time before Hero Honda emerged as the largest two wheeler company in the world. During this spectacular journey; the fact that Lall was a rooted son of soil did wonders for his company. Stories are legion of how Lall would cultivate dealers across India, making it a point to attend family functions and develop a long term strategic partnership with them. India has thrown up many remarkable entrepreneurs since the 1980s when the economy started re engaging with the world. Quite a few have fallen by the way side. But when it comes to building a world class brand and sustaining, there can be little doubt that Brijmohan Lall is right up there. Ironically, the legend has passed away at a time when his one time partner Honda now challenges the Hero supremacy of the Indian two wheeler market. In 2011, Hero and Honda parted ways. Since then, the wheels of consumer preference ha e turned again as urban buyers are once again choosing scooters over motorcycles. Till he gave up the mantle in June this year, Lall was acutely aware of this and had been prodding his company to to invest massively in new generation scooters. Perhaps the most fitting tribute that his inheritors can give Lall is to ride the new wave of consumer preference and reinforce Hero Motor Corp was the largest two wheeler company in the world.
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For artists and designers, the days of having to schlep all their artwork to brick-and-mortar galleries, just to sell a few prints, are long gone. Today they can meet buyers from all across the world in virtual marketplaces to sell their creative work like digital art, photography, film, animation, comics, anime, stock images and more. They no longer have to invest huge amounts of time and money building their own stores as ecommerce websites has flourished which allow them to reach a wider market and sell their designs in a variety of products. It's mostly free to set up, and the products are produced, shipped, and managed for artists - leaving them with only the designing to do. Online marketplaces for authentic and affordable art are witnessing surging demand due to convenience and flexibility they offer to consumers and businesses alike. These companies are making the process of discovery easier and buying faster as they have taken a digital-first no-inventory approach to selling art. E-commerce is at the heart of this resurgence for domestically produced products in India that for years have had a hard time finding buyers. More importantly, these online players are empowering artists to take charge of their art business, and to not let others dictate whether or not their work is good enough to be sold. A majority of customers buying art online are under 35, looking for fashion and art they can relate to and that cannot be found in stores.Print-on-demand websites are getting popular globally for their ability to put an artist into the manufacturing market so easily and quickly. All they have to do is upload their work and, in some cases, set prices. Everything else is done for them - printing their artwork on a range of lifestyle products, including apparel, home decor, technology accessories, and wall art. Leading-edge print-on-demand technology enables production individually for each consumer.The great news is that thanks to the surge in these online marketplaces combined with the power of social networking, amateur artists can now present their art online, bypass the limitations of search engines and bulk art/artist websites, cultivate their own followings and ultimately make sales. Enterprising artists are regularly attracting hundreds of thousands of followers. Since artists now have to focus only on designing and spreading their collection link online, those who do it well, end up raking anywhere between $800 to $4,000 every month. The highest selling artists post regularly, maintain consistent and engaging dialogues, provide insight not only into their art but also into their lives and adventures as an artist, and are good about interacting with their fans. With an expanding online art market in India, we're not just seeing changes to how art is sold, but also changes to what is bought, at what price points it's bought, why it is bought and by whom. The ability of online art platforms to empower the public as tastemaker & democratize art is an example of one such change, one which has many positive outcomes: for the public, who will be able to decide what makes the cut; for artists, who desire a level playing field; and for culture, which will become far more representative of all society, not just the wealthy classes. The biggest difference between major players in this space is the pricing systems. With some, the artist decides their own price above the base price and they pocket the difference. With others, prices are pre-determined by the site and artists make a fixed percentage of each sale. In almost all cases, the artist retains all rights to the artwork and they grant the online marketplace a non-exclusive license to use the artwork. There are also differences in terms of analytics provided, payment mechanism, quality and product standards, and most importantly traffic on website. The internet is offering the visual art market great potential for growth and change. Globally, online sales make up just 1.6% of total global sales, but this is set to change. In the past couple of years millions of dollars have been invested in online platforms. Sizeable new rounds of outside investment for a number of online art platforms have happened in the last two years. In 2013 Artspace received $8.5m of investment, Paddle8 received $6m of investment, Artsy raised $5.6 million, Society6 & Saatchi Art was acquired by Demand Media. Last month, a major player in the online art space Redbubble raised $15.5m from some of the top notch investors in the Silicon Valley. One thing for sure that globally there's a lot of investor money being poured into online art marketplaces right now. And secondly, the online market for art related products is growing and there's sufficient evidence of its success that brick-and-mortar galleries need to be paying attention. The author, Bharat Sethi, is founder & CEO of PosterGully
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Scarcity and exclusivity lead to an increase in willingness to pay and perceived prestige value, writes Ranjan BanerjeeGuess the largest channel through which Rolls-Royce cars are sold in the United Kingdom. The answer: yacht shows. It’s not that surprising, when you think about it. Yacht shows attract the right audience: wealthy people with high disposable incomes, who value the good things in life.The strategy hinges on a well-researched phenomenon in behavioural economics called anchoring. It refers to the observation that consumers do not judge value and make decisions in a vacuum — they do so relative to a reference point. The process of forming reference points is subjective. It is possible to anchor reference points and impact decisions. A consumer who has come mentally prepared to buy a yacht is less likely to balk at the price of a Rolls-Royce.The 2009 US film The Joneses takes the role of luxury reference points to a whole new level. The Jones family moves into a swanky neighbourhood and quickly becomes the cynosure of the neighbours. The Joneses are good-looking, and they flaunt the latest gadgets with panache. Soon, many neighbours begin using the same products. Spoiler alert: as the plot progresses, we learn that the Joneses are really actors who get paid based on the sales of the products they flaunt. The film has satirical elements and takes an interesting turn, but the role of reference points in luxury consumption comes through clearly.When consumers buy luxury goods, they are often guided by an image or experience, which is hinted at or perhaps sampled. Marketing luxury goods is about look and feel, so it’s important to focus on the minutest aspects of the buying and ownership experience. Design, styling and sensory elements all play a significant role in creating this experience.A study of sensory branding by researcher Martin Lindstrom reveals that the more senses you involve at the point of sale, the higher the likelihood of conversion. This is important, because most luxury goods are high-margin, infrequently purchased items.For example, German luxury car maker Mercedes-Benz employs a team of 10 engineers whose sole task is to create the ideal sound for the opening and closing of a car door. Rolls-Royce combined some 800 ingredients to re-create the scent of its classic 1965 Silver Cloud, to spray under the seats of its new cars. Thus sensory elements are used to cue an image, enhance the anticipation of possession, and subtly shift consumer reference points.Research also suggests that many prominent brands deliberately produce less than they know they can sell. Part of the value of luxury goods comes from possession, and part from the fact that people who do not belong to a particular group do not possess it. Scarcity and exclusivity lead to an increase in willingness to pay and perceived prestige value. When a brand produces a limited edition, the implied exclusivity moves the consumer reference points on price upwards.So reference points matter when buying luxury goods. What luxury brand do you aspire to buy? How did your reference points for it get created? These questions can help both consumers and marketers make better decisions.(This story was published in BW | Businessworld Issue Dated 16-11-2015)
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Some say that nothing can come between a man and his true love of biryani. The food item, which is believed to have originated in the sixteenth century, is now being served in its original essence through a food startup, Biryani by Kilo in Gurgaon, near Delhi.Started by restaurateur Kaushik Roy in June this year, Biryani by Kilo (BBK) aims to deliver a vintage Khansama-style biryani experience to its lovers with the utmost convenience. With varieties of Lucknowi and Hyderabadi biryani on the menu, BBK charges Rs 525-750 for a kilo, which can feed three people according to Roy.Interestingly, the biryani is freshly made after the order is placed, and is delivered in approximately 45 minutes along with a small angithi to keep it warm. Roy says, “Our delivery is restricted to Gurgaon as of now, but we also accept bulk orders from the National Capital Region. Delivery, however, takes two to three hours.”With a 25-member team working out of a single kitchen in Gurgaon, BBK has got a positive response within four months. “We broke even in the second month, and sales have been increasing 20 to 30 per cent a month since then,” says Roy. Started with an initial investment of Rs 60 lakh, BBK plans to expand to 20 kitchens across India in the next two years.-Shantanu Jain(This story was published in BW | Businessworld Issue Dated 16-11-2015)
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By Neetu BhatiaJonas Hoffman and Laurent Lecamp in their book Independent Luxury have explored the challenges faced by independent luxury entrepreneurs and explained why they need to remain in business. The book is an exhortation to independent luxury brands to innovate. The authors lay down a path for entrepreneurs, creators and designers in the luxury world to, first and foremost, stay independent, build groundbreaking products and formulate strategies that will help them go “back to the roots” of luxury.The authors argue that as a handful of luxury multi-brand houses continue to grow and proliferate, the fundamental hallmarks of a luxury brand — being truly unique, high on the discernment curve and appealing to a true consumer of luxury that values old-fashioned craftsmanship — are and can continue to be alive and well via independent innovation and vision. While the big multi-brand houses are churning out “mass” luxury product and, in some sense, “assembly line” luxury goods, the independents can make a foray with equal measures of innovation, vision, courage and tenacity. Neetu BhatiaThe book uses significant analogies like those of the endangered species of the Knysna elephant in the forests and savannahs of Africa to highlight the need to maintain the independence of luxury. It offers theories, tools and stories to luxury entrepreneurs to build and achieve success in the face of continued vertical integration by global luxury giants. In their push to achieve economy of scale, these large companies will continue to standardise the notion of luxury, which in itself is an oxymoron. The focus on quarterly earnings and private equity exits is antithetical to the traditional and independent luxury houses that have built these over multiple generations.The authors argue that in their quest for scale and profitability, major luxury brands run the risk of dilution and the eternal balancing act of exclusivity versus accessibility. Borrowing from Clayton Christensen, Hoffman and Lecamp suggest that these companies may be caught in the “capitalist’s dilemma” and a vicious circle that needs increased accessibility but at the same time need to be fresh in their approach.They also analyse consumer behaviour, especially in Asian economies such as China, and take us through the stages of luxury lifecycle evolution. The fact that a huge swathe of the region’s population has developed “logo fatigue” and that, as these consumers become more discerning and evolve from the materiality of brands to the culture of luxury, the authors suggest, there are tremendous opportunities for independent luxury entrepreneurs.The authors also outline the role of the digital revolution with social, mobile, data and Internet of Things as disruptive and enabling forces for independent entrepreneurs to take advantage of. They further explain four innovation strategies that independents can adopt.The fact that large groups continue to want to acquire independents in itself is proof of their strength. As an entrepreneur and a discerning customer of a select set of luxury brands, I find this book at once, informative and edifying. The authors have done a fine job of providing inspiration to the creators of independent luxury.Bhatia is CEO and Co-founder, KyaZoonga(This story was published in BW | Businessworld Issue Dated 16-11-2015)
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