Blog No.20

Something that has been bugging me for days- how does Freecharge make money?

Well Read it all for yourself:

http://headstart.in/2010/09/03/headstart-talks-freechargein/

 

Reposting a part of the interview that I found very interesting:

As a startup what are two things you have learnt that you might like to share with your fellow entrepreneurs?

1. You have to accept that there is a high probability of failure, but you shouldn’t stop moving in spite of that.

2. Everything is doable, You just have to believe in it and work relentlessly for it.

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What I didn’t learn in Business School

An easy read, must recommend for those who are about to graduate or new in the industry i.e. people like me.

Justin Cambell is a freshly minted MBA graduate from a top notch B-school, who has landed a plum job in a consultancy firm. On his first assignment for an organization that has recently developed a groundbreaking new fabric called Plastiwear, Justin and his team are called in to formulate the firm’s strategy for this new product.

Along the way Justin learns many things, such as the inadequacy of basing one’s knowledge on the solution of case studies and management’s influences in using theories such as NPV and Porter’s Five Forces.

My take-away from this book:

Having recently read The McKinsey Way this book strengthened the fact that Consulting solutions are more about managing people than providing the optimum solution. The book explained in a rather lucid manner the importance of each stakeholder and how their opinions and aspirations could shape the future of an organization.

This book reminded me a lot of Prof.  Mukherjee’s class discussions wherein in each case he pushed us to first understand each stakeholder’s expectation from a new product/innovation or a new service and then think of an alternative that would be acceptable to all stakeholders.

It’s not important to have the best solution, but to have the solution that is implementable, scalable, revenue generating and most importantly acceptable to all.

Brand Management and Competitive Strategy

Where to play and How to play, these two questions are the pillars on which a firm’s strategy is based.

I had the opportunity to take part in a B-school competition, Nissan Student Brand Manager and was fortunate enough to win it. During the course of this competition I learnt many things, one of the primary learning being that the brand positioning strategy flows from the auto manufacturer’s strategy.

Nissan is present in India with four models, Micra in the hatchback segment, Teana in the luxury sedan segment, X-trail in the SUV segment and the 370z in the premium sports car segment. The firm currently has a market share of around 1% in India. A lot can be attributed to low brand awareness of Nissan in India. How to leverage the brand name of the world’s 5th largest auto manufacturer in a market as diverse as India?

With the Micra, Nissan’s strategy is to build on the Nissan brand name and aim for high brand awareness so that the car features in the top rung of the customer’s consideration set. Realizing the need for a urban city car, a unique position that was previously unexploited by its competitors such as Maruti Suzuki Swift, Hyundai i10, Maruti Suzuki Ritz etc. Nissan has built a unique proposition for the Micra as a comfortable city car. With the Teana the auto manufacturer has taken the high route as positioned as a “luxury spa for tired feet”. What is important here is to understand the link between the where to play and how to play questions and the product positioning. The competitive strategy of a firm determined the former two.

With Ranbir Kapoor being roped in as the brand ambassador for the Micra, Nissan has seen a significant spike in sales especially in the north of the country. Can this be duplicated in other parts of the country as well? That is something that I as a Nissan Student Brand Manager would be working on for the next six months and something that I look forward to.

Androidify me?

Recently a friend asked me, “which is better an iPhone or an Android?”. I pointed out the basic flaw in his question. You cannot compare Android to an iPhone. That’s comparing an operating system to a hardware device.    Doesn’t really make sense does it?

There are currently six manufacturers — Dell, HTC, Kyocera, LG, Motorola, and Samsung — making 42 smartphones using the Android operating system. So how does the iPhone stack up against one of these phones? Let’s take a look at the Motorola Droid. Motorola says it shipped 13.7 million smartphones in 2010. The company didn’t specify Droids, but let’s assume that all the phones shipped were Droids. In comparison, Apple shipped 47.49 million in 2010, outpacing Motorola by more than three times.

Now, let’s take a look at the operating systems in the U.S. According to reports released this month by comScore, if we factor in all of the devices that use iOS including iPhones, iPads and iPod touches, Apple reached 37.9 million people. Android, according to the data, reached 23.8 million on phones and tablets.

That’s a 59 percent lead for iOS over Android. So where are these conflicting news about Android outnumbering iOS coming from?

Airtel’s Friendship Strategy

Airtel’s advertisement “Har friend zaroori” can accord its success to the strong integration between its image and consumer trends. Airtel’s image has always been centered on emotional advertising, and the new campaign works on friendship – an important emotion among the largest captive audience in one of the world’s youngest countries today. The consumer behavior of this audience suggests the highest use of mobile services and high adaptability to new innovations – something that Airtel can leverage upon after capturing the audience base.

The ad was released in August – the month when friendship day is celebrated. They couldn’t have asked for a better time. A digital campaign to support this concept makes it even stronger.

Vodafone has done something similar with two school girls, and how their friendship is special, but this had a more old-world and a subdued feel, while the Airtel ad is trendy, with a catchy song – aligned to the urban youth of India.

The success of this ad is clearly seen in it Youtube hits, facebook posts and comments, ringtones and general public humming along!

 

Mystery Shopping and retail performance

Mystery Shopper – a regular person paid to enter a store as a customer and report the quality of salespeople that the store has. As customer experience becomes an important parameter in measuring brand equity, mystery shopping has become the new tool for auditing a sales executive’s performance – which includes not only interpersonal skills but other factors such as product information, efficiency, level of assistance etc.

Mystery Shoppers often bring up some interesting facts about salespersons and their behavior – and also reveal that there is a huge room for improvement in retail stores. Various high end brand need a minimum level of service, which is often ignored by salespeople as there is no specific accountability mechanism. Feedback books kept in the store are not a good reflection of what a customer thinks, and is often filtered before it reaches the senior management.

Many a times, salespersons have a partial treatment towards customers who have greater likelihood of sales conversion, and often the information given to them is also incorrect. Factors such as indifference often turn customers away. On the other hand, if a salesperson can also suggest accessories or complimentary products, it would help increase sales of a store, another important KPI expected from a salesperson.

Retail essentially sustains itself on in-store experience – and failure to provide this may cause a store to fail. With this new concept, many stores are now able to develop incentives based on soft skills, indirectly enhancing their own brand image.

 

LGs Strategy in regaining market leadership in India

LG has been pushed to a number 2 rank in India in laptops and mobility devices, close after Samsung. After having withdrawn its PC and Laptop Business in India for 3 years, LG plans to re-enter the Indian market with the intention of regaining its share and sweeping past the current leader Samsung – as specified by Soon Kown.

Currently the Indian PC market reports a sales of 4.4 million units, increase at 15-20% every year. This presents a largest captive audience to target. Moreover, the declared spin-off from HP also creates space for a new player, a factor that LG plans to leverage to the fullest.

In terms of product, HP plans to create its competitive edge through technological innovation, such as 3D tablets, Ultrabooks etc. They plan to be a multi-platform player, and have been working on Android, Windows 8 and other user-friendly platforms. A rather safe start, LG will be able to gain consumer attraction through providing customers something that they are already used to.

In order to regain revenues, LG plans to work in the field of mobile phones, as they are ahead of competition in many other businesses. Rather than trying to capture the whole market, LG is being rather selective and focusing on smartphones, especially 3D smartphones.

A cautious move and an integrated approach creates a positivity about succeeding in a market as volatie as India.

Human Resource Strategy to determine when an employee will resign

KPMG has recently adopted a KPMG Predictive Index which determines when an employee will resign – a tool which has an accuracy percentage of above 70% (as per Economic Times). Now are the times when all employees of the company face a financial or budget crunch, including ancillary functions such as HR. Thus, high attrition levels give rise to hiring and training costs that are expected to generate long term returns for the company. On the other hand, employees often join or stay in companies for special training and experiences which increase their value in the industry, but prove detrimental to the company efforts.

In such a scenario, such an HR Strategy will be useful in allowing the company to channelize its efforts towards employees that will stay on long enough for the investment returns to take shape. Another advantage of this statistical tool is to understand organizational health, employee behavior and satisfaction etc. This clarity will help in creating clear-cut and relevant HR policies and events which will address the issues thereby, improving the overall corporate atmosphere.

Cross Connections?

The mobile phone industry began when the market was dominated by a few small players and very high technology and quality. Nokia, Ericsson and Siemens etc. were the few players who offered handsets at high prices for those who could afford them. This target segment comprised of a few high end and affluent individuals, who considered mobile phones as a mere status symbol, while a large part of the Indian Middle Class only aspired for them.
Today, the Indian mobile phones industry is witnessing a sudden increase of brands, which are giving immense competition to well-established players such as Nokia, Samsung and HTC. The brands play on the price factor, by providing handsets at low price points, but at the same time, they offer high levels of innovation and technology. Micromax (that replaced LG as the 3rd largest handset vendor in India) was the first company to introduce handsets with an inbuilt detachable Bluetooth, or a Swarovski studded phone. Micromax also provides the Android Operating System, making its phones at par with Samsung and HTC. However, what these phones do not offer is quality. Not only are they flimsy and lack strength; they work less efficiently as compared to their higher priced counterparts.
From a consumer’s point of view, the youth of India and the rural customer is the key driver of the mobile phone industry, both of whom are price conscious, rather than quality lovers, giving such brand a better uptake in the market. The youth want variety and prefer to change phones in regular intervals, and the innovations offered by Micromax are the most attractive factor for them. Currently, there are 10-12 million subscribers being added every month, with a market penetration being close to 50%.
Brands such as Karbonn, Lava, Spice etc. are growing because of a variety of factors. The government’s ban on grey market for handsets have been responsible for local vendors increasing, and allowing such brands to sustain themselves. The best thing about these brands is that they have allowed increased connectivity across the nation and have increased the standard of living in India. Villages may not have electricity or continuous source of water, but the residents do show off their mobile phones!

The Silver Spoon

Why is to so difficult to create luxury brands. Let’s try to list down some of the differentiators:

  • Heavy investment in marketing communications
  • Excellent product/service quality
  • These brands have to try to remain fashionable, which is notoriously difficult

Marketers are moving from the traditional marketing mix approach towards greater use of experiential marketing.  This is where customers are treated as both rational and emotional individuals that seek ‘experiences’ from products.  The key is to engage customers in a memorable experience around the product/service, developing a relationship with customers, creating an affinity with them.  The central aim of experiential marketing is to create an emotional attachment between the brand and the customer.  For example Louis Vuitton provides this experience through its unique product image and features, outstanding service, exclusive retail environment, pricing, selective channels of distribution and complete with the distinct packaging.  To promote a product to the high-market it is important that the customers have the right experience so that the desired feelings, images and perspectives become linked with the product/service and their marketing programme.

It is necessary for the brand to convey a personality that the customer can relate to, or wishes to aspire to.  Consumers then try and communicate this to others.  Consumers of these brands feel that they too are fashion and design conscious, that they too are wealthy, and that they are part of the “in-crowd”.   In many cases, luxury brands are tapping into “aspirational” buyer market.   These are individuals who seek out access entry-level products with luxury brand names.  Some brands are targeting both ends of the market (e.g. Mercedes Benz with its affordable A-Class range targets the masses, whilst still manufacturing their elite brands such as the Maybach for $300,000 plus dollars to the world’s super rich).  Luxury brands are offering products at different price points.  These brands hope that sometime during the customers’ lifetime that they will trade up to their more exclusive ranges.

The risk of ‘democratising’ the brand is that they may lose their aura of exclusivity – as it can be obtained by anyone. Remember the Parker Beta range that was introduced in the late 1990’s. The sudden infiltration of every schoolboy’s pocket by a “luxury pen” pointed to a muddled brand strategy that alienated the loyalists as well as the potential customers. The brand perception which was built over decades of hard labor was washed away in a few years. It’s a blow that Parker has not completely recovered from, partially due to Waterman, Sheaffer and the likes moving in to fill the vacuum left by Parker.