Monday, July 16, 2012
FDI in retail
Small is beautiful and Big is
cheaper
By Harish Bijoor
Q: What is the real impact of FDI in retail, and when do we see it all
happen?
-Kumar K Rajapalayam, Hyderabad
A: Kumar, this question is as
contemporary as it comes. FDI in retail has just been announced. This is really
a policy intent drawn out and announced as a go-ahead document. Retail in many
ways is a “State” subject, and its implementation will depend a lot on what the
individual states with their individual political agenda will allow or not.
The road-map for retail in India
has however been laid out clearly in this policy announcement. 51% FDI in
Multi-brand retail and a 100% FDI (up from the current 51%) in Single-brand
retail. This move was first conceptualized 16 years ago, hotted up as a point
of debate three years ago, and has today culminated in a decision that simply says
“get going guys”!
I am really impressed at the fact
that the UPA government took courage to sanction a go-ahead through a Cabinet
decision, despite the fact that elections in Uttar Pradesh are round the
corner, and despite the fact that UPA-allies have opposed the move. This is a
bold move. A move that accelerates the process of liberalization that started
trundling on in India 1984 onwards.
This move is good for the farmer
and the consumer. The farmer will hopefully have access to a better supply-chain
mechanism that gets him to channelize his produce of grain and fruit and
vegetables to the big city markets without wastage, and the consumer gets a
better variety, a bigger choice of options to shop at, and hopefully better
prices. The fact is that bigger chains are able to offer cheaper prices,
cheaper by as much as 3-7% over current prices offered by smaller retailers.
Scale counts. While small is beautiful, big is cheaper.
I am equally excited by the
riders put into the policy. One particular point of excitement is the fact that
investments need to be channelized for the benefit of local industry. The fact
that retailers will need to source 30% of their requirements from SME’s, is a
good one. This boosts the sagging SME manufacturing sector. And I hope this
really translates into business for real and existing small scale manufacturing
units rather than new ones created just to fill in the blanks of this policy.
The minimum investment of 100
Million USD is another good move. This ensures businesses with serious
long-term intent entering the space with adequate back-end infrastructural
investments.
I do believe this policy
threatens and impinges the 14.6 million small mom and pop retail outlets in
India. This policy for sure brings about a kind of Retail Darwinism in the
country, where only the fittest will survive and the others will fall by the
wayside. This will happen first in the 42 big one million plus population towns
of India. And at a later stage, expect this retail revolution to go deeper into
the hinterland.
Small retail intermediaries are
bound to be hit by this decision, as the effort to make the supply chain leaner
results in the small links in the chain snapping to make way for the bigger
links to facilitate cost-efficient deliveries.
Kumar, expect to see the real
fruits of this policy decision to touch our lives three years hence. Retail
investments are low gestation investments in many ways and take time to
fructify and deliver.
Q: With a young Cyrus Mistry anointed to head the Tata group, will the
Tata group look and feel younger in its profile?
-Rahul P Kolihara, Mumbai
A: Rahul, that’s a loaded
question in itself. What makes you think that the Tata Group is “older” in its
profile? Look at the profile of the large number of people who work for Tata
Consultancy Services, and you will be jolted by the young and the aggressively
young.
That apart, if you mean the Tata
Group looks older in profile, and will Cyrus Mistry get it looking younger, I
do believe all this will take time. This sure is a big move. Cyrus Mistry is
likely to be all of 44 when he takes charge of the House of Tatas. That sure is
an infusion of young blood. To put it in perspective, Cyrus Mistry and Rahul
Gandhi are well nigh of the same age bracket. One is attempting to head this
country, and another is anointed to head one of the country’s biggest business
empires.
The age of leadership in India is
and has to progressively go downwards in its push. The forties is today the age
of dynamic and alive leadership. Just wait as you see the thirties capture this
slot, later than sooner.
And what does age bring to the
party? A certain degree of dynamism. A certain willingness to take risks. A
certain bravado that will have groups make mistakes and learn, rather than
depend on sure-shot approaches that are really not so sure-shot anymore in any
case. And that again is a paradigm in itself. May or may not be true.
Age is again what you make of it.
If you peep into the House of Tatas you will see that some of the boldest and
bravest decisions were made by people who were not so young after all. RK
Krishna Kumar of the Tatas led the Tetley acquisition brigade when he was not
exactly a sprightly forty. Look around the Tata Sons Board and you have names
that have done it all aggressively thus far, despite the age counter not being
on their side. Age is therefore in many ways a number. Age is also a paradigm.
A paradigm of our making.
The author is a brand-strategy
specialist & CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
Labels: ADVERTISING, CEO, City brands, Crisis-branding, India
Tuesday, May 01, 2012
The Facebook Farmer and Rural Twitter
The Facebook Farmer
By Harish Bijoor
Q: Do you see social networking sites
spreading their applications and wings? If so, where is the opportunity?
-P Malik Krishna, New Delhi
A: Malik, social networking sites hold immense potential for a range of applications. These applications need not necessarily be for urban educated folk alone. The opportunity is ripe for the rural farmer as well.
Take the large agrarian community in India. Most live distanced from
physical market places. Facebook or Twitter or for that matter any other robust
social networking format that attracts eye-balls and visits that are robust (we
are told FB has 423 million daily visitors and users) can help bridge the gap
between the physical and the virtual. Staying far away from physical markets
can no longer be a disadvantage. In many ways, geography is history. If a
farmer is on FB, he can experience real-time prices, a real-time feel of the
market, and indeed a real-time interface with buyers and sellers alike. To that
extent, buying and selling and information facilitation is just but one of the many
applications that can be farmer-friendly.
On the other hand, for the Corporate, the social networking site does away with the one big issue most corporate organizations grapple with: access to market. Access to market today is defined not by physical product presence in the market, as much as the access to information about the product. Imagine a fertilizer or a seeds company that can network with the farmer online, offer prices on quantities, offer consulting and counseling services, and then finally sell. All this is today possible, thanks to the social networking site.
In the old days, a corporate entity would define for itself the urban market space as the space it could manage to cater to, due to distance. Today, every corporate can have an e-presence and an e-commerce and e-consulting and e-counseling plan in place. This means that no corporate is too far away or too close to the market. In many ways, the social networking site re-invents the model of Pure competition, where no player is too far or too close from the market. The potential is therefore pregnant.
Farmers can use these sites in several steps. Step one would be to garner information. This can relate to weather, cropping patterns, crop-volume-estimation across growing areas, rainfall patterns and more. In addition, farmers can network with brethren-farmers across the world and utilize the power of peer group influence in terms of buying and selling. Add to it the possibility of a more knowledge-enriched farmer, and you have the potential of a shift of power back to the farmer, from the current days where the power and margin largely rests with the middle-man. In many ways social networking sites can help dis-intermediate the market and help the farmer retain larger margins.
Q: Premium and luxury brands do not
advertise on radio as a medium. Why?
-Shephali B Raghavachar, Hyderabad
A: Shephali, yes, premium advertisers think radio as a non-premium medium. There is just too much of it, and there is ample research available that tells you that the premium-category shopper does not depend on awareness scores for luxury brands from radio. In fact radio tends to negate effort for luxury brands as of now. Proves counter-productive to effort. Radio is much too mass for luxury brands.
Premium luxury brands will still depend on niche mediums. Niche mediums such as niche print for instance. Airline in-flight magazines work beautifully here. Even for the small town traveler. In fact he carries away these in-flight magazines and salivates and shops. Works better than radio for sure.
Q: How big is the e-retail industry
today and how does its future potential look?
-Nalin Vaidyanathan, Chennai
A:
Nalin, e-retail is today growing differentially across categories. Since the
base is small, in some categories you witness a 600% growth and in some a 220
per cent growth. Today, we have 143 million Indians on the Web. Of these, we
have 49 million people who are the prime audience for e-retail mechanisms as of
now. My prognosis is that we will have 320 million Internet users by December
2014. As this happens, expect e-retail to boom.
Harish
Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
Labels: ADVERTISING, branding, Brands, City brands, Digital Marketing, Facebook, Rural brands, Twitter
Sunday, February 07, 2010
Celebrity Endorsement and Real Estate
Rotten Celebrity Eggs
By Harish Bijoor
Q: Cities are pushing themselves to the fore in India by building themselves as brands that attract investments. What gets invested in building the brand image of a city?
-BP Gururaj, Hyderabad
A: Guru, the brand is an amorphous entity. The brand is a thought. A thought that lives in people's minds.
A city's brand image is therefore the collective set of thoughts that a city enjoys in the minds of people. These minds include the minds of the people who live in the city, and equally the minds of people who do not live in it.
The brand image of a city has therefore an intrinsic aspect, which is all about the image enjoyed within the city, and an extrinsic aspect which is the image enjoyed outside the city.
A city's image is created by a whole set of disparate elements altogether. It is about the weather, the culture, the politics, the society, the people, religion, language, attitude, tolerance and a whole set of 48 other factors included. To that extent, the brand image of a city is really not an engineered one. It is an accident. A literal small part of the chaos theory that abounds in much of our lives altogether.
In a technical manner of speaking, brand-engineering is a new science, art and philosophy on its own. Creating the brand image of a city is not about creating it from scratch on a drawing board. Instead, it is all about using its positives, its history and its heritage to advantage as one builds on the basic foundations that abound.
To that extent, Brand Hyderabad is all about leveraging on the image of its hoary past, its politics, its food, and everything that is old and super-imposing onto it the modern icons from IT. ITES, Real Estate, Retail and Biotech included.
Q: The Real-estate industry is getting onto the branding format. What are the fundamentals in branding the real-estate developer?
-Rohit Bhargava, Mumbai
A: Rohit, branding is very critical to the Real Estate industry. Particularly in times when there is so much clutter all around. And most certainly in times of uncertainty such as the ones we live in today with the big names of Wall Street having crumbled over the last week itself in the US, sending tremors of uncertain economic times the world over.
Cities and their Real Estate offerings need to re-invent themselves on the path of credibility for a start. Take Bangalore for instance. The city has been home for decades to builders, developers and the entire real-estate fraternity at large. We started with a high repute developer by the name of SI . Chennai and Bangalore saw developments which were unique. This builder promised the earth and delivered the sky. The builder promised delivery on a date and did it by that date.
Today, even as I answer your question, builders in Bangalore are getting a negative image on delivery, quality and at times consistency of what is promised being delivered. There are builders who have promised delivery and have defaulted on this count by more than two years. The stories abound. This is bad for the brand image of Bangalore and the builder at large. No amount of branding input will help correct a credibility issue.
While the real-estate industry benefits a lot from Brand Bangalore, it is time for the industry to start contributing back. The first step would be to follow the basic rule of transparency, credibility and honest delivery. The image of a city is the responsibility of all its stake-holders. The Real Estate fraternity is one such key stake-holder.
Branding helps only when the offering is honest. The brand is an honest consumer statement.
Q: There is so much being written on the use of celebrities and its impact on brands. What’s your view on this? Should we use? Should we not?
-Shefali Luthra, New Delhi
A: Shefali, celebrity use in advertising has fast emerged as a lowest common denominator item in Indian advertising. When there is nothing else that is working, just pick a celebrity, use his/her awareness scores to bump up your brand awareness scores as well.
Celebrity use works. But works at one level only. And that is at the level of building awareness for the brand in question. This works when you are launching a new brand, or when you are re-launching an old one that needs to get back into the awareness mindset of consumers again.
At awareness creation it works 8.2/10. At Interest development in the brand, it works 2.2/10; at desire development it works 1.6/10, on creating the action of purchase and buy-in: 1.6/10. At creating positive cues post-purchase (and in the process of reducing post-purchase dissonance) it works 4.1/10. This is as per a very recent study of ours across categories involving 81 advertised works over the last two years.
Celebrity use therefore works best at the stage of awareness creation, and a wee bit at the stage of managing post-purchase dissonance. But that's it.
This is the reason why you see celebrities being used for categories where they have no brand fit even. The brand-manager knows this, but is desperate to bump up his awareness scores, never mind if he is using Anupam Kher to advertise a new housing project. Brand fit goes for a toss. The immediate objective is celeb-linked awareness building.
The overuse of celebrities is causing the killing of the golden goose that used to lay silver eggs at least. Now, it is rotten eggs only!
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
By Harish Bijoor
Q: Cities are pushing themselves to the fore in India by building themselves as brands that attract investments. What gets invested in building the brand image of a city?
-BP Gururaj, Hyderabad
A: Guru, the brand is an amorphous entity. The brand is a thought. A thought that lives in people's minds.
A city's brand image is therefore the collective set of thoughts that a city enjoys in the minds of people. These minds include the minds of the people who live in the city, and equally the minds of people who do not live in it.
The brand image of a city has therefore an intrinsic aspect, which is all about the image enjoyed within the city, and an extrinsic aspect which is the image enjoyed outside the city.
A city's image is created by a whole set of disparate elements altogether. It is about the weather, the culture, the politics, the society, the people, religion, language, attitude, tolerance and a whole set of 48 other factors included. To that extent, the brand image of a city is really not an engineered one. It is an accident. A literal small part of the chaos theory that abounds in much of our lives altogether.
In a technical manner of speaking, brand-engineering is a new science, art and philosophy on its own. Creating the brand image of a city is not about creating it from scratch on a drawing board. Instead, it is all about using its positives, its history and its heritage to advantage as one builds on the basic foundations that abound.
To that extent, Brand Hyderabad is all about leveraging on the image of its hoary past, its politics, its food, and everything that is old and super-imposing onto it the modern icons from IT. ITES, Real Estate, Retail and Biotech included.
Q: The Real-estate industry is getting onto the branding format. What are the fundamentals in branding the real-estate developer?
-Rohit Bhargava, Mumbai
A: Rohit, branding is very critical to the Real Estate industry. Particularly in times when there is so much clutter all around. And most certainly in times of uncertainty such as the ones we live in today with the big names of Wall Street having crumbled over the last week itself in the US, sending tremors of uncertain economic times the world over.
Cities and their Real Estate offerings need to re-invent themselves on the path of credibility for a start. Take Bangalore for instance. The city has been home for decades to builders, developers and the entire real-estate fraternity at large. We started with a high repute developer by the name of SI . Chennai and Bangalore saw developments which were unique. This builder promised the earth and delivered the sky. The builder promised delivery on a date and did it by that date.
Today, even as I answer your question, builders in Bangalore are getting a negative image on delivery, quality and at times consistency of what is promised being delivered. There are builders who have promised delivery and have defaulted on this count by more than two years. The stories abound. This is bad for the brand image of Bangalore and the builder at large. No amount of branding input will help correct a credibility issue.
While the real-estate industry benefits a lot from Brand Bangalore, it is time for the industry to start contributing back. The first step would be to follow the basic rule of transparency, credibility and honest delivery. The image of a city is the responsibility of all its stake-holders. The Real Estate fraternity is one such key stake-holder.
Branding helps only when the offering is honest. The brand is an honest consumer statement.
Q: There is so much being written on the use of celebrities and its impact on brands. What’s your view on this? Should we use? Should we not?
-Shefali Luthra, New Delhi
A: Shefali, celebrity use in advertising has fast emerged as a lowest common denominator item in Indian advertising. When there is nothing else that is working, just pick a celebrity, use his/her awareness scores to bump up your brand awareness scores as well.
Celebrity use works. But works at one level only. And that is at the level of building awareness for the brand in question. This works when you are launching a new brand, or when you are re-launching an old one that needs to get back into the awareness mindset of consumers again.
At awareness creation it works 8.2/10. At Interest development in the brand, it works 2.2/10; at desire development it works 1.6/10, on creating the action of purchase and buy-in: 1.6/10. At creating positive cues post-purchase (and in the process of reducing post-purchase dissonance) it works 4.1/10. This is as per a very recent study of ours across categories involving 81 advertised works over the last two years.
Celebrity use therefore works best at the stage of awareness creation, and a wee bit at the stage of managing post-purchase dissonance. But that's it.
This is the reason why you see celebrities being used for categories where they have no brand fit even. The brand-manager knows this, but is desperate to bump up his awareness scores, never mind if he is using Anupam Kher to advertise a new housing project. Brand fit goes for a toss. The immediate objective is celeb-linked awareness building.
The overuse of celebrities is causing the killing of the golden goose that used to lay silver eggs at least. Now, it is rotten eggs only!
Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc.
Email: harishbijoor@hotmail.com
Labels: Brands, Celebrity endorsement, City brands, real estate
