‘December discount' drive

Car dealers rev up for ‘December discount' drive:

It is that time of the year when those looking to acquire a car of their choice visit showrooms hunting for attractive discounts and freebies. Call it December ‘dhamaka,' it is when most of automotive players seek to increase their sales volumes.

The discounts just got bigger, with the country's largest carmaker Maruti announcing higher discounts and Tata Motors and Hyundai Motor continue to offer attractive packages. It won't be long before others follow suit.

For Higher numbers:

This is something unique to India. This has been the trend for the last four-five years when companies and dealers extend deep discounts to log higher numbers.

Discounts ranging from Rs 10,000 to Rs 27,500 for different models in the Maruti stable This has got bigger now, with the discounts ranging from Rs 10,000 to Rs 40,000. In fact, this could go up to about Rs 70,000 for SX4 sedan, if the buyer avails exchange and loyalty bonus.

Cars from the Tata Motors stable are now commanding discounts ranging from about Rs 15,000 to Rs 50,000 depending upon the model. The last few years have seen good numbers coming from December sales.

Hyundai 

has been offering discounts in the range of Rs 18,000 for i10, Rs 25,000 for Santro and Verna cars during November.

Nokia

Nokia not sure of dual SIM handset market sustaining:

Intense tariff war has led to flooding of the mobile phone market with lower-end products with dual SIM (Subscriber Identity Module). However, the single largest player in the handset market, Nokia, is yet to be convinced of the sustainability of the present trend.

According to IDC India, dual or multiple SIM handsets accounted for more than one-third (39 per cent) of the total number of handsets sold in the country during April-June 2010, up from one per cent a year ago.

The newly created market space has proved to be a game changer in the handset industry in the country, as new players (such as Micromax and Spice) have made their way among the top five sellers – largely riding on a range of dual SIM offerings.

Not to join ‘price game':

Nokia, admits that the dual-SIM market had “taken off” during the last one year. However, the company also makes it clear that it will not join the “price game”, the characteristic of the emergent market.

Compared to a range of dual SIM offerings by its competitors, Nokia currently has a single model (C-100) to offer in this category. Plans are afoot to launch a second model (C- 200) soon.

Dual-SIM is an India specific phenomenon arising out of the intense competition among the cellular operators to grab market share by unleashing a tariff war.

Whether this trend is sustainable over the long-term remains to be seen – especially with operators coming under increased pressure from tariff arbitrage

Expanding dual-SIM market:

The mobile telephony market is youth dominated resulting in competition and prevailing low telecom tariffs. These trends are expected to continue in the short (less than one year) - to medium-term (2-3 years).

The introduction of new brands has seen ‘emerging vendors' corner as much as 33 per cent of the country's mobile handset market in April-June 2010.

Sources: Business Line.

CLIMBING UP FAST

FMCG INDUSTRY GROWTH:

FUTURE GROWTH:

CATEGORY GROWTH

L'Oreal: High-end skin care

L'Oreal: High-end skin care:

L’Oreal is all set to expand its portfolio in India by rolling out Kiehl’s, a 159-year-old brand. Kiehl’s has been a part of L’Oreal since 2000 and is present in 39 countries worldwide.

In India, the brand will take off at the Ambience Mall in New Delhi. Subsequently, L’Oreal plans to take the brand to other cities like Mumbai, Bangalore, Pune, Chennai and Kolkata.

In India, the strategy is to establish the brand through standalone stores, unlike the West where Kiehl’s is also present in shop-in-shop formats in upscale departmental stores. L’Oreal has partnered with Quest Retail which will help the company identify retail locations and recruit staff.

“Online retail is not on the agenda for now, as we want consumers to visit our store and experience the brand first-hand,” says L’Oreal Group Chief Operating Officer Dinesh Dayal.

Kiehl’s will sell grooming lines for both men and women — cosmetics for the face, body and hair. “Initially, we will stick to our core product portfolio. We will not display our extended range like pet products (dog shampoo etc) as we believe the market is too early for that,” says Dayal.

With households raising discretionary purchases such as personal products from 8 per cent in 2005 to 11 per cent in 2025 (says a McKinsey report), ignoring this market would be a missed opportunity.

In addition, with rapid growth in average annual household incomes, the demand for luxury products is rising at a fast clip. The brand’s primary target will be individuals who have bought these products overseas. Thus the price tags in India are similar to Europe. “We also see the new working woman as a target group, who now has the wealth and desire for self-indulgence and opulence,” says Dayal.

The immediate target audience might seem like low-hanging fruit which can be easily captured, but Kiehl’s has ample company in the luxury skincare space. There are brands like Lancome from L’Oreal’s existing portfolio. Then there are multitude of others like Estee Lauder, Chanel, Shiseido, Clarins and the nature-driven L’Occitane and Body Shop that vie for consumer attention.

However, the competition does not intimidate Dayal who believes the premium skincare market, though small, is witnessing double-digit growth, and there will be an opportunity for brands to co-exist. Kotak Institutional Securities Analyst (consumer division) Manoj Menon sees the entry of premium brands as an investment towards the future. “The premium skincare market has grown in other countries like Thailand, Singapore, China and brands are hoping that the same will happen in India.”

As far as differentiation goes, the company says it will capitalise on retail engagements to stand out in the marketplace. Dayal believes that Indian consumers are today seeking a personalised retail experience, and distributing free samples and offering in-store consultation are unique ways that the brand will connect with the customer.

“Our entire brand draws inspiration from natural ingredients, and our beauty guides are equipped to educate consumers about our products,” claims Dayal. “In fact, the brand team flew down from New York and Singapore to train the staff at the Delhi store.”

To generate awareness for the brand in India, L’Oreal will not invest in above-the-line campaigns. “Following Kiehl’s global policy, we will focus on word-of-mouth marketing to build a loyal base of customers which includes achievers in different walks of life like dermatologists, fashion designers, artists and musicians.”

The brand will also pursue the digital route to build a community around the Kiehl’s brand. It is preparing to release a micro-site and a Facebook page soon.

The future of FMCG

The future of FMCG:

Fast moving consumer goods will become a Rs 400,000-crore industry by 2020. A Booz & Company study finds out the trends that will shape its future

Consider this. The anti-ageing skincare category grew five times between 2007 and 2008. It’s today the fastest-growing segment in the skincare market. Olay, Procter & Gamble’s premium anti-ageing skincare brand, captured 20 per cent of the market within a year of its launch in 2007 and today dominates it with 37 per cent share. Who could have thought of ready acceptance for anti-ageing creams and lotions some ten years ago? For that matter, who could have thought Indian consumers would take oral hygiene so seriously? Mouth-rinsing seems to be picking up as a habit — mouthwash penetration is growing at 35 per cent a year. More so, who could have thought rural consumers would fall for shampoos? Rural penetration of shampoos increased to 46 per cent last year, way up from 16 per cent in 2001.

Consumption patterns have evolved rapidly in the last five to ten years. The consumer is trading up to experience the new or what he hasn’t. He’s looking for products with better functionality, quality, value, and so on. What he ‘needs’ is fast getting replaced with what he ‘wants’. A new report by Booz & Company for the Confederation of Indian Industry (CII), called FMCG Roadmap to 2020: The Game Changers, spells out the key growth drivers for the Indian fast moving consumer goods (FMCG) industry in the past ten years and identifies the big trends and factors that will impact its future.

The report estimates the FMCG sector witnessed robust year-on-year growth of approximately 11 per cent in the last decade, almost tripling in size from Rs 47,000 crore in 2000-01 to Rs 130,000 crore now (it accounts for 2.2 per cent of the country’s GDP). Growth was even faster in the past five years — almost 17 per cent annually since 2005. It identifies robust GDP growth, opening up of rural markets, increased income in rural areas, growing urbanisation along with evolving consumer lifestyles and buying behaviours as the key drivers of this growth.

The report further estimates that the FMCG industry will grow at least 12 per cent annually to become Rs 400,000 crore in size by 2020. Additionally, if some of the factors play out favourably, say, GDP grows a little faster, the government removes bottlenecks such as the goods and services tax (GST), infrastructure investments pick up, there is more efficient spending on government subsidy and so on, growth can be significantly higher. It could be as high as 17 per cent, leading to an overall industry size of Rs 620,000 crore by 2020.

Based on research on industry evolutions in other markets and discussions with industry experts and practitioners, Booz & Company has identified some important trends that will change the face of the industry over the next ten years. Some key ones related to evolution of consumer segments are as follows:

Accelerating ‘premiumisation’

he rising income of Indian consumers has accelerated the trend towards ‘premiumisation’ or up-trading. The trend can be observed prominently in the top two income groups — the rich with annual income exceeding Rs 10 lakh, and the upper middle class with annual income ranging between Rs 5 lakh and Rs 10 lakh. The reports says, the rich are willing to spend on premium products for their ‘emotional value’ and ‘exclusive feel’, and their behaviour is close to consumers in developed economies.

Evolving categories

Categories are evolving at a brisk pace in the market for the middle and lower-income segments. With their rising economic status, these consumers are shifting from need- to want-based products. For instance, consumers have moved from toothpowders to toothpastes and are now also demanding mouthwash within the same category.

The trend towards mass-customisation of products will intensify with FMCG players profiling the buyer by age, region, personal attributes, ethnic background and professional choices. Micro-segmentation will amplify the need for highly customised market research so as to capture the specific needs of the consumer segment targeted, before the actual product design phase gets underway.

Value at the bottom

Booz defines the bottom-of-the-pyramid or BoP consumers as those who earn less than Rs 2 lakh per annum per household. The group constitutes about 900 to 950 million people. While the middle class segment is largely urban, already well-served and competitive, the BoP markets are largely rural, poorly-served and uncompetitive. A lot of the basic needs of BoP consumers are yet unmet: Financial services, mobile phones & communication, housing, water, electricity and basic healthcare. And so there is untapped opportunity.

Top 10:

Top 10 Indian CEOs:

Rank     CEO                                            COMPANY

1.          Ratan Tata                                   :Tata Group

2.          Mukesh Ambani                          :RIL

3.          Anil Ambani                                :ADAG

4.          partha S.Bhattacharyya               :CIL

5.          S.Gopalakrishnan                        :Infosys

6.          O.P.Bhatt                                    :State Bank of India

7.          Chanda Kochhar                         :ICICI Bank

8.          N.Chandrasekaran                      :TCS

9.          Vineet Nayar                               :HCL

10.        R.S.Sharma                                 :ONGC

Top 10 Global CEOs:

Rank        CEO                                       COMPANY

1.             Warren Buffet                        :Berkshire Hathaway

2.             Steve Jobs                               :Apple

3.             Rupert Murdoch                     :News Crop

4.             Steve Balmer                          :Microsoft

5.             Jamie Dimon                           :JP Morgan

6.             Robert Dudley                        :BP

7.             Mark Zuckerberg                    :Facebook

8.             Brain Moyanihan                    :BOA

9.             Marius Kloppers                     :BHP Billiton

10.           Tom Albanese                        :Rio Tinto

* These Rankings are based upon the most discussed Business heads. published by: Business Today

A New Social network.

MOODLER.IN

Now, let them know how you feel..

The social media is lending itself to new innovations, the latest being a site called Moodler that harnesses the power of moods..

What's Up??

The Chennai-based Pixelkraft is a digital media communications company that describes itself as one “made up of a highly motivated (sometimes moody) lot who think that the Web is too much fun to be left to serious-sounding people”. Moodler, an icon, instead of hundreds of posts such as the kind found on Twitter or Facebook, speaks volumes. “It's a dialogue, even when you‘re not uttering a syllable, you can tell what mood the world's in just by looking at the icon, and you can do a mood graph too, to tell what mood the world is in.”

Why ‘Moodle'?

Moodler is designed to track the mood of a social network. Moods happen for a reason, and Moodler just makes it easy to have conversations around what caused that mood. it's different from Twitter or Facebook because they are all about ‘me'. But the latter two needn't be all about ‘me', one argues, they could be places to have a discussion or a debate rather than be merely an exercise in egotism. Facebook stands for “this is me”, Twitter for “I'm thinking aloud”, Foursquare for “I'm here” and Moodler for “I'm feeling/what do you feel?” On FB and Twitter, though, one has to actually read what someone else's saying, whereas Moodler is visually immediate.

Moodler, which has notched up over 1,200 members so far in the six weeks since launch, has made an app for the mobile phone, and is making apps for the iPad and Google TV.

* Its an Indian site designed as more simple and more interactive with the members in their social network. just check it out. www.moodler.in.

Harry Potter

The magic of Harry Potter!!

What makes Harry Potter one of the biggest brands of our age?.

Harry Potter has become one of the biggest fictional brands of our generation. Ever since the first Potter book was published in 1997, over 400 million copies have sold, making it one of the bestsellers of all time. The first Harry Potter movie ranks amongst the top 10 grossers of Hollywood, and the first six movies have earned an astounding $5.7 billion. Brand Harry Potter commands levels of recognition and buzz that most consumer brands would die to achieve. What explains this magic, and what learnings does it hold for us? Here are seven lessons from Brand Harry Potter.

• THE BRAND HARRY POTTER IS BASED ON A POWERFUL HUMAN INSIGHT.
• THE BRAND ENGAGES US SPLENDIDLY.
• THE BRAND IS SUFFUSED WITH EVOCATIVE SYMBOLS AND RITUALS.
• THE BRAND HAS CREATED ITS OWN LEGENDS.
• THE BRAND HAS DEVELOPED A DAZZLING ARRAY OF TOUCH POINTS.
• THE BRAND HAS LEVERAGED NEW-AGE MEDIA VERY SMARTLY.

"As you contemplate the seventh lesson, don't forget to enjoy the seventh Harry Potter movie."

TRENDS: The Indian consumer, 10 years on

The Indian consumer, 10 years on...

Given the rapid changes in the country's demographic profile, marketers and advertisers say they would be addressing a whole new Indian consumer in the next decade..

*** Even as the majority of India will be young, there will still be a significantly large retired p

opulation and a very large middle-aged population.

What will the Indian consumer look like in 2020?

Based on a few reports (The FMCG Roadmap to 2020 by Booz & Co), some trend spotting by CEOs at the recent CII-FMCG summit and forecasts by experts, BrandLine pieces together the profile of the Indian consumer a decade from now. The 2020 consumer in the country will be:

• A younger Indian.

          *The average age of the Indian in 2020 will be 29

• A predominantly urban animal.

           *Even as marketers chase the rural markets today,the growing trend of large-scale 

             migration to the cities could mean changing ratios

• A multi-tasker SEEKING experiences.

           *the emerging new consumer will be a seeker of experiences: so the engagement would       

            have to be more visual, more interactive.Brands will need to focus on the experience.

• Not-so-price conscious, indulgent.

          *Several market surveys and studies have shown that the Indian consumer, even at the    

           BoP (bottom of the pyramid), is not so much cost-conscious as he is value-conscious.

          *By 2020 when per capita incomes are expected to double and India will be the eighth   

           largest economy, this will become even more pronounced. 

• More aware and educated.

         *As education levels rise (India will have more than 100 million graduates and    

           post-graduates), the Indian consumer will become more aware.

• A bit of a brand sceptic.

          *India is getting younger and the youth are typically not so sentimental about brands.     

           Second, the rise of private labels will give brands a run for their money. Hence, marketers 

           will need to work harder to gain brand salience.

• More health conscious.

         *even as their disease profile is forcing Indians to become more health conscious, the 

          Indian consumer wants a pain-free change.“The sweet spot for marketers is to give the 

          healthy option without foregoing the indulgences,” citing how consumers may switch to 

          healthier oils but will not give up oil.

• Convenience conscious.

         *With time at a premium and Indians getting busier, marketers will have to provide more ‘

          on the go' products. By the next decade, the Indian consumer will be demanding 

          convenience, not just of products but also of purchase.

          "how Kitchens of India, its ready-to-eat label, sells more online (on Amazon) than in retail stores."

• More individualistic.

         *The family structure will continue to evolve in the next decade — even as the joint family 

          disintegrates and nuclear units take firm shape, there could also be a rise in the single 

          person household.

         So, rather than address the family as a unit, marketers need to talk to individuals pointing 

         at how an increasing number of men are making FMCG purchases on their way from work.

Franchising : A Smart way to get started!!

Taking the franchise route is a smart way to get started

"As a business model, franchising gives an entrepreneur a system to follow. You get the support of an experienced hand and your learning will be faster."

Do you want to live the dream of being your own boss? Then, may be, you should buy the franchise of a good brand. Franchising is the smart way to get started as an entrepreneur, says Mr Gaurav Marya, President, Franchise India.

Heading this integrated franchise and retail solutions company, Gaurav Marya has helped many budding entrepreneurs meet the challenges of being in business and growing with it.

He has serviced several large and medium businesses including, that of Videocon, the Landmark Group, Tata Steel, Unilever India and Levis.

Excerpts from the interview:

Can you explain the concept of franchising and how it has clicked in India over the last few years?

• Franchise literally means rights or privileges granted to someone. If you have a successful business model or a brand and you transfer it to someone in another geographical location for a fee or royalty, that becomes franchising.
• The franchising industry is growing by 30 per cent every year. Prominent industries here are education and retail. F&B and Wellness is also a fast growing segment.
• There are two types of franchising — 
• one is distribution-based franchise, where, typically, the company would give the product/service to a distributor who will sell it under his own name.
• The second is business format franchising, which is the growing phenomenon now. Here, the products are sold under the franchisor's brand. And, yes, they use the same signage and give the same kind of experience to customers.

So how does a franchise business work? Is it on a profit share basis?

• Typically, when you take up a franchise, you would be required to pay an upfront fee towards the brand. Product companies charge a relatively small fee compared to service businesses, as margins are made on the supply of the product.
• If you take a Koutons franchise, for instance, you need not pay royalty because the company will supply shirts and trousers and make margins on that.
• But if it is a service franchise like that of a food business, a royalty will be charged on a monthly basis — which is a share on the gross sales. Your profit will depend on how you run the business.

In a franchise business model, what are the areas where the entrepreneur has restrictions?

• In franchising, there is something called the ‘firm and flexible' rule. The franchisee (one who takes the franchise) can't change the brand name or the product features.

For example, he cannot add a new product to the company's product line. Flexible are areas where one wants to expand the business. A franchisee for McDonald or Pizza Hut in India, for instance, has more vegetarian than non-vegetarian options. Generally, a franchise business model is suited to entrepreneurs who believe in working in a system.

How should one select a franchisor?

• There is a three-stage approach which we advise for the franchisees. 
• Stage one is called "Information stage", the potential franchisee needs to go and collect information from the market on the brands available, the sector options and on what can give the best return on the time he is to invest.
• Then comes the ‘evaluation' stage. In this stage, one should speak to the specific brand's past franchisees and look into how those franchise outlets have performed. While valuing the franchisor, some self-evaluation is also needed. One needs to know his financial and operational capability. Many people assume franchise business to be an easy affair; not really, it can take all your weekends and all your evenings. So, once you are done with evaluation.
• you go to the next stage, which is, ‘negotiation'. This is where you go and negotiate on the fee structure and clauses in the agreement. One can take the advice of a professional consultant or a law firm or even a chartered accountant for this.

What are your thoughts on taking up franchise business for a career?

• It is a smart way to get started. As a business model, franchising gives an entrepreneur a system to follow, which has been proved successful.
• You get the support of an experienced hand and your learning will be faster. But again presuming that you will be successful just because you bought the franchise of a number one brand is wrong.

Can you name some brands that are doing successful franchise business which young entrepreneurs can look at?

• There are lot of good brands. Well, to name few — Motilal Oswal, Gitanjali, Videocon, Euro kids, NIIT and Archies. For someone looking at low-cost franchise business, there are several good play schools which are open to franchise offers now.

What is the exit option in a franchise business? Is there any lock-in period?

• Franchising is normally a term-based agreement which is renewed if the franchisee continues to pay and fulfil his obligations.
• But in the middle of the term, the franchisor can terminate the agreement for non-performance on the part of the franchisee or on an act that is breach of contract.
• A franchisee should be very careful while putting down the exit clause in a franchise agreement. He must be careful about how he wants to define an exit.