Tuesday, May 25, 2010

POWER OF INNOVATION

It’s no mean feat to connect with rural consumers, but with ‘Jalsa’ and ‘ChotuKool’, Coca-Cola & Godrej have accomplished the task with ease

It’s not a cakewalk to think out-of-the-box and companies are aware of this harsh reality. But, if chiseled intelligently this bitter task can turn out to be a sweet verity for a company and that too without even an iota of doubt. Don’t agree? Ask Coca-Cola India and you’ll come to know that how through a unique consumer engagement initiative named ‘Jalsa’ this soft drink major has slotted its rural balls in the right net. And all that it took to accomplish this heavy duty chore were just few shows!

The company had organised shows (with an audience base of around 15,000-20,000) in small towns and villages of Uttar Pradesh and Bihar last year to connect with the locales. Based on a local “Folk Fare” narration through dance, poetry and plays, the show had professional dancers performing live on popular Hindi and Bhojpuri songs and the show generally lasted for about 2-3 hours. Interestingly, the company did all its advertising through an auto rickshaw, just three days prior to the event.

Moreover, in order to participate in ‘Thums Up Jalsa’ the consumers had to purchase a bottle of Thums Up (For instance, Coca-Cola gave one free ticket with every RGB bottle and two free tickets per 600 ml bottle). Not only this, sometimes the ticket also carried a unique number which gave consumer a chance to win attractive prizes like TV, music system, et al, in contests organised during the show. As Atul Singh, President and CEO, Coca-Cola India admits, “In the 3rd quarter of 2009, unit case volume growth for Coca-Cola India grew by 37% against the 18% increase in the prior year.” Apart from innovative thinking in terms of engaging consumers with the brand, the company has also introduced a mirco-nutrient drink ‘Vitingo’ especially keeping in mind the micro-nutrient malnutrition that is caused by the lack of sufficient micronutrients in the diet of the people rural India. Available in 18 gm sachet at Rs.2.50, Vitingo provides affordable nutritional beverage alternatives to the “bottom of the socio-economic pyramid” population.

It’s not just Coca-Cola, which is trying to exploit such opportunities through innovative thinking. In fact, FMCG major, Godrej, has already made its way into the hearts of rural customer and that too through a nano refrigerator – ChotuKool. The refrigerator was specially designed for the Indian hinterland. Red in colour, ChotuKool weighed only 7.8 kg and was priced at Rs.3,200 only. It even ran on battery and had no compressor. Result: Godrej had not only added 1,700 new small towns and 5,000 villages to its rural coverage in the last six months but is now looking at expanding its reach to 50,000 villages in the next three years. Now, that’s what you call the power of innovation!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

For More IIPM Info, Visit below mentioned IIPM articles.
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Friday, April 30, 2010

I invest my money in stocks which give me good returns


Though some of these austerity acts have back fired (remember Jet fiasco), but most of them have gradually pushed airlines towards the profitable zone. Well, the recent and long awaited profitable quarterly results of both Jet Airways and SpiceJet (Rs.530 million Q4 ‘08-09 and 260 million Q1 ‘09-10 respectively) stand testimony to the fact. Further, the continuous fall in the price of the air turbine fuel (ATF) over the last one month (Jet fuel form 40 to 50% of the total input cost) has contributed to the cause. “A shift in passenger traffic from FSCs to LCCs coupled with added capacity have helped SpiceJet gain market share. While the total passenger demand is expected to remain unchanged, our goal is to continue to gain market share in 2009,” explains Sanjay Aggarwal, CEO, SpiceJet.

The fact that further encourages investors to invest in the domestic airlines is the favourable attitude of the government towards the sector. Apart from restructuring the ailing Air India, it’s also taking initiatives to fuel the revival of the sector. Reportedly the government is planning to include jet fuel under the purview of goods and services tax, starting next fiscal. This would help airlines in further reducing the overall cost.

Moreover, the contentious proposal by Praful Patel, which allows foreign airlines to pick equity in their Indian counterpart, would definitely give some breathing space to the cash strapped domestic aviators. Apart from easing the norms for Indian carriers to fly abroad, the ministry has also been lobbying for tax sops. “There has been a perceptible change in India’s airport infrastructure, especially with the modernisation of the Delhi and Mumbai airports. We believe this improvement would translate into better airlines’ productivity and profitability,” agrees Mahantesh Sabarad, Aviation analyst, Centrum Broking.

Further, Indian investors can also take a positive clue from the fact that encouraged by the favourable standings and better future prospects the domestic airlines are now raising funds from overseas. While Goyal plans to raise $400 million through a QIP, Mallya has unleashed plans of raising $175 million from overseas investors by March 2010. Not to forget, SpiceJet is already being supported by Wilbur Ross.

No doubt, these are reasons enough to encourage an investor. But then, the one thing that they need to keep in mind before digging too deep into their pockets is that the airlines are still not out of the woods completely. Industry experts continue to stand firm on their prediction of losses for the sector for the current fiscal. Further, debt burdens for these airlines are still mounting. For starters Kingfisher Airlines is burdened by a total debt of Rs.60 billion. “Yields continue to remain weak, and with the industry moving strongly to the low cost model, downward pressure on fares will continue. So it is likely that the outlook, although better, will continue to remain challenging for some months to come,” predicts Somaia of CAPA.

Thus, looking at the prevailing uncertainties, new investors should keep their eyes and ears open before taking the final plunge into the sector. In fact, the best option available for the existing investors is to quickly book profit and exit. Or may be, it’s already too late for some!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

For More IIPM Info, Visit below mentioned IIPM articles.

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Friday, April 09, 2010

CONFUSED CONSUMERS!

And now for a very different re-positioning song – one that has left many customers confused. Yes, we are referring to Naresh Goyal’s third airline brand, Jet Konnect.

The slowdown-induced tightening of purse strings possibly hit the air travel sector the worst. The domestic market shrunk significantly and there was a significant shift of air travellers from full service carriers to low cost airlines. Given the changing market dynamics, and to cash in on consumer preference for low cost airlines – Jet Airways’ Naresh Goyal launched a third brand Jet Konnect, which became the second low cost brand from Jet’s stable (after JetLite). Jet Konnect is flying on specific routes to replace many of the Jet Airways (full-service) flights. Now the obvious question that pops up, why a third brand? Why not simply replace the Jet Airways flights by its low cost carrier JetLite? As K. J. Singh, Co-Founder and CEO, Evolve Brands says, “It makes more sense to fly with a single-brand rather than having two separate brands catering similar facilities. JetLite and Jet Konnect have nothing different apart from the routes.” Well Goyal thought of that option first but had to drop it due to the operational and regulatory hiccups, which would have complicated and in turn delayed the shift in the strategy. Thus, a third brand was a quick and easily deployable solution to battle the tough economic times. A smart business strategy!

So what went wrong? Well, Goyal failed to support its strategy with a right marketing plan! As a result, till date, the differentiation between Jet Konnect and JetLite in consumer mind is fuzzy. So much so that many fliers aren’t even aware that Jet Konnect is a separate airline. Many travellers believe that Jet Konnect is yet another scheme launched by JetLite. Binit Somaia, Regional Director, Centre for Asia Pacific Aviation explains, “The challenges which Jet faces is the potential for consumer confusion between the three brands, as well as the fact that Jet Airways and Jet Konnect fall under the same management.”

Ratan Lal Bhagat

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

For More IIPM Info, Visit below mentioned IIPM articles.

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Thursday, March 25, 2010

Life Plan ka irada

After launching a series of comunication on Child Plans and Pension Plans, Max New York Life Insurance, under its refreshed positioning, ‘Karo Zyada Ka Irada’, has recently launched an ad campaign to promote its Life Plans. The communication revolves around the idea that even a short separation from our loved onesmakes us paranoid. But what if they were gone forever?

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

For More IIPM Info, Visit below mentioned IIPM articles.

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