MxMIndia

Category: PRODUCTS

  • Aggressive discount offers on the back of a recovering stock market and appreciating rupee have lured shoppers back to the main street

    Double-digit growth in Jan for consumer electronics, cars & lifestyle retail chains

    By Sarah Jacob, Writankar Mukherjee & Neha Dewan

     

    Sales of consumer electronics, cars and lifestyle products bounced back in January after a tough quarter, raising hopes of a revival in consumer sentiment in 2012.

     

    Companies, including Samsung, Nokia, Hyundai Motors and Reliance Retail, have reported up to double-digit sales growth in products such as flat-panel televisions, smartphones, cars and fashion garments in January, as aggressive discount offers on the back of a recovering stock market and appreciating rupee lured shoppers back to the main street.

     

    “Not just consumer but overall economic confidence has also picked up in January due to a host of factors such as rupee appreciation, stock market and some policy-level changes like single-brand FDI,” said Adi Godrej, Godrej Group Chairman.

     

    “So the fear of declining stock market and rupee depreciation has been replaced by positive consumer sentiment, which is interlinked and is reflecting in healthy consumption,” he added.

     

    Shantanu DasGupta, durable maker Whirlpool’s VP (corporate affairs & strategy-South Asia), stated that sales increased across product categories in January. “While demand has been bullish across the country, certain pockets in the north and west performed exceptionally well. The summer looks positive,” he said.

     

    Carmakers too are upbeat after a tough 2011 when sales rose just 4.24 per cent. Companies are optimistic that new models and stable interest rates on loans could bring back the boom.

     

    “The new year seems to have started on a positive note,” said Arvind Saxena, Hyundai Motor India Director (marketing and sales). Hyundai saw a 12 per cent jump in sales to 33,900 cars in January.

     

    But marketers are still cautious. Several segments are still growing on the back of heavy discounts and end-of-season sales. Consumer sentiment not clear ye

     

    Analysts say consumer sentiment is not clear despite the positive signs. “The environment is still challenging. Interest rates are high and consumer sentiment remains uncertain,” said Anand Ramanathan, associate director at management consultancy KPMG.

     

    Sandeep Kulhalli, VP-retail and marketing at Titan Industries’ jewellery chain Tanishq, said: “Much of the positiveness is because the whole market is on discount offers.” In January, Finance Minister Pranab Mukherjee said this fiscal would be challenging.

     

    With GDP growth forecast being tempered to 7.2 per cent from 8.6 per cent, the economy had been wrestling with high commodity prices, sharp increases in interest rates and the Euro zone crisis, which dampened consumer confidence in the third quarter.

     

    All eyes are now on the Union Budget over whether the growth momentum in January will sustain over the next quarter by increasing disposable incomes or moves to boost demand.

    Rupee impact

    The rupee’s gain in January after a downward spiral in the second half of 2011 helped stabilise prices of consumer durables and electronics products, which require imported raw materials, and boost demand.

    Korean electronics maker Samsung’s flat-panel television sales grew 50 per cent over last January and more than 85 per cent compared with December 2011. “The rupee stabilising against the dollar is one factor for higher sales,” said Mahesh Krishnan, Samsung India VP-home appliances.

    Rupee depreciation had prompted several companies to increase prices by 5-10 per cent in several tranches late last year. The personal computer market bounced back to low double-digit growth in January compared with November-December when it shrunk around 15 per cent.

    Several brands also reduced prices that brought back the market into shape, said S Rajendran, Acer India chief marketing officer. New launches too helped boost demand. The country’s largest phone maker, Nokia India, launched five new devices under Lumia and Asha series that boosted sales in January, both over last year and compared with November-December.

    Sunil Dutt, MD of Research in Motion India, which makes BlackBerry smartphones, said smartphone sales increased 40-50 per cent since the second week of January compared with a flat November-December 2010. “The market is back to its natural growth momentum.”

    Bijou Kurien, president and CEO of Reliance Retail-lifestyle, said good performance of export and IT firms in the third quarter had a rub off on consumer confidence in terms of bonuses and increments. “This will help the upward trend continue through February and March,” he said.

    Reliance Retail’s lifestyle division posted an upswing in retail sales since January 7, reaching its peak over the Republic day weekend. J Suresh, MD and CEO of Arvind Brands and Retail, which makes Arrow, Flying Machine and US Polo in India, however, cautions that it would be best not to get carried away by performance in the end-of-season sales period just yet.

    Pushpa Bector, senior VP of another New Delhi-based mall, DLF Promenade, said: “People are getting far more conscious today. If they get a good deal, they tend to stock up.”

    – With inputs from Chanchal Pal Chauhan

     

    Source:The Economic Times

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

     

  • Meru is testing specialized services like Meru Select, aimed at its regular users and Meru Corporate, aimed at corporate customers

    Now Meru to offer special services to key customers

    By Preethi Chamikutty

     

    From zero to 5,600 radio taxis in under five years, with a presence in four metros to boot, has helped Meru Cabs become the largest such service in the country. With Rs300 crore in revenue, Meru has raced ahead of competitors like Easy Cabs and Mega Cabs, with the company even claiming that it is the third largest radio taxi operator in the world. The sauce of this success is no rocket science, at least on paper: a clean car, a knowledgeable driver, non-negotiable fares and a tamperproof meter.

     

    “You provide these things to the customer and he will be happy,” said Gavin D’abreo, who heads marketing & sales for Meru. This, of course, is just the beginning, and as Rajesh Puri, CEO, pointed out: “This industry is still at a nascent stage and there is a lot of upfront investment that needs to be done. Technology has been a major investment for us to improve our service offerings.”

     

    So what next for Meru, now that it has established a sound base in Mumbai, Delhi, Hyderabad and Bengaluru? Well for starters, turning profitable is the priority, with Mr Puri expecting to be in black in three out of four cities at the end of the quarter ending March. Beyond that, identifying new revenue streams by offering specialized services is the way to scale up operations.

     

    Meru, which has partnered with the airports in the cities it operates in, is now testing out a service called Meru Select in Hyderabad. This is aimed at giving its regular users a guarantee of up to 80 per cent of getting a Meru cab when they book for one. The trigger for Meru Select: only 5 per cent of its customer base gives Meru about 60 per cent of its revenues.

     

    “Because of limited inventory, customers have complained to us about the non-availability of cabs when they order for one. We work on first come, first serve basis, but our loyal customers get an additional assurance of getting a cab with Meru Select,” explained Mr D’abreo.

     

    Meru Corporate, aimed at corporate customers who want more than a service from point A to point B as being offered by Meru currently, is another service being tested. Meru Corporate is targeted at executives who have to travel from one meeting to another across the city in a day.

     

    A preloaded plastic card will be given to the eligible executive, which will be swiped by the Meru driver at the end of day’s travel. Some 21 companies have so far expressed interest in this service and Meru is in the process of giving the finishing touches. Other services being planned are transporting kids in absence of their parents as well as a service for medical emergencies.

     

    Also on cards are expansions into Chennai, Kolkata, Ahmedabad and Vizag. However, such growth won’t come easy. One reason for that are restrictions – fares, distances and licences are regulated by the government. Another hindrance in growth, according to Mr Puri, is finding drivers. And then there’s competition. Mega Cabs, the oldest brand in the radio taxi business, is present in seven cities. Then there’s Easy Cabs -present in four cities – which are available at malls, hotels and even hospitals. Niche services like For She, an exclusive ladies taxi service driven by lady chauffeurs in three cities, are also available.

     

    Yet, there are brands – like Gold Cabs and Star Taxi – that have not been able to survive the tough regulatory environment and the investments that need to be pumped into not just vehicles but the technology back end. Meru estimates the size of the radio taxi business in India at 9,500 cabs across Mumbai, Delhi, Bengaluru & Hyderabad, which is growing at 50-60 per cent per annum. Nabankur Gupta, founder, Nobby Brand Architects, a brand consultancy, reckons the radio taxi space has tremendous scope for brand building.

     

    “What exists today is commodity service with a name; a brand can be built only if customers come back to a brand for the experience they get. Security and assurance of good service will help build stronger brands in this space,” said Mr Gupta. He suggested having two levels of service offerings – one level is a limousine kind of service, which is about exclusivity and pampering; the second level is the existing sedans that can cater to the mass market. Mr Puri of Meru agrees there is a demand for super premium service in India, but the constraints are not just restricted to acquisition of vehicles. “To have differentiated cabs, there has to be a differentiated pricing system and a backend IT infrastructure to support it. Technology is the most important aspect of our business.”

     

    He adds that evidence of Meru’s tech edge is that its drives can do “six duties a day compared to 2-3 duties of others. Our backend alerts them about the next job nearest to where they are positioned,” explained Mr Puri.

     

    Mr Gupta says in countries like Singapore and Hong Kong radio taxis have made a big difference and have also replaced the public taxi fleet. “Black & yellow taxi drivers should be spoken to and, if they can be taken over, we will have a much better taxi service in our cities,” he suggested.

     

    Source:The Economic Times
    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

  • A Coca-Cola spokesman confirmed the company is introducing Citra in "a few towns in Maharashtra and Gujarat" on a pilot basis

    Eye on volumes, Coca-Cola to revive Citra after 19 years

    By Ratna Bhushan

     

    Coca-Cola will revive Citra, a clear-lime drink it bought from Ramesh Chauhan two decades ago but junked in favour of Sprite, in a move that analysts believe is more to target price-sensitive consumer segments than to unlock the brand’s heritage value.

     

    A person familiar with the top beverages maker’s plans said Citra will be priced about 20 per cent cheaper than existing lime-lemon drinks such as its own brands Sprite and Limca as well as PepsiCo’s Mountain Dew and 7 Up, to target a wider audience and take on smaller brands.

     

    A Coca-Cola spokesman confirmed the company is introducing Citra in “a few towns in Maharashtra and Gujarat” on a pilot basis. This will be followed by a staggered launch across other metros and bigger cities.

     

    The move has surprised industry watchers because Coca-Cola’s Sprite, the second-largest soft drink brand in the country after Thums Up, leads the lime-lemon drinks segment, which is the fastest-growing soft drink category in India’s Rs13,000-crore fizzy drinks market.

     

    Among those surprised is Ramesh Chauhan, who created brand Citra and made it popular in the late 1980s and early 1990s.

     

    “After keeping the brand in cold storage for so many years, it’s strange they want to re-introduce it now, especially when they have a strong presence in the clear-lime segment,” Chauhan said. “If they are looking for retention and heritage value, then logically even Gold Spot should be revived.”

     

    When Coca-Cola re-entered India in 1993, it bought out all Parle brands except Bisleri from Chauhan.

     

    Move aimed at mopping up volumes

    While Citra and Gold Spot were phased out to make way for Coca-Cola’s global brands Sprite and Fanta, respectively, Thums Up, Limca and Maaza were retained. Shashi Kalathil, CEO of management advisory firm Y-factor and partner at private equity fund Exponentia Capital, said the move may be aimed at mopping up volumes. “Coca-Cola probably doesn’t want Citra’s pricing to impact its larger brands. So this could be more of a pricing game and about treating Citra more as a trademark than a brand,” he said.

     

    Parle brand again

    It’s history that the US major sidelined Parle’s cola brand Thums Up to promote its own brand Coca-Cola for years before waking up to the potential of the Indian brand and backing it.

     

    Now it seems like deja vu for Coca-Cola as it is banking on a Parle brand once again to push market share in the lime segment. The Coca-Cola spokesman said Citra would not cannibalise its existing lemon drinks because there is ample room for multiple brands in a developing segment like sparkling fizzy drink in a high-potential market such as India.

     

    Devendra Chawla, president of food & FMCG segments at the country’s largest retailer Future Group, said the move will aid the growth of the clear-lime category, which is already seeing heightened brand activity. “To grow carbonated soft drinks’ per capita in India, apart from growing colas, it’s critical to activate flavours which have natural acceptance from Indian consumers such as lime and mango,” said Chawla, who formerly worked with Coca-Cola.

     

    India’s per capita consumption of carbonated drinks is just 11 litres a year compared to 34 litres in China and 675 litres in Mexico.

     

    The lime-lemon category in India has been growing 16-17 per cent a year, ahead of colas at about 11-12 per cent and orange drinks at 8-9 per cent. Apart from being a familiar flavour that Indians consume at home (in the form of nimbu paani), lime-lemon drinks are considered ideal thirst quenchers.

     

    Both Coca-Cola and PepsiCo have been promoting their brands aggressively in this segment. PepsiCo has Bollywood star Salman Khan endorsing Mountain Dew and actor Sharman Joshi for 7 Up, while Coca-Cola pushes clear-lime drink Sprite and cloudy lemon drink Limca on the irreverent and freshness platforms, respectively.

     

    Source:The Economic Times

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

  • Little wonder, the Feb 1-14 period accounts for 16-18 per cent of the company's annual turnover

    Love sees a new high for Archies on V-Day

     

    By Tuhina Anand

     

    Valentine’s Day celebrations in India would be incomplete without that ubiquitous Archies card declaring undying love and probably most, when at the store, one adds some gifts too from a wide selection of red and pink love tokens. So there is no room for doubt when the company declared that Valentine’s month, as it considers the period from February 1-14, accounts for 16-18 per cent of their annual turnover.

     

    “We have seen that 3-4 days before V-Day, the sales across our stores increase from anything between 6-10 times as compared to an average day. In fact, a day before (Feb 13), the stores witness chaos and we have to arrange for all the helping hands available to cater to this rush in many of our company-operated stores,” informed Youhan Aria, Head Corporate Communications at Archies.

     

    In the last few years, Valentine’s Day has become a money spinner for businesses of all sorts. While few years back, this day was restricted to college-goers or youngsters, now the craze has engulfed many across the cross-section. Mutalik and Shiv Sena notwithstanding, the day is being celebrated and the phenomenon has caught on so much that even if one might not go for a high priced gift, a greeting card or maybe flowers and chocolates do figure on the gifting list.

     

    Aria shares the example of a beat constable in Vasant Vihar in New Delhi, who did not understand the concept behind V-Day, but still walked in one of the Archies store to pick up a card. That speaks volumes on the V-Day equation and the formula of gifting.

     

    For Archies, V-Day is bigger than any other gifting occasion which sees spikes in sales, be it Diwali, Friendship Day or Rakhi. Across its 240 stores in 66 cities, the display, too, is done keeping in mind the spirit of the day where red and pink rules.

     

    In terms of top picks for gifting are the usual cards, soft toys, chocolates and fashion jewellery. Also, it seems, when splurging on V-Day, money is not much of a concern and people go for cards that are high on embellishments – higher the number of inserts, better it is. Also there are not too many takers for lesser-priced cards

     

    “Over the years, the change that we have seen on the V-Day gifting is that our TG has expanded.Whereas, earlier it was restricted to only teens and young professionals, now one sees people even in their late 40s coming over to pick something. Seeing this trend, we have expanded our portfolio of gifts to cater to a wider range for different TGs,” said Mr Aria.

     

    Also one thing that Archies has seen over the years is that sales come more easily from tier II and III cities as the number of options available in these towns are limited. Mr Aria added: “For us, competition comes from anyone, be it a coffee joint or a retail store. In fact, even laptops, jewellery brands and shops as well as restaurants are competing with us. I would call these category killers. However, an Archies store is a social expression as it fulfills its customer’s gifting needs. Even gifting a gadget is never complete on V-Day without the greeting cards, and that’s where we step in.”

     

    Archies has seen exponential growth in the demand for their merchandise and cards on V-Day in the last few years and have been extremely satisfied with the sales during this period. While the country celebrates V-Day on February 14, for Archies, their season for this celebration has almost ended and they now start analyzing the sales and trends and get ready to celebrate the day of love for the next year. In fact work for the next year’s V-Day design of cards, based on the feedback they get every year, begins in the month of April itself.

     

  • The Indian brands today are doing what the Korean brands did when they entered India way back in late 90s, mapping their rivals' strengths and weaknesses

    Korean durable brands outwit Indian giants

    By Rajiv Banerjee & Ravi Balakrishnan

     

    There’s frenetic activity inside the corporate office of a leading consumer durable brand. As the financial year hurtles to an end, the head of marketing is racing against time, tying up operational plans for the 12 months of the new fiscal. This involves meetings with the board and also key dealers to keep the network abreast of the gameplan.

     

    The excitement among the marketing team at the consumer durable maker is palpable, and not just because of the strategy being crafted. 2012-13 may well be the year in which, after a long time, Indian consumer electronics and white goods makers stand more than just a fighting chance of taking on their more successful Korean rivals.

     

    “When the Korean brands were behaving like Indian companies, they were doing very well. The minute control moved out of this country to Korea, it’s all changing,” says the marketing head, who wishes to remain anonymous.

     

    This change in the Rs35,000 crore durables and electronics segment in India – where possibly after more than a decade, the incumbents (the Koreans) seem vulnerable – is not lost on rival brands. Specifically, the indigenous brands like Onida, Godrej, Voltas and Videocon, which once ruled the roost but were thrown off the perch as Korean brands LG and Samsung caught the Indian consumer’s imagination and her share of wallet.

     

    Today, according to market estimates, Samsung and LG together have a dominant combined share of 34 per cent in ACs, 45 per cent in refrigerators and an equal combined share in washing machines (semi-automatic category). But in the ACs, from the period January-December 2011, Samsung’s market share fell from 19 per cent to 11 per cent.

     

    Similarly, LG slid from 28 per cent to 23 per cent, but Voltas jumped from 12 per cent to around 17 per cent in the same time frame. In the CTVs segment, Videocon is running almost neck to neck with leader of the pack LG with Samsung in the third position. And the year ahead may well be comeback time for the domestic camp.

     

    Sure, the growth rate for the industry dipped to 8-9 per cent against the projected 14-15 per cent in 2011. But that’s not fazing the Indian warhorses, a few of whom are blueprinting big-bang entries into new categories. Godrej Appliances, which has a presence across categories like refrigerators, washing machines, air conditioners and microwave ovens, is running pilot projects in small geographies in the area of consumer electronics, according to Kamal Nandi, VP, sales & marketing, Godrej Appliances. Those in the industry aware of the developments indicate that Godrej is giving colour televisions a serious thought although Nandi refuses to elaborate on the nature of the pilot project.

     

    Similarly Voltas, say rivals who are aware of the matter, is readying for a more aggressive play in air conditioners (ACs) to close the gap with LG; this after overtaking rivals like Samsung and Carrier. “In the last 3 to 4 years, one can see the comeback of Indian brands both at the shelf level, as well as in the minds of the consumer. Brands like Videocon and Godrej have gone through major identity revamps. Accurate positioning or not, but it has certainly brought back the buzz for them in the home appliances domain,” says Deba Ghoshal, head of marketing at Voltas.

     

    In many ways, the Indian brands today are doing what the Korean brands did when they entered India way back in late 90s. The Koreans mapped the strength and weaknesses of each Indian player across categories and then went about eating into the share of established brands like BPL and Onida in colour TVs, and Godrej and Videocon in appliances. Sensing that they were no match for the product strength of the Korean brands, the Indians manufacturers changed their strategy.

     

    “They tactically withdrew from categories where they thought that they will not be able to match the product strengths of their Korean counterparts. However, they did not let go of their core competencies. Instead of spreading themselves too thin, they maintained focus on their main categories,” says a senior marketing professional from one of the Indian consumer durable brands.

     

    A brand like Onida resorted to re-branding in an attempt to project a more youthful image, and in the process moving away from its iconic ‘Devil’ (Neighbours’ envy, Owners’ pride) advertising.

     

    “I wouldn’t say the campaigns from the last couple of years were path-breaking but we want to be a little unconventional to appeal to young nesters, which is our defined target group,” says Anand Ramadurai, head of marketing at Onida.

     

    Over the years, to withstand the Korean onslaught, brands like Onida decided to focus on regions and consolidate the space there. “In markets like Mumbai, we are relatively weak since the cost of doing business is very high. But the south is a strong market across categories, as is Gujarat, and the north is strong in air conditioners,” explained Mr Ramadurai.

     

    Other marketers chose their areas of comfort and protected that turf. For instance, Videocon maintained a strong presence in consumer electronics – its market share according to estimates in CTVs stands at 26 per cent. Godrej focused sharply on the direct cool refrigerator category (overall in refrigerators, Godrej stands at 15 per cent). And Voltas consolidated its presence in ACs with a market share of around 17 per cent at the end of 2011. “In many sub-categories, Indian brands have successfully protected their turf, and lead the market,” observed Mr Ghoshal of Voltas.

     

    At the same time the focus of the Korean brands is getting diffused somewhat as they get more serious about mobiles and tech products. For Indian manufacturers, it’s an opportunity to go in for the kill. Sure enough, Onida, Videocon and Voltas are pushing further into home appliances and ACs.

     

    Apart from stable pricing and better dealer margins, where Indian brands are trying to emulate the Koreans is faster go-to-market. Implementation, the players realise, is the key to instilling confidence in the trade that the companies mean business.

     

    “We are trying to break into the MBOs (multi-brand outlet) in Mumbai as well and are present in Vijay Sales and Reliance Digital where we were not there at all a month or two ago,” said Mr Ramadurai. “The recent campaign from us has certainly brought in the numbers, both from brand volumes as well as from a market share perspective,” added Mr Ghoshal.

     

    However, there are challenges ahead for Indian players. Nabankur Gupta, founder of Nobby Brand Architects who has worked with Videocon and Philips in the past, says Indian business houses, by typically chasing volumes, run the risk of entering the zone of commoditisation. They neglect the fact that many of the lower-volume, higher-end products add value – not just to the bottom line – but to the brand’s image.

     

    The Koreans and Japanese brands, says Mr Gupta, still rule in the premium, innovation- led space across categories. His take on the Indian brands is as follows: Videocon has regained number one position as a consumer durables group but not as a brand. Onida has totally lost out on appliances.

     

    “They are concentrating on TV and have held their own in terms of volumes but there’s very little innovation. It’s an also-ran brand. They still go on basis of old loyalties and pricing and a lot of dealer push,” reckons Mr Gupta. Mr Ramadurai of Onida counters that Onida is definitely not a price warrior. “What we do is launch products that are innovative in some manner. Being an Indian company, our insights are seen to be better.”

     

    Another area of concern for the Indian brands, market observers feel, is the lack of investment in technology; where Koreans and the Japanese brands have proved to be miles ahead.

     

    “In the conventional products like CRT TVs, Indian brands may stake a claim with an advantage on cost. But MNC brands have been able to invest in technology across smart TVs, LEDs, home theatres and mobile. Without investment in tech and manufacturing, Indian brands cannot dominate the market,” said Vijay Narayanan, head of marketing at Havells and formerly with Korean brand, LG.

     

    Finally, if Indian brands are to make their very own great leap forward, brandbuilding has to become a year-long pan-India affair rather than sporadic bursts around the festive season. According to Mr Ramadurai, Indian companies that are listed on the stock exchange cannot splurge on communications as they are accountable to shareholders. The cost of high spends that don’t quite show up on the bottom line and on margins can wreak havoc on the stock price.

     

    “Most multinationals in durables are not listed here and so can afford to make losses and make it up someplace else. Haier was extremely aggressive year before last and Toshiba was a year ago. They come and go in cycles but we can’t do that,” shrugs Mr Ramadurai.

     

    One option is a greater reliance on the more cost-effective digital media. It’s an area that Onida confesses to just starting to get its feet wet. It’s currently evaluating options of e-tailing and harnessing its presence on social media.

     

    Rebranding, pushing the trade and distribution may allow the Indian players to narrow the gap with rival Koreans. But there’s one camp that is slowly but surely making its presence felt as well – the Japanese. Even if Indian brands are successful in dethroning the Korean brands, rest assured the Japanese will be snapping at their heels.

     

    Source:The Economic Times

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

     

  • The transaction will involve transfer of all key assets, including intellectual property rights, supply agreements and third-party manufacturing agreements

    Marico picks up Paras personal care brands from Reckitt Benckiser

    By A Correspondent

     

    Marico has bought the personal care business of Paras Pharmaceuticals from UK consumer goods giant Reckitt Benckiser, edging out Emami. While announcing the deal, both Marico and Reckitt Benckiser declined to disclose the financial details.

     

    But two industry officials familiar with the negotiations said the maker of Parachute Hair Oil has paid Rs600-650 crore for the privately-held Paras Pharma’s personal care brands such as Zatak deodorant, Set Wet hair gel and Livon hair serum. This is much lower than Reckitt Benckiser’s original demand of Rs900 crore, they said.

     

    Morgan Stanley was the exclusive financial advisor to Reckitt Benckiser on the deal.

     

    Marico CMD Harsh Mariwala said the deal will help the company target the youth who now drives demand in the country’s consumer space. “All these brands are youth-oriented, fast growing and have low penetration,” said Mr Mariwala

     

    The transaction will involve demerging the personal care business of Paras Pharma into a separate company, Halite Personal Care India, in which Marico will acquire 100 per cent stake. This will involve transfer of all key assets, including intellectual property rights, supply agreements and third-party manufacturing agreements.

     

    Marico will fund the acquisition through a mix of internal accruals, equity and debt.

     

    Reckitt Benckiser acquired Paras Pharma in December 2010 for Rs3,260 crore, in one of the biggest acquisitions in the Indian consumer goods sector.

     

    The maker of Dettol Anti-septic and Disprin pain killer was more interested in Paras’ healthcare products such as Moov pain-relief ointment and Krack heel care lotion, and decided to sell the personal care business. Financial analysts say it is a good buy for Marico.

     

    “The acquisition will help Marico to move from a dominant hair-care portfolio to skin-care and personal care, which is a bigger opportunity,” said Shirish Pardeshi, executive director and research co-head at Anand Rathi Securities. Marico’s key products in India include hair oil Parachute and edible oil Saffola.

     

    With the new deal, it will get six brands – Set Wet, Livon, Zatak, Eclipse, Recova and Dr Lips – expected to have a turnover of more than Rs 150 crore in FY12. Paras brands are among the top three in the hair gel, male deodorant and hair serum categories.

     

    According to industry estimates, the deodorant category is growing at a rate of 40 per cent a year, hair styling gel at 25 per cent and hair serum at 30 per cent.

     

    Marico CEO (consumer products business) Saugata Gupta said the integration will be easy since the company has domain knowledge in the acquired categories through its operations in Vietnam and the Middle East.

     

    Source:The Economic Times

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

  • Contribution of premium items is growing in most FMCG categories, giving a breather to marketers fighting rising input costs and slowing overall demand

    Young urban users and modern trade boost demand for premium FMCG products

    By A Correspondent

     

    Makers of packaged food and personal care products are increasingly focusing on premium products as rising aspirations of young urban consumers and widening reach of modern trade help boost demand for high-value, high-margin products.

    Contribution of premium items is growing in most FMCG categories, giving a breather to marketers fighting rising input costs and slowing overall demand, particularly in rural areas.

    “Consumers are moving from value-added products to products that offer value benefits,” said Shirish Pardeshi, executive director and co-head, research, at Anand Rathi Securities.

    Big retailers play a key role in increasing demand for premium products within a category, by helping companies directly engage with consumers.

    Future Group, the country’s largest retailer, has reported premiumisation in the last several quarters. “Consumers are upgrading and there is not much impact of the external economic scenario,” said Devendra Chawla, president, Future group food and FMCG businesses.

    Mr Chawla said the trend of premiumisation is high in categories like soaps – the premium variants (priced above Rs 35 per soap bar) accounts for 40 per cent of sales at Big Bazaar – biscuits and detergents.

    Premium cream biscuits and cookies are growing 20-25 per cent a year, double the pace of mass variety Glucose and Marie biscuits, according to Parle Products, the country’s largest biscuit maker.

    Contribution of Glucose and Marie to the biscuit market has slipped to around 55 per cent from 65 per cent in the past one year, according to B Krishna Rao, group product manager of Parle Products.

     

    SUPERMARKET DRIVE

    Modern retail has been the saving grace for FMCG companies that had warned of slower growth this fiscal, more so after they had to resort to multiple price hikes of up to 15 per cent due to increases in commodity costs and pressures on margins.

    Retailers such as Future Group and Spencer’s Retail have reported rise in average purchase size of most product segments, confirming the premium drive.

    Anand Mour and Shariq Merchant, analysts with financial services firm Ambit Capital, wrote in a report in January that growth is moderating in rural India, but aspirational consumption of young urbanites is driving premiumisation. Expansion of modern retail, which accounts for less than 10 per cent of the country’s Rs2 lakh crore retail market, will facilitate this premium drive.

    A recent Nielsen study expects Indian shoppers to increase spending on FMCG at modern retail to $5 billion, or about Rs24,700 crore, by 2015 from $1.8 billion, or Rs8,900, in 2011.

     

    NEW PRODUCTS

    “Absolute price is no longer the only consideration, the price benefit equation is what needs to be managed,” says Jayant Kapre, president of McVitie’s India, a subsidiary of British confectionery firm United Biscuits. The firm has rolled out a premium range of McVitie’s Hob Nobs biscuits.

    Now Nestle is expected to launch a chocolate dessert called Fudge priced at Rs200, according to industry insiders. GSK has launched Horlicks Gold at a 30 per cent premium and within six months it has generated sales equal to 3 per cent of the more than Rs1,500-crore flagship brand. Marico, Dabur and ITC are all gung-ho about such products.

     

    Source:The Economic Times

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

     

  • E-shopping could get a major boost as familiar & friendly grocery stores come online

    Networking the neighbourhood kirana @ AaramShop

     

     

    Aaramshop, a venture that makes shopping for essentials in FMCG and CPG (Consumer Packaged Goods) easy with just a click of the mouse, may be just about seven months old but has been making steady progress. As the name suggests, it is about shopping aaram se, the difference being that it has brought the local kiranas/ banias/ mom-n-pop store on its platform thus making possible for consumers to purchase their daily needs online and what better than it is delivered by your trusted neighbourhood shop that you have been visiting all this while. Aaramshop.com has partnered with1400 independent retailers across the country and plans to grow this number significantly by the end of the year.

    A concept that has not been tried before especially in the e-commerce where its largely dominated by players catering to travel, gifts and apparels and even when there are few who have ventured into selling grocery, fruits and vegetables, the AaramShop model is different as it is bringing into its fold the existing local shops into its domain. Vijay Singh, CEO & Managing Director, AaramShop, talks to MxMIndia’s Tuhina Anand in an exclusive interview and explains the concept behind his venture and the dynamics behind the ever-changing face of e-commerce in India.

     

    In the last few months that you have been running AaramShop, what has been some of the key learnings?

    It is always fantastic to see raw thoughts and ideas turning into reality – and that’s what being happening at AaramShop over the last 7 months. We launched the site in mid-June last year and it was the one of its kind of venture, anywhere in the world, so we did not really have clear benchmarks to follow.

     

    So far, almost all our thoughts and ideas have been reinforced and we are very positive about the future of what we have created. Every member of the brand marketing & retailing eco-system has embraced the idea of AaramShop with enthusiasm.

     

    How do you see the venture going further?

    Today, we are the commerce partner to over 1,400 independent retailers across the country and we will grow this number multi-fold by the end of the year to ensure that every household in the top 10 cities can order their preferred FMCG brands via their trusted independent neighbourhood retailer (AaramShops as we call them) and get it at their doorstep in a matter of a few hours. We intend to scale to approx 20,000 AaramShops.

     

    We are starting to see brands integrating the advantages of the AaramShop platform within their digital marketing assets. This will extend the integration to all marketing initiatives by brands, including print ads, social media, campaign sites, and so on, as it will enable to them to ensure a critical last mile connect.

     

    In a move to make the online shopping experience exciting, AaramShop has introduced its unique product listing option that envelops the shopper in a complete brand experience. The innovation would enable marketers across FMCG / CPG categories to take advantage of the proliferation of online videos and all other digital content and consumers’ increasing engagement with that content.

     

    You have said that AaramShop is just a platform and your revenue model is not dependent on it. Can you elaborate on the revenue model?

    We don’t believe that the typical e-commerce models would work for the FMCG/CPG brands, predominantly on account of absence of deep discounting by brands and the fact that FMCG brands are extremely well distributed across the country and widely available across 12 million plus stores across the country.

     

    At AaramShop, we believe there is no need for more shops (on-ground or online) – the opportunity, however, is in making the existing shops available on the web so that the consumers can do their shopping with added ease, without needing to trudge down to the market.

     

    AaramShop, therefore, has been created as a hybrid retail platform for sales and marketing of FMCG/CPG brands to busy urban consumers. The platform offers the consumers the convenience of selecting from thousands of FMCG brands and then leverages the strengths of neighbourhood retailers to ensure last mile fulfillment of the orders.

     

    AaramShop is a free-to-use platform, not just for the consumers, but also for the retailers and, therefore, it does not disrupt the financial arrangements that the brands have already put in place.

     

    We have created a number of premium opt-in services for brands to use to connect in a more meaningful manner with consumers. These premium services are predominantly built around analytics-driven marketing, advertising options online and offline, AaramShop centric opportunities, and so on. Our revenue model is centred on premium services and brands have started to use some of these services.

     

    Buying grocery online, what are some of the logistics nightmare that you have faced in the last few months?

    Since the last mile of our model is completely managed by independent retailer partners who undertake the warehousing and the fulfillment of orders within their stores’ normal footprint – we do not face any logistics related nightmares. This is the core strength of the retailers within their geographical footprint.

     

    How open have the local kiranas been of joining this platform?

    The ‘kirana’ (independent retailers) are extremely keen to join the platform. They see it as an opportunity to become more relevant to the modern consumers. AaramShop, as a free to use platform, is open not only to ‘kiranawalas’ but also to neighbourhood “pharmacies” as they tend to stock and sell a lot of personal & beauty products.

     

    The independent retailers realize that they are unable to ensure a great “shopper experience” within their small stores and hence tend to lose out on larger orders. However, when they merge the online convenience of AaramShop with its access to thousands of brands with the local distribution and delivery capabilities that they already have, they realize that the combo could be a possible winner.

     

    The digital readiness of a lot of these retailers is still low, but I believe these are quite easily addressable with some technology innovations – and that is when the number of partner retailers would shoot up.

     

    You have been venturing into new and innovative arenas. So what is it that an entrepreneur should keep in mind when going alone especially looking at long term sustainability solutions?

    I don’t believe there is any fun in trending a path that is well-walked.

     

    The environment around us has changed completely in the last five years and consumer behaviour has transformed, however we tend to keep throwing the same set of solutions for the marketing challenges that the brands face. It is important to reboot.

     

    My religion is still marketing; it is the rituals that have changed. This change is dictated by what I see as incredible changes that are happening all around us and, to stay relevant, one needs to change.

     

    We have created a solution which integrates Local + Social +Mobiletrends of the days and it enables the interlinking of the Zero Moment of Truth of brands with their First Moment of Truth.

     

    So long as we can continue to provide an important connect for the brands, consumers and retailers and creating value across the eco-system, we believe that our premium services would be much sort after.

     

    How have you been promoting AaramShop?

    We have not aggressively started to promote AaramShop yet, as the focus is still on building the channel and ensuring we get the technology right. However, in the past and also going forward, our promotion strategies are based on:

    • Extensive use of social media – for example we were the first grocery store on Facebook.
    • Micro-geographic marketing, using the excellent footprint of AaramShops.
    • High quality CRM – grocery buying is a done 20 times a year by an average household, and we want to reach out in a meaningful manner and based on past purchase behaviour to ensure repeat usage.

     

    What are two key goals for your venture this year?

    While we have already released our mobile apps for all platforms, our focus would stay on making AaramShop more easy to use on mobile devices. We believe that mobile is the future and we will release a number of apps that will address different needs of different users in the year ahead.

     

    The other big focus area is going to be the BrandEngagementCenter. The BEC (www.brandengagementcenter.com) enables brand owners and their agencies to seamlessly manage and monitor their brand/products performance on the AaramShop platform. It is also our ad & analytical centre and we would like to ensure more users to start trying their hands on it.

     

    Having said that, I think the list of priorities is very long and we will be fighting on a number of fronts.

     

  • The latest TV commercial for Discover 125 takes a veiled dig at Hero's flagship brands Passion and Splendor as the old bonhomie between two industrial giants gives way to no-holds-barred marketing strategy

    Bajaj takes a dig at Hero’s Passion & Splendor in its latest Discover 125 ad

    By Rajiv Singh & Bhanu Pande

     

    “We have not yet beaten Bajaj, they’ve just been overtaken by us,” said Brijmohan Lall Munjal in 2001, when the reticent Munjal family patriarch and chairman of Hero Honda understated the fact that his company sold more two-wheelers than Bajaj Auto.

     

    Fast forward to 2012.

    The latest TV commercial for Discover 125 takes a veiled dig at Hero’s flagship brands Passion and Splendor as the old bonhomie between two industrial giants gives way to no-holds-barred marketing strategy in a fiercely competitive market.

     

    Bajaj Auto MD Rajiv Bajaj said the advertisement reflects a strategic repositioning and it’s not about Hero: “Our campaign is based on a consumer research interpretation and has nothing to do with taking on Hero”.

     

    That’s the official line. But most people who have watched the commercial feel it’s unmistakably targeted at Hero MotoCorp, the new entity formed after the Munjal family-owned Hero bought out its 27-year long partner Honda last year.

     

    Industry watchers say the breakup with Honda has weakened the market leader in the world’s second-largest two-wheeler market and Bajaj Auto wants to make the most of it.

    “Now Hero is without the safety helmet of Honda, so it is the best time for Bajaj to inflict maximum damage on the leader that is weak and vulnerable,” ,” said Prathap Suthan, chief creative officer of iYogi, a global remote tech support company and the man who created the government’s ‘India Shining’ and ‘Incredible India’ campaigns.

     

    KYUN, HERO?

    The advertisement shows three men owning different commuter bikes (seen in the background) say they always desired Discover 125, but settled for something lesser to satisfy father or wife, or to avoid annoying boss.

     

    They sound apologetic and wistful about their bikes. When they name them, a bleep sinks their voice, but it leaves enough for viewers to guess they are referring to Hero’s Splendor or Passion. “Discover nahin hai, par chalta hai,” each of them says. And the commercial, created by Ogilvy & Mather, ends with voice over, “Discover 125, ye chalta nahin, daudta hai.”

     

    The only previous time a Bajaj commercial took on Hero Honda was back in the early 1990s when a campaign for its 4s Champion teased Hero Honda with a tagline, “Kyun Hero?”

     

    Bajaj Auto President, Motorcycles, K Srinivas said that the advertisement does not take a dig at any rival, but wouldn’t comment on the bleep sound.

     

    DOING A BMW

    Rajiv Bajaj says his company wants to do what luxury carmaker BMW did when it entered the US 30 years ago – reposition the leader: “Mercedes was already an established player. So BMW said that Mercedes is the ultimate sitting machine, while BMW is the ultimate driving machine.”

     

    Now Bajaj wants to do something similar. “As part of an internal discussion, we felt that if you are not a leader, position yourself and re-position the leader by projecting yourself as the opposite of a leader… that’s what we are doing,” said Mr Bajaj.

     

    With Discover 125, Bajaj seeks a large chunk in the biggest segment of the two-wheeler market. Discover competes in the executive commuter segment – or bikes in Rs40,000-50,000 price range – that accounts for two-thirds of the two-wheeler market that sells more than a million units a year. This segment is dominated by Splendor and Passion. But that may soon change.

     

    BATTLE ROYALE

    “Splendor and Passion have not changed at all over the last few years, except maybe a tweak in graphics. They are heading the way Bajaj Chetak did,” said Adil Jal Darukhanawala, Editor, Zigwheels. One of the most popular scooters in the country, Chetak was discontinued in 2009.

     

    Analysts say Hero is grappling on technology front after the exit of Honda and this opens up the largest segment to competitors like Bajaj Auto and Honda Motorcycle & Scooter India that have planned aggressive model refurbishment and new launches.

     

    “For the first time in a decade, Bajaj is sniffing an opportunity to challenge the numero uno,” said Saurabh Uboweja, director of brand consulting firm Brands of Desire.

     

    He said that Bajaj’s take on Hero MotoCorp is deliberate and well timed: “By projecting buyers of Hero bikes as meek and compromising, Bajaj is also highlighting the weaknesses of Hero MotoCorp-withdrawal of Honda and its tech platform.” Without Honda, Hero might struggle to launch path-breaking products like it did in the past.

     

    “Hero has money but no technology. This is something that Bajaj is going to take advantage of with its slew of new models blitzkrieg that it has lined up this year,” said Mr Darukhanawala. The Discover ad is in line with Bajaj Auto’s aggressive stance in the market. Last year, one of its TVCs proclaimed that ‘Pulsar sells five times more than any Japanese sports bike in India’. With inputs from Lijee Philip

     

    Source:The Economic Times

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

     

  • We found in M&C Saatchi a partner who has the strategy, market analysis, creative expression all figured out just right for W, says Anant Daga, CEO, TCNS Clothing Company Pvt. Ltd.

    M&C Saatchi bags creative mandate for W

    By A Correspondent

     

    The year has begun on an exciting note for W – the leading Indian contemporary ready-to-wear brand for women. The brand appointed M&C Saatchi to carry out their creative duties.

     

    Speaking on the creative association, Anant Daga, CEO, TCNS Clothing Company Pvt. Ltd. said: “We were impressed by M&C Saatchi’s in-depth understanding of the women’s apparel market and the target consumer. We found in M&C Saatchi a partner who has the strategy, market analysis, creative expression all figured out just right for W. Indian women’s wear market is large, unorganized and untapped. Being a leading women’s wear brand, W is well positioned to capitalize on this opportunity and with M&C Saatchi we look towards achieving greater successes for the brand.”

     

    The advancement was confirmed by Anjali Nayar, CEO, M&C Saatchi: “It was a great start to the year. And we are excited about having added W to our portfolio. With retail growing at this pace, we see a lot of scope to do some interesting work together.”

     

    Commenting on this advancement, Richa Sinha, Executive Creative Director, M&C Saatchi, said: “We are happy to have got W as it is a brand that’s close to our heart. What makes W so special is the fact that the brand truly embodies the true spirit of the modern Indian woman and doesn’t believe in slotting women in their clichéd roles.”

     

    Rupin Jayal, Head – Strategy & Planning, M& C Saatchi said: “W is a brand that is unique in representing the aspirations and identity of contemporary Indian women. With its blend of international influences framed within Indian silhouettes, W has the potential of becoming an iconic brand.”

     

    W, a part of TCNS Clothing Pvt. Ltd, designs, manufactures and retails fashionable garments for the Indian women. It is the pioneer in introducing the concept of ‘Mix-n-Match’ in retail and has long been known for its fits and exotic inspirations. W is present in 40 cities across the country with 100 exclusive stores.

     

    M&C Saatchi Communications is one of the world’s youngest and fastest growing global advertising agency networks, with offices in 22 cities across 15 countries. It is founded on the principle of Brutal Simplicity of Thought, with all offices grounded in an entrepreneurial spirit. With offices in Mumbai andDelhi, M&C SaatchiIndiais now an agency of choice for leading entrepreneurs.

     

  • A Comms has tied up with the e-commerce site for a unique campaign across India

    A Comm’s latest TV campaign for snapdeal.com

    By A Correspondent

     

    One of India’s largest network media houses, Aurora Comms (A Comms) has tied up with one of the most popular e-commerce sites, snapdeal.com for their campaign. A Comms, which has been connecting brands to consumers at consumer spend zones, has tied up with the e-commerce site for a unique campaign acrossIndia.

     

    A Comms brought to the Indian market the innovation of streaming communication on multiple LCD panels in electronic stores. It has successfully been running campaigns connecting premium brands with technology climbers. snapdeal.com will be the first brand in e-commerce segment to be displayed in Croma and E-Zone outlets acrossIndia.

     

    A Comms uses multiple television panels in electronic stores to create an experiential zone for the brand. While some brands may use the medium as pure-play display medium, for some it also works as sampling.

     

    In the case of snapdeal.com, which already has a recall among tech-savvy and upwardly mobile audiences, this tie-up will only take it to the premium consumers of the two electronic stores and make them aware of its creative approach for getting the “Best Deals everyday”. That snapdeal.com itself has attractive offers in the same cities where Croma and E-Zone are present, is the X-factor of this tie-up.

     

    Samir Vithlani, Director – Key Accounts, Aurora Comms, said, ‘It is our endeavour to deliver targeted consumers in a contextual manner. Croma and E-Zone attract intellectual consumers; therefore we worked on offering branding and showcasing the deal site across these stores.”

     

    Abhimanyu Rishi, Head Activations, snapdeal.com feels this will help the e-commerce site get a new audience. “The footfalls in electronic stores are always increasing. Our tie-up is a unique attempt to promote snapdeal.com to the smart, upwardly mobile urban citizen. We want to drive home our messages innovatively, not intrusively,” he said.

     

    The Campaign:

     

    [youtube width=”400″ height=”200″]http://www.youtube.com/watch?v=RFrkWV-yZ44[/youtube]

    Aurora Comms, popularly known as A Comms, is India’s largest advertising network media house offering branding solutions across various consumer spendzones. The company already has tie ups with over 4000 destinations in about 600 cities inIndia.

     

  • UCO Bank is the Banking Partner forMaharashtraand Madhya Pradesh, Dena Bank would be the partner forGujaratand Rajasthan and Corporation Bank for Karnataka

    Future Media takes its partnership with banks to regional level for ‘Sabse Saste 5 Din’

    By A correspondent

     

    It is that time of the year when hordes of people throng the alleys of the country’s most economical retail supermarket for a once-in-a-year opportunity to purchase goods at the most economical price ever.

     

    Big Bazaar is back with its ‘Sabse Saste 5 Din’ offer and has loads of surprises planned for the consumer. For the year’s most economical five days of shopping to be held from January 25-29, Future Media, the Retail Media arm of Future Group has partnered with three leading banks ofIndiaat a regional level.

     

    Having tasted success in 2010, Future Media has been tying up with various partners for a variety of Future Group’s properties. However, for the first time, staying true to the potential of the medium, Future Media has broken down the partnership at a regional level.

     

    While UCO Bank is the banking partner forMaharashtraand Madhya Pradesh, Dena Bank would be the partner forGujaratand Rajasthan and Corporation Bank for Karnataka.

     

    As part of the partnership, each of the banks get branding visibility across the stores in their respective markets and also a perfect platform to interact with millions of customers who will shop in Big Bazaars during this period.

     

    “For the first time, we have opened up the sponsorship at a regional level, thereby enabling banks to partner us in markets crucial to them,” said Sandip Tarkas, CEO, Future Media.

     

    “In addition to the Branding and Customer Interaction, these banks will also get presence across Big Bazaar’s ATL & BTL promotions”, he added.

     

    Every year more than 10 million customers acrossIndiashop in 200 Big Bazaar, Food Bazaar & Fashion@Big Bazaar stores spread over 89 cities, making it one of India’s largest consumer events.