MxMIndia

Category: MARKETING

  • It’s a mixed bag for Top 10 players: Samsung, Karbonn, HTC and Huawei record growth & Nokia, Micromax, Blackberry, Spice, LG and G’Five drop revenues

    Mobile handset revenues drop 5% to Rs 31k cr

    By A Correspondent

     

    The Indian mobile handset market saw a drop of 5 per cent in revenues in FY 2011-12. The revenues dropped to Rs31,215 crore from Rs33,031 crore a year back. The annual survey of the Indian telecom industry by CyberMedia Group’s flagship journal for the telecom industry – Voice&Data attributes this drop to de-growth in the feature phones sales as well as lower average selling values (ASVs).

     

    The 17th annual study ‘V&D 100’ surveyed over 30 mobile handset firms – both multi-national and Indian – selling feature phones, multimedia phones, enterprise phones and smartphones in India.

     

    The disappearing act by the home-grown handset makers was a big surprise of the year. Barring Karbonn and Lava, none of the Indian handset players could face intense competition. Their main stay – feature phones – saw a negative growth while the entry level smartphones of various companies saw a marginal rise.

     

    “Indian mobile phone brands that had hoped to make a mark by sourcing Chinese handsets and selling them only on the price plank were in for a big surprise. These players will have to quickly rethink their product, marketing and service strategy afresh to put their house in order,” said Ibrahim Ahmad, Group Editor, Voice&Data.

     

    Top 10IndiaMobileHandset Vendors: Voice&Data 100 survey 2012
    Revenue in Rs Crore
    Rank 2011-12 2010-11 Change Mkt Share in %
    1 Nokia 11925 12929 -8 38.2
    2 Samsung 7891 5720 38 25.3
    3 Micromax 1978.0 2289 -14 6.3
    4 Blackberry 1460.0 1950 -25 4.7
    5 Karbonn 1327.0 1004 32 4.3
    6 HTC 923.0 450 105 3.0
    7 Spice 790.0 920 -14 2.5
    8 LG 780.0 1834 -57 2.5
    9 Huawei 750.0 626 20 2.4
    10 G’Five 670.0 1326 -49 2.1
    Total 31,215.0 33,031.0 -5 100.0
    Source: Cybermedia’s Voice&Data Annual survey of the industry 2012

     

    Nokia remained the number 1 player in the handset business in FY 2011-12 with revenue of Rs11,925 crore, despite a 8 per cent  drop. The Finnish company lost market share in smartphones and multi-media segment to Samsung, HTC and Apple, among others.

     

    Nokia felt its absence in the Android ecosystem dent its performance, it made a head way in the dual SIM phones category but lost out in the smartphone market and ended the year with a market share of 38.2 per cent.

     

    The Korean giant Samsung, grew its revenues 38 per cent to Rs7,891 crore at the second spot with a market share of 25.3 per cent. Voice&Data analysts attribute Samsung’s success to its rich product portfolio based on Windows, Android and Bada operating systems. Samsung’s Galaxy Note, a hybrid between smartphone and tablet was a trail blazer selling 40,000 units each month since launch in late 2011.

     

    “As consumers look for applications beyond voice and SMS, the market will see fight for high-end feature phones and smart phones intensify further. Consumers can also look forward to steeper price drops and more features in the same price,” said Mr Ahmad.

     

    Homegrown handset company Micromax with revenues of Rs1,978 crore ranked third among Voice&Data100 Top10 mobile handset brands, recording a 13 per cent negative growth and a market share of 6.3 per cent.

     

    The only other Indian player to post revenues of over Rs1,000 crore was Karbonn. The company grew its revenues 32 per cent to emerge as the No 5 player with a market share of 4.3 per cent.

     

    Among the global companies in the V&D100 Top 10 players, BlackBerry maker Research In Motion dropped the most- 25 per cent – to post revenues of Rs1,460 crore. At No 4, Blackberry had a market share of 4.7 per cent on the back of entry level smart phones last year.

     

    Taiwanese handset maker HTC saw maximum growth among all the brands surveyed by Voice&Data. HTC’s revenue more than doubled to Rs923 crore to inch a 3 per cent market share.

     

    The other key players in the Top 10 list include Spice Telecom (Rs790 crore), LG (Rs780 crore), Huawei (Rs760 crore) and G’Five (Rs670 crore),

     

  • Who would have thought that an agarbathi brand will come up with such out of the box thinking to reach the remotest population?

    Marketing, Cycle-ishtyle

    By Tuhina Anand

     

    Arjun Ranga

    Cycle Pure Agarbathies has been finding unique ways to build connect with its consumers. One thing that stands out is the company’s attempt to invest in innovative advertising, unlike its competition that focuses mainly on trade-oriented promotions. In 2011, during the World Cup, it had very successfully launched Pray forIndiacampaign to connect with the masses.

     

    The brand, Cycle Pure Agarbathies, belongs to the parent company NR Group, which has a turnover of Rs650 crore. From its very inception, the company has been focusing on reaching the rural masses.

     

    However, three years back, it intensified its initiative and started focusing on reaching villages with a population of 10,000 and more. It modified its target in 2012 to reach places which have a minimum population of 5,000 people. In its bid to reach the interior most locales of India, the company has branded vans that move across hundreds of towns and villages in India. These vans have Cycle products that are ready to be sold to the public. The company also ensures that it participates in the community fairs and exhibitions that take place in villages and towns.

     

    Besides this, the company has been focusing on initiatives to preserveIndia’s dying culture and traditions. The company has been focusing on cause-related marketing activities, specifically on preserving India’s culture and heritage.

     

    To encourage young minds to appreciate India’s rich culture and heritage, the company has initiated a heritage quiz. The quiz is framed on many themes of India heritage including monuments, epics, mythology, origin of various festivals among others. The quiz just concluded its first session in Chennai on July 7 and will be held in Kolkata on August 25 followed by Ahmedabad in September this year.

     

    From 2009, the company has also been organizing the ‘Cycle Sheri Garba’ – Sheri Garba is a traditional art form of Gujarat- in its attempt to resurrect the original style of garba which is now crushed under commercialization. The organizers of Sheri Garbha have appreciated Cycle’s effort in reviving the Garba with its traditional practices.

     

    The company also started Rhythm Ta Ta Thai Thai to showcase the young female dance talent in and Rhythm Dhaker ladai, a contest for drum beaters in West Bengal.

     

    In a category like incense sticks, where building brand is difficult, Cycle has been quite successful. Arjun Ranga, Managing Director, Cycle Pure Agarbathies, elaborated: “We have unique fragrances with formulations handed down from generations that help in elevating mood for sampoorna dhyaan (complete concentration). Our prime focus is to get superior raw materials and provide consistency in quality. Besides, we have been bringing innovations across the value chain.”

     

    He added: “From the very inception, brand building was given priority, which was a key differential compared to competition. Well known advertising agencies were roped in. Over the year’s consistent quality, distribution, promotions and advertising have built up strong brand equity, and created a strong consumer pull.”

     

    While building the brand Cycle, there have been few parameters that include distinctly superior quality compared to competition, value for money offerings, exclusive fragrances, commitment and ethical practice, customer focus, constant innovation and investment in brand building and significant focus on R&D.

     

    The company has been launching occasion related pooja kits – like a kit for Ganesh Chaturthi. Mr Ranga also pointed out few other initiatives that include the rural marketing/saturation coverage in all parts of the country, intensifying involvement in cause-related marketing and focusing on social media and digital marketing.
    The Mysore-based NR Group was founded by N Ranga Rao in 1948. Interestingly, Mr Rao decided to call his range of incense sticks Cycle as the symbol recognized across the globe. Today Cycle Pure Agarbathies is widely known incense brand.

     

  • What excites kiranawallahs is the huge margin they get

    Kiranas dump big brands for high margin Bharti Walmart wares

    By Sagar Malviya

     

    A few months ago, Dhananjay Jain, a grocery owner at Vidisha Road in Bhopal, decided to stock two alien brands – Right Buy and Members Mark – because they offered much higher margins than national brands and had lower price tags. Today, these floor cleaners, tea and cornflakes brands contribute nearly 20 per cent to his monthly sales.

     

    Many of his consumers may still have no idea where these brands priced 10-30 per cent less than those of Hindustan Unilever, Dabur and PepsiCo are sourced from. Well, they come from the world’s largest retailer, Walmart.

     

    Mr Jain gets these brands from a Best Price Modern Wholesale outlet – run by Walmart’s joint venture with Bharti Enterprises – just two kilometres from his store.

     

    Walmart is not allowed to sell directly to Indian consumers yet, but its brands across some three dozen categories have started sliding into Indian homes, as its cash-and-carry venture becomes a hit among grocery shop owners.

     

    “The idea is that the reseller should make more profits by selling our brands than he does by selling national brands,” said Arvind Mediratta, chief operating officer of Bharti Walmart. He said the firm’s private labels adhere to all the quality norms despite their lower price tags.

     

    Bharti Walmart operates 17 cashand-carry format Best Price Wholesale outlets, selling products to licensed neighbourhood stores, schools, offices and large enterprises. It has more than 3 lakh members, who own grocery stores.

     

    The firm launched Right Buy and Members Mark after phasing out its earlier brand Great Value, which is now restricted to Bharti’s Easy Day supermarket chain.

     

    So far, Walmart has developed a network of 100 suppliers to make private label products ranging from groceries, home care and personal care products to apparel and stationery. And it may soon get into categories such as soaps, shampoos and detergent. “We are planning to add several more categories in coming months and open over 10 outlets by next year,” Mr Mediratta said.

     

    Company officials say its brands already control 20-22 per cent share in most categories at its members’ outlets. Some shop owners even say they have stopped stocking national brands. “In categories such as floor cleaners and dish washing, we have stopped stocking national brands as consumers just want the lowest priced products in these segments,” said Mohammed Fayaz, a storeowner at Guntur in Andhra Pradesh, where Walmart has opened two wholesale outlets.

     

    What excites kiranawallahs is the huge margin they get. For instance, a 500ml bottle of Walmart’s toilet cleaner brand sports a price tag of Rs55 but is available to a kirana owner at Rs37. That makes the retailer’s margin a whopping 48 per cent. National rivals such as Reckitt Benckiser’s Harpic and HUL’s Domex are sold at Rs58, with the grocer earning 12-15 per cent margin on an average. Bharti Walmart also provides 10-30 per cent higher margins than national brands on tea, colas and juices that allow shopkeepers earn 10-30 per cent higher margins than national brands. Consumer products companies have been increasingly fighting private labels of modern retailers.

     

    In fact, private labels outsell several national brands in home care and packaged food categories at the outlets of retailers such as Future Group, Reliance Retail and Aditya Birla Group.

     

    FMCG companies didn’t feel too threatened because modern trade accounts for just 7-10 per cent of their total sales. But now, with Walmart’s private labels finding place in consumer companies’ largest sales channel – the country’s ubiquitous neighbourhood stores – this trend could become a headache for them.

     

    “As Walmart and other similar players scale up their cash-and-carry operations, given the price consciousness of the Indian consumer and the fact that kirana stores are here to stay, it is likely that this trend will start to worry large consumer goods companies,” said Siddharth Bafna, partner at advisory firm Lodha & Co.

     

    Not everybody agrees. The chief executive of a leading consumer products firm, however, said such private labels would not challenge big brands in evolved categories such as personal care. “There are always some categories, especially commodities, that are more prone to losing out to private labels because of pricing. However, several brands in the personal care segment that keep innovating aren’t threatened by private labels even in markets where modern trade is evolved,” the person said, requesting anonymity because Walmart is one of its partners.

     

    Some shopkeepers say it’s not easy to make people try new brands. “We are able to convince some consumers to opt for lower priced Walmart brands. But there are still many consumers who want to buy popular brands from national companies even if the price is higher,” said Jas Karan Singh, a store owner in Amritsar, where Walmart opened its first cash-and-carry outlet four years ago. Private labels accounted for around 7 per cent of Bharti Walmart’s annual sales of Rs 1,876 crore last calendar at over Rs 130 crore.

     

    Worldwide, the US retail giant is performing well despite the slowdown. For the fiscal year ended January 2012, it increased net sales by 5.9 per cent to $443.9 billion and ranked first on the 2011 Fortune 500 list of the world’s largest companies by revenues.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Companies will delay price increases, emphasise on low-priced packs, explore new value price points and step up promotions to prevent possible downtrading, or consumers switching to cheaper products, in case of a crisis

    FMCGs brace for a weak monsoon

    By Ratna Bhushan & Sagar Malviya

     

    Consumer goods companies are busy firming up contingency plans to stem any decline in volume sales in case a deficit in monsoon rainfall hit crop yields, escalate food prices and impact consumer spend.

     

    Companies such as Dabur and Parle Products said they will delay price increases, emphasise on low-priced packs of Rs2, 5 and 10, explore new value price points and step up promotions to prevent possible downtrading, or consumers switching to cheaper products, in case of a crisis.

     

    “If there’s a monsoon deficit, we would obviously look at protecting volumes,” said Sunil Duggal, CEO of Dabur, which makes Vatika shampoo and Babool toothpaste.

     

    “Contingency plans could include a combination of things like putting off price increases, accelerating focus on smaller packs and allocating more spends on consumer promotions, depending on where the deficit is,” he added.

     

    BK Rao, general manager at top biscuits maker Parle Products said the maker of Parle-G, Monaco and Hide & Seek biscuits will focus on smaller price points if the situation is bad.

     

    The monsoon has revived significantly in the past week to reduce total deficit in the country so far to 22 per cent from 31 per cent and accelerated crop planting. But crop yields may still be lower as rainfall has been uneven, with some regions, including parts of Karnataka and Maharashtra, remaining practically dry for three weeks. Economists warn that food prices may rise sharply if rainfall weakens again.

     

    FMCG companies have been bucking the overall slowdown in the economy and posting an average 15 per cent growth, but a weak monsoon could change it.

     

    “A weak monsoon will naturally reflect on costs and we will have to work around that. The industry will feel the impact around September-October,” said Chitranjan Dar, divisional chief executive of tobacco-to-chips maker ITC Foods.

     

    While impact of inflation on the premium urban rich is not very significant, mid-rung and rural demand is strongly linked to the monsoons. Thus, top FMCG firm Hindustan Unilever, Dabur and biscuit maker Britannia, which have large rural presence, could be hurt more than Nestle and GlaxoSmithKline Consumer, which have an urban focus for their products, say experts.

     

    Analysts say consumer goods companies tend to push ‘magic price points’ of Rs2, 3, 5 and 10 in an inflationary scenario to minimise any negative impact on discretionary spends. Such low-unit packs account for over 25-30 per cent sales of makers of shampoos, hair dyes, biscuits and snack foods.

     

    Also, with local competition always posing a threat, established players would have to step up volume discounts and consumer promotions in a weak monsoon scenario. A significant 70 per cent of low unit packs are sold through kirana shops (mom and pop stores).

     

    “Small SKUs and distribution expansion may save the day. Downtrading too would be arrested at the small-pack level,” Shirish Pardeshi, executive director and co-head, research, at financial services firm Anand Rathi Securities, wrote in an investor note two weeks back. “Rural expansion of distribution (for example, HUL’s Project Shakti and Emami’s Swadesh initiatives – both aimed at accelerating expansion in rural markets) would help arrest drop in consumption,” the note said.

     

    Some analysts, however, believe the impact of a weak monsoon will be limited on rural consumption because dependence on agricultural income has been declining. “Our discussions with rural trade and consumers have always highlighted that one bad monsoon does not result in consumption declining. Instead, it leads to trade credit terms becoming more onerous in rural India,” Ambit Capital’s Anand Mour wrote in a report.

     

    Some companies such as Marico, maker of Saffola edible oil, say they would wait for some more time before start worrying about monsoon. “The June-July period is too early to take any decision. We will have to wait for August to check the monsoon trend and get a clearer picture,” said Marico CEO Saugata Gupta.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Retailers say early signs are encouraging than the same season last year, although these are early days and total actual sales numbers cannot be predicted yet

    Good news! End-season sales lure shoppers back to malls & high streets

    By Rasul Bailay, Sarah Jacob & Sagar Malviya

     

    After a lull of more than two months, Indian shoppers are thronging malls and high streets once again, lured by the end-of-season discount sales, and bringing some relief to nervous retailers.

     

    Retailers say early signs are encouraging than the same season last year, although these are early days and total actual sales numbers cannot be predicted yet. “So far it has shaped better than last year,” said Kailash Bhatia, chief executive of Pantaloons department chain.

     

    Dipak Agarwal, chief executive of DLF Brands, that markets products of brands including Mothercare, Mango, DKNY, Alcott among others, said the average sales at the brands under the company’s portfolio doubled in the first week of July compared to the same period in June when the discount sales had not started.

     

    Retailers have been nervous about whether shoppers would open their wallets amid a slew of negative news on the economic front such as increasing fears of below-normal monsoon rains, slowest GDP growth rate in nine years, US President Barack Obama expressing concerns about India’s investment climate, increasing food prices and prevailing high interest rates.

     

    After lukewarm sales in May, many brands including Arrow, French Connection and Puma advanced the start of their end-of-season sales to the last week of June instead of the traditional July.

     

    Now, with a whole host of other retailers joining in with discounts, consumers are back in the street in large numbers, causing traffic jams in main shopping areas this weekend.

     

    At the Noida Sector 18 market near Delhi, for example, hundreds of shoppers were driving up and down this weekend looking for a parking space.

     

    “It seemed I was shopping in the US. The sale looked genuine. I bought two Lee and two Wrangler T-shirts, two pairs of Albatross leather shoes and five pairs of sandals for my six-year old from Lifestyle and I paid just Rs7,500,” beamed a shopper holding a clutch of shopping bags at The Great India Place, the largest mall in Noida.

     

    DLF Brands’ Mr Agarwal says many retailers were apprehensive of the slowdown and through early sales they were trying to avoid an inventory build-up. And he expects consumer spending to remain high in the coming months.

     

    Jitendranath Patri, head of marketing at Central, a department chain owned by Future Group, shared Mr Agarwal’s optimism. “There is a long festival season starting from August and consumers will have something to celebrate each month during Ramzan and Diwali,” he said.

     

    Others such as Arvind Lifestyle Brands CEO J Suresh and Indus League Clothing CEO Rachna Aggarwal, however, warn that the positive response to discount sales need not necessarily mean that the good run will continue post August when most of the sales are over. “End-of-season sales never gives the true picture,” said Mr Suresh. “It is more important to see if sales will stabilize after the discount sales period or if a slowdown will continue,” he added.

     

    Mr Bhatia of Pantaloons said more and more customers now wait to shop during the sales seasons. Almost 30 per cent of Pantaloons’ revenues are generated during the discount seasons for the last four-five years.

     

    While the footfall has grown this discount season, Mr Patri of Central said the average ticket size of a Central customer too has increased to 2,500 this from 2,300 last year, making it a double whammy.

     

    A spokesperson for German sportswear brand Adidas AG said the company was expecting double-digit growth at its like-to-like stores during the sales season and it has achieved that target.

     

    Lavina Rodrigues, marketing manager at Metro Shoes Ltd, which sells multi-brand footwear through 175 outlets across the country, said the company is yet to gauge the sales records for the two-day flat 50 per cent sale this year, but indications are it is same as July last year. She says Metro is generally able to sell almost 60 per cent of the old stocks during the sales periods. In some cities like Rajkot, where consumers are more receptive of the discount season, the company would get rid of almost 85 per cent of the old stuff.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • TJ's, a brand of FMCG products made exclusively in Tihar Jail, Asia's largest prison complex, will soon be available in the outlets of Reliance Retail

    Tihar Jail in talks with Reliance Retail, Spencer’s & Vishal Retail to sell products

    By Rasul Bailay

     

    TJ’s, a brand of FMCG products made exclusively in Tihar Jail, Asia’s largest prison complex, will soon be available in the outlets of Reliance Retail, one of the largest retailers in the country.

     

    “Over the months, every Reliance Retail food and grocery store in Delhi will display TJ’s products,” said Neeraj Kumar, former director-general of Tihar Jail, who earlier this month assumed office as the commissioner of Delhi Police.

     

    TJ’s branded products, including spices and bakery products, are being sold in Reliance Retail outlets in Gurgaon for the past two months.

     

    “We are already an official vendor to Reliance Retail and have a vendor code,” a jail spokesman said. He said jail officials are also in talks with other retail chains such as Spencer’s Retail and Vishal Retail to sell TJ’s products through their outlets.

     

    Behind the walls and iron gates of the Central Jail of Tihar, more than 600 inmates are working in two shifts in a factory within jail No. 2, making a range of products, including bakery items, spices, stationery, furniture, garments and detergents.

     

    Police Commissioner Kumar said jail authorities plan three shifts as TJ’s products find their way into the lucrative modern retail market. These products were earlier sold only through government offices, Khadi outlets and Kendriya Bhandar stores.

     

    Mr Kumar said jail authorities are in the process of fulfilling requirements such as adding barcodes to products and mentioning the nutritional value of food products before taking them to all Reliance Retail stores in the National Capital Region. “All these formalities are done,” he said.

     

    Reliance Retail did not respond to an emailed questionnaire till late on Tuesday.

     

    TJ’s brand was born in 1995 with bakery products. Over the years, the portfolio has expanded to include handloom and textile, apparel, furniture, mustard oil, stationery paper products and even phenyl for household uses.

     

    In recent months, it has started making soaps, detergent powders and blankets, among other items. In the pipeline are cosmetic items such as face wash and henna. TJ’s products comply with global food safety norms and are certified under various ISO norms. Tihar’s backing school is certified by London-based global technical agency Moody International.

     

    TJ’s revenues have risen from Rs2.36 crore in 2004-2005 to about Rs18 crore in the last fiscal year. TJ’s products’ first brush with the organised retail happened late last year when jail authorities showcased products at Select Citywalk Mall in the city, and got overwhelming response from shoppers. This prompted the jail to open a kiosk in the mall to sell TJ’s products.

     

    Mr Kumar credits brand consultant Suhel Seth, who visited the jail in April, for initiating talks with retail chains. Mr Seth said that after visiting the jail in April he wrote to a host of corporate honchos, calling for promoting TJ’s. “This is a great branding opportunity,” he said.

     

    He expects TJ’s to become a Rs300-crore business, with net profit of Rs30 crore, in the next one year mainly by retailing through branded stores. This would help the jail ramp up capacity and supply products to other cities, Mr Seth said.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • This rebranding is part of the company’s efforts to ramp-up the Johnson Bathrooms Business by investing in capacities as well as market reach

    H&R Johnson rebrands bath-fittings & sanitaryware biz as Johnson Bathrooms

    By A Correspondent

     

    H&R Johnson (India), the tile, bath and kitchen company, has rebranded its bath-fittings & sanitaryware business as Johnson Bathrooms. This rebranding is part of the company’s efforts to ramp-up the Johnson Bathrooms Business by investing in capacities as well as market reach.

     

    The rebranding to Johnson Bathroom reflects a definitive shift of H&R Johnson (India) from product marketing to solutions marketing with emphasis on product innovation and after-sales service, a key deliverable towards achieving customer delight. The “solutions marketing” emphasis will form a key thrust area to further boost revenue growth for Johnson Bathrooms division.

     

    Commenting on the refreshed brand identity of its bathroom products business vertical, Chief Marketing Officer, H&R Johnson (India) Mr R Kurup said: “The rebranding of the bath product business to Johnson Bathrooms is an effort to create a strategic refresh of the business vertical as we seek to scale-up Johnson Bathrooms business through investments in capacity building, enhancing market reach, focus on introducing new innovative products and provide greater impetus to solutions marketing over mere product marketing. As part of this process, we have set-up a pan-India solutions marketing service team.”

     

    The company has put in place a pan-India service infrastructure team to service the customers’ post purchase requirements. The company has invested nearly Rs40 crores in ramping up manufacturing capacities.

     

    Further elaborating on the new brand identity for Johnson Bathroom, Mr Kurup averred: “The new brand identity Johnson Bathrooms rides on the strong market equity & service commitment of Johnson brand. The identity mark is designed using Black & Red visuals to signify vibrancy while being coherent to the flagship brand’s identity.”

     

    During the last fiscal, this business vertical contributed Rs103 crores to H&R Johnson revenues of Rs1,729 crores. The company will support this rebranding exercise with a 360 degree marketing campaign.

     

  • A CII-AT Kearney study recently observed that End of season sales have played a good role in getting more and more Indians to get their first experience of luxury

    Global luxe brands woo first-timers with sales

    By Vijaya Rathore

     

    International luxury brands such as Chanel, Christian Dior and Burberry have started discount sales at their outlets in Delhi, Mumbai and other cities to woo first-time buyers as well as to clear inventory.

     

    “Sale is a good way to bring down the entry point for the first-time buyers,” said Roasie Ahluwalia, general manager (marketing), at Genesis Luxury that operates brands such as Giorgio Armani, Paul Smith, Bottega Veneta, Canali, Burberry and Jimmy Choo in India.

     

    She said this strategy is particularly effective in a nascent luxury market like India. “Many of those who buy these luxury products at a 40 per cent lower price end up becoming regulars,” she said.

     

    A CII-AT Kearney study recently observed: “End of season sales have played a good role in getting more and more Indians to get their first experience of luxury.”

     

    Even Chanel and Christian Dior, among the best-known luxury brands in the world, have put lower price tags on select products. Chanel offers 30 per cent sale on its ready-to-wear section twice a year while Dior offers discounts on items such as clutches and shoes.

     

    Marielou Phillips, spokesperson for Chanel in India, however, said the luxury brand uses the sales to reward its loyal customers rather than attract first time buyers. “Neither do we put up big signage at stores nor we give advertisements in newspapers. We simply put aside a few products and inform our regular buyers about the discounts,” she said.

     

    Industry experts say tempering sale of high-end goods in a slowing economy and limited circulation of products due to small number of stores in the country are forcing luxury brands to put the big labels on sale.

     

    “Brands go on sale in India because they have to get rid of last season’s products. In case of luxury brands, the seasonality factor is much higher. Most of their products are seasonal in nature,” said Dipak Agarwal, chief executive officer at DLF Brands, which co-operates Salvatore Ferragamo stores.

     

    Most international luxury brands do not operate more than five stores in India, making it necessary for them to flush out the old inventory. “A brand’s ability to leverage inventory across stores goes down when it has a limited number of stores in a country,” said Mr Agarwal.

     

    Dinaz Madhukar, president at DLF Emporio, a luxury shopping mall in South Delhi, says the number of shoppers increase 30 per cent during any sale. “Even brands that do not go on sale benefit from the increased footfall,” she added.

     

    An average two lakh people visit the DLF Emporio each month. The mall also does a lot of events like corporate tie-ups to invite potential customers for sale previews.

     

    However, there are a few brands like Hermes, Louis Vuitton, Cartier and Tom Ford that do not offer discounts. “We do not go on sale,” said a representative at a Louis Vuitton store.

     

    Experts say most of these brands follow their global policy of not bringing prices down.

     

    An executive associated with Tom Ford brand in India said: “Many brands also want to convey a message that each of their products is worth what a consumer is paying for. They do not want a customer who has paid more for the item to feel cheated when he finds that someone else has paid 30 per cent less.”

     

    Fair enough, but such brands might be losing out on a certain class of luxury customers in India who buy luxury only on sales.

     

    Abhay Gupta, founder promoter and CEO of Luxury Connect, which offers executive educational programmes on luxury business, said there are two kinds of luxury shoppers in the country. “There are people who are brand loyal and spend irrespective of the price tags and there are those who wait for six months for the sales to begin,” he said.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • The consumer goods companies said the next few quarters could be challenging if the monsoon is weak and the rupee continues to fall

    HUL, Dabur & Colgate Q1 sales up 20%, next few Qs challenging

    By A Correspondent

     

    Consumer goods companies Hindustan Unilever, Colgate-Palmolive and Dabur said the next few quarters could be challenging if the monsoon is weak and the rupee continues to fall after reporting about 20 per cent jump in their first quarter sales.

     

    Hindustan Unilever, the country’s largest consumer goods company, whose presence in a range of daily consumption items such as soaps, shampoos and food makes its performance a good proxy for consumer sentiment, said it has not seen any evidence yet of customers trading down for cheaper products but delayed monsoon, weak rupee and volatile raw-material prices remain a concern.

     

    “When we look into the medium term, we believe that the growth drivers for FMCG are really positive,” said R Sridhar, chief financial officer at Hindustan Unilever. “But when we look at the next 2-3 quarters, clearly there are few challenges-the final shape of how monsoon distribution happens, rupee has depreciated quite significantly and inflation continues to be at a very high level,” he said.

     

    Dabur CEO Sunil Duggal too said: “As of now, we have not witnessed any slowdown in rural consumption, but there could be some amount of demand contraction this (July-September) quarter.”

     

    HUL’s total income rose 20 per cent to Rs6,378.7 crore in the April-June quarter from Rs5,323.6 crore in the year-ago period, outperforming the broader FMCG industry that grew 16 per cent during the quarter. Profit after tax before exceptional items at the Indian unit of Anglo-Dutch Unilever rose 48 per cent to Rs855 crore in the three months to June. Exceptional items included sale of properties worth Rs607 crore.

     

    The company said it was able to increase its operating profit margins by 180 basis points. Its cost of goods sold during the period was 200 basis points lower than in the year-ago period.

     

    During the quarter, HUL’s sales of soaps and detergents-its largest business segment-rose 24 per cent to Rs3,163.05 crore, helped mainly by price increases. Double-digit volume growth drove up sales of personal care products by 17per cent  to Rs1,847.08 crore, while beverages sales were 7per cent  higher at Rs654.07 crore. New launches in brands such as Kwality Walls helped its packaged foods business grow 17 per cent to Rs436.98 crore.

     

    What pleased analysts the most about the results was the companies’ sustainable volume growth. HUL, Dabur and Colgate-Palmolive grew their volumes between 9-12 per cent as the makers of daily household products sold more goods despite increasing prices. “Across companies, margins have expanded and ad spends increased too. With sales of premium products growing, there isn’t even first signs of slowdown yet,” said Anand Mour of Ambit Capital. Colgate-Palmolive reported a 17 per cent jump in first quarter profit at Rs117 crore, while its sales grew 20 per cent at Rs736 crore. “In an inflationary environment, the company’s continuing efforts and focussed programs to enhance efficiencies and reduce costs continue to yield strong, positive results, helping to maintain margin and fund investments in building and strengthening brand equity and the business,” Colgate said in a statement. The company said prudent price increases and cost management helped it maintain its strong gross margin.

     

    Dabur reported 21 per cent jump in April-June sales at Rs1,461.9 crore, while net profit increased 17 per cent year-on-year to Rs149.4 crore, riding on categories like health supplements, shampoos and food. Faster network expansion in rural markets too helped the firm drive sales. Dabur CEO Duggal said the company was forecasting double-digit growth over the next two quarters although there could be some slowdown in demand.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • Clients attend festivals like the Cannes Lions to spot inspiring ideas, particularly in the digital, social and mobile and media worlds

    Why CMOs needn’t feel guilty about going for Cannes Lions

    By Delshad Irani

     

    What does a chief marketing officer of a very large global company do when he wants to be proficient in Twitter? He asks the CEO of Twitter, Dick Costolo to provide the best resource they possess for an intensive reverse mentoring session. According to Antonio Lucio, global chief marketing, strategy and development officer, Visa, it is critically important for him as the head of a global marketing organisation to be an expert on social media and be able to build the Visa brand on platforms like Twitter and Facebook.

     

    Interestingly, he has been a marketer for over 30 years and it is his first time at Cannes Lions International Festival of Creativity and the first time Visa has attended the festival as a company. The question then is why now? For starters, digital media has changed the rules of engagement. However, the cases of truly successful integration and application of digital media are few and generally set on loop. “The fact is that when people talk about social they keep using the same concepts and best cases, for instance, the Old Spice campaign. This means that there really isn’t a clearly articulated model,” said Mr Lucio.

     

    So clients like him attend festivals like the Cannes Lions to spot inspiring ideas, particularly in the digital, social and mobile and media worlds. Reasonable grounds for marketers to attend with teams of 5 to 15 senior management level employees.

     

    But, it wasn’t too long ago when if you were a client and you said you want to go to Cannes for the ad festival you might not have got permission from management to do so. However, it is due to the efforts of a few that has led to the institutionalisation of the client’s side of Cannes. Marketers like Mr Lucio can come with midsize teams and it’s no longer considered an indulgence. P&G, Unilever, Coca-Cola, Pepsi, Heineken, Kraft, GM, McDonald’s and Mars, among others are just a few of the big global marketers who were present at the 2012 Cannes Lions.

     

    Some have been attending longer than others. Like Joseph Tripodi, executive vice president and chief marketing and commercial officer, The Coca-Cola Company, who is particularly impressed with the attention the festival is receiving from media owners like Time Warner, in addition to growing participation numbers from clients as well as delegates from agencies. Keith Weed of Unilever, who has come to Cannes three years in a row and has been CMO for as many years said: “We have 15 people here this year and we do a combination of workshops, meeting our agency partners and recognising and acknowledging that creativity is great. In a cluttered media world, we need creativity to cut through.”

     

    So apart from networking and opportunities to meet all their concerned parties, old and some new, in the same place, at the same time, these marketers are on the look out for inspiring work from across the world. And set creative benchmarks wherever possible. According to Cyril Charzat, senior global brand director, Heineken: “It’s very much about stimulating our marketing people to be stronger when they evaluate work from creative agencies; to define what is progressive and inventive. Our key message is to stimulate inventiveness and that’s what we try to do.” And Cannes is a part of that story.

     

    On the Indian front, however, it is not yet a vital chapter. And Cannes remains the exclusive domain of adwallahs, with a light sprinkling of some regular clients like Mr Kakar of Aditya Birla Group, who has been attending the festival for over half a decade. Then there are first-timers like Mahindra & Mahindra. The company wanted to test French waters and therefore Vivek Nayer the company’s VP-marketing for the auto division attended the festival. But he left a tad disappointed and overwhelmed by the creative clutter. Other Indian marketers in attendance were Parle Agro (with Nadia Chauhan also a jury member), Dabur and Flipkart. Clearly, Indian marketers are grappling with the big question – to attend or not to attend? Meanwhile, clients from markets on our left and right, up and down, are strategising on ways to find the best creative result during the seven days spent in the Cote d’Azur.

     

    However, the challenge for most is to put all that inspiring work to actual use. And here’s how some intend to do it. “We are not going to come in like the advertising people who get inspiration and go back home to figure it out. We will have a very structured approach with sessions of inspiration followed by sessions of perspiration, daily.

     

    It’s my responsibility during the week to ensure that Cannes becomes a truly business building program for us,” said Mr Lucio of Visa. In other words, for marketers to take Cannes Lions International Festival of Creativity seriously there must be “enough perspiration to pay for the inspiration.”

     

    Fair enough.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • Individuals often opt for these programmes on their own, but companies too nominate and shortlist candidates

    Big Boys go to B-school for betterment

    By Anumeha Chaturvedi

     

    Liane Cabral Ghosh was working as a senior manager and strategist at Dell’s research and development centre in Bangalore, when she decided to enroll for an INSEAD leadership programme for senior Indian executives last August.

     

    “I was growing well in technical functions, but did not have management skillsets. I wanted a programme that could provide a career jump for senior leadership positions,” said Ms Ghosh. The programme concluded last month, and it seems that Ms Ghosh has been taught well. She will now join Canadian IT company Innovatia this month as country manager.

     

    Senior-level professionals across functions, profiles and industries are going back to school for short-term and long-term executive education programmes in order to reskill themselves. Ms Ghosh’s batchmates at INSEAD included Rajshree Naik, the marketing head of Forevermark, De Beers; and Manesh Nair, former director of business relationship consulting, India and Thailand, at American Express, and after the course, global director for partnership development posted at American Express, New York.

     

    “We are witnessing a growth of 25 per cent when it comes to participation in ‘open enrollment’ executive education programmes every year,” said Deepak Chandra, deputy dean at the Indian School of Business (ISB).

     

    Open enrollment programmes are meant for professionals from all fields looking at a specialisation in functions like marketing, finance or sales strategies. ISB will host 5,000 such students this year. It currently offers 45-50 such programmes, up from 5-6 a decade ago. The courses at ISB last anywhere from a week to a month.

     

    “Reskilling assumes greater importance in challenging times,” said Chaitanya

    Kalipatnapu, co-founder and director of Eruditus, a firm promoted by the alumni of INSEAD and Harvard Business School (HBS) to deliver executive education programmes. “Business schools witness a spike in activity during a slowdown, as candidates consider it safe to turn to education and feel the slowdown would be over and done with by the time they pass out.”

     

    Among the IIMs, Kozhikode is the only one to offer a two-year executive post-graduate programme in management for professionals. The batch size for this programme accredited by the London-based Association of MBAs (AMBA) has increased from 220 in 2010-12 to 333 for 2012-14. “We have increased the batch size owing to a significant demand for this course among professionals,” said C Raju, professor, quantitative methods and operations management, at IIM Kozhikode. The institute will also have two new one-year executive education programmes on human resource management and IT this year.

     

    “The number of requests and applications for customised and open enrolment programmes have more than doubled this year,” said Mr Kalipatnapu. It offers executive education programmes from INSEAD (one-year), Wharton (both short-term and long-term), and Tuck School of Business in India. While Wharton has introduced open enrollment executive education programmes in the country this year, Tuck School of Business entered into a first-of-its-kind by-invitation consortium with a few companies like TCS, Mahindra & Mahindra and HSBC this year, wherein the companies nominated their senior managers for a programme on innovation and leadership. The Tuck programme is spread over nine months.

     

    Individuals often opt for these programmes on their own, but companies too nominate and shortlist candidates and even work with universities on customised case studies to address their business needs. “Companies are realising that education is a good motivating tool to attract and retain talent,” added Mr Chandra.

     

    “Companies realise that the economic challenges demand a more targeted approach to talent management,” said Mr Kalipatnapu. Firms like Bharat Petroleum, Accenture and IBM work with these top schools for programmes tailor-made to suit their needs.

     

    Harvard Business School India Research Center, which handles executive education programmes in India, has diversified its portfolio of executive education programmes this year. “We had three executive education programmes last year, and we plan to have around 10 this year,” said Amrita Chowdhury, associate director, education, at HBS India Research Center. It has introduced new programmes on leadership and corporate accountability and innovation. “As senior professionals move up the leader, they realise they need specialised skills in general management and leadership,” said Ms Chowdhury.

     

    She said that while the majority of candidates in a programme would comprise large private companies and PSUs, 30-40 per cent of the candidates are senior management professionals or owners of SMEs. “These are companies with a turnover of around Rs 100 crore, have gained a lot of scale, and are now looking at skilling their top management for the next phase of growth.”

     

    Companies like Genpact and Aon Hewitt also have tie-ups with the HBS Research Center for shortlisting candidates for their programmes. “Our managers run large teams across the world and they learn about leadership and understand how cultures operate through these programmes,” said Amit Aggarwal, senior vice-president, global leadership development and training, at Genpact.

     

    While Genpact sends around 3-5 professionals for such programmes every year, Aon Hewitt shortlists its partners and even sent one of the directors for the programme this year. “The programme touched upon all elements of leading businesses and people, and was insightful, as managing people is one of the most crucial aspects of our business,” said Ryan Lowe, director at Aon Hewitt, who attended the HBS programme on managing professional services firms in January this year.

     

  • Do consumers get influenced by names like 'Munich Polo' and 'Franco Leone' for locally made products?

    Do ‘phoren’ names work for Made-in-India brands?

    Pick the odd one out: Zara, Tommy  Hilfiger, Munich Polo, Skechers and Pavers. Answer: Munich Polo. Reason: It’s the only Indian brand amongst the lot of global labels

     

    As the rush of single brands into the country-including those that have applied for approvals-peaks, a number of home-grown, international sounding brands are melding themselves into the retailing landscape.

     

    “The trend will gather momentum,” says Piyush Kumar Sinha, professor in retailing and marketing at IIM, Ahmedabad. Indian brands will try to look and sound foreign to make the most of rising aspirations of foreign-label fascinated Indians, he adds.

     

    Munich Polo, which has positioned itself as a German brand and recently rolled out its premium kidswear stores in New Delhi, is the latest addition to the serpentine list of home-grown brands flaunting foreign tags. This include Da Milano, Franco Leone, La Opala and Monte Carlo.

     

    Munich Polo uses the German language and depicts Munich’s rich cultural history on its website. It draws inspiration from Munich’s heritage for its apparel designs, and uses fair-skinned child models to give the brand a German look and feel. When contacted, a Munich Polo spokesperson did not comment on why the brand has appropriated a German name and positioning.

     

    Another local brand Da Milano, a high-end leather accessory label, is widely perceived to be of Italian origin. Company officials refused to comment on the brand’s local origin.

     

    Franco Leone, a Delhi-based premium footwear brand, has an explanation for its Italian-sounding name. “My father bought the brand from two Italian designers called Franco and Leone,” says Vikram Bhamri, director of Franco Leone.

     

    But why did the brand continue to use a foreign name in India? Simple, it makes immense business sense. “It has to do with the Indian mindset. We love and easily accept European and American fashion because it is aspirational,” adds Mr Bhamri, who roped in Bollywood star Ranbir Kapoor as brand ambassador last year.

     

    Mr Bhamri himself is one such consumer who would prefer a foreign brand over an Indian one. “Despite the high quality of Liberty (Shoes), I would still prefer Lee Cooper because of its foreign tag,” he shrugs.

     

    For Monte Carlo, a 26-year-old woollen wear brand from the Ludhiana-based Nahar Group, having a foreign name does have some advantages, but it has to be reinforced by quality of the product. “The name is built by customers, not by brands,” says Sandeep Jain, executive director of Monte Carlo Fashions, which was hived off from Oswal Woollen Mills of the Nahar Group last year. 100% foreign direct investment for single brands will only help raise awareness of their local counterparts, he argues.

     

    Veteran adman Piyush Pandey thinks a foreign brand can be a double-edged sword. If it doesn’t deliver its promise, it is doomed to bomb. “Consumers are not stupid, says the executive chairman & creative director of Ogilvy South Asia. “You can fool them once, but not twice. If you claim to be an Italian brand, then you have to deliver Italian quality. If you don’t, people won’t buy it.”

     

    Mr Pandey turns the trend of foreign-sounding desi brands on its head by pointing to international brands with Indian names. Like French jewellery house Boucheron that has a perfume exotically branded Jaipur. “Now, calling it Jaipur doesn’t make it an Indian brand, does it,” asks Mr Pandey.

     

    Source:The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved