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Showing posts from November, 2008

The difference b'ween then and now

When it comes to the financial world, the difference between then and now is, then, I didn't invest as much. Again, the difference is, then I wasn't as confused as I am now. Half the time, I don't even understand what's happening to my money that I've parked with Investment banks. Every time I try and read about any financial instrument that I've bought, I can't for the life of me understand what's written on all those long winding sheets of paper that come along. What's really happened is this. Note what WSJ reports on the contrast between now and then, and note how the consumer is the loser in the process. 'Thirty years ago, a typical consumer had a fixed-rate mortgage, a life-insurance policy, a bank account and an employer-paid pension plan. Nowadays, that same consumer may have a payment option adjustable-rate mortgage, a 401(k) retirement-savings plan, a home-equity line of credit and perhaps even a health-savings account instead of tradit…

India's anti-terror blunders

'The litany of errors is long. Unlike their counterparts in the West, or in East Asia, India's perpetually squabbling leaders have failed to put national security above partisan politics. The country's antiterrorism effort is reactive and episodic rather than proactive and sustained. Its public discourse on Islam oscillates between crude, anti-Muslim bigotry and mindless sympathy for largely unjustified Muslim grievance-mongering. Its failure to either charm or cow its Islamist-friendly neighbors -- Pakistan and Bangladesh -- reveals a limited grasp of statecraft...

In sum, the Indian approach to terrorism has been consistently haphazard and weak-kneed. When faced with fundamentalist demands, India's democratically elected leaders have regularly preferred caving to confrontation on a point of principle. The country's institutions and culture have abetted a widespread sense of Muslim separateness from the national mainstream. The country's diplomats and soldiers …

Are consumer truly loyal to socially responsible brands?

I must say I am deeply skeptical about Edelman's 'Goodpurpose' survey which proclaims that 'Eighty-five percent of consumers around the world are willing to change the brands they buy or their consumption habits to make tomorrow’s world a better place. Over half (55%) would help a brand “promote” a product if there was a good cause behind it.'

The survey states that even in countries like India, a brand's 'good cause' ensures loyalty. The study shows that a majority of consumers in India, China and Japan, despite the economic downturn, think it is important to purchase products and brands they perceive to be socially responsible (India 90%, China 90% and Japan 64%).

I don't have a problem with the survey to the extent that it shows consumer care about what the brand does in a social context. What makes me skeptical is 'cost implications' of this 'care' on the consumer; and supposing, should it raise costs thus prices, would consumers …

The Costs of Terrorism

The human costs of a terrorist attack like the one at Mumbai are incalculable. Our hearts go out to the families that have lost loved ones and our prayers are with them and the city of Mumbai. The indirect impact of such a dastardly act is on commerce. With shops downing shutters and people staying indoors, the fallout is on productivity and spending. At a time when consumer sentiment is at its lowest, this cowardly act only makes things worse. But then, we can count both on the common man's resilience and his compulsions, and expect our financial capital to bounce back, within no time. We pray for that too.Its noteworthy to consider Becker-Posner's comments on 'Economic Development and Terrorism'; Sample this, 'It is helpful to think of terrorism as of other goods and services in demand and supply terms. There is a demand for terrorism, and a supply of terrorism, and the intersection of demand and supply gives the amount of terrorism. Terrorism is a political phen…

Consumer Loyalty - 'Li'l things' that matter

Its always the little things that count.

Database driven CRM systems sure work, but to what extent, I am not sure. Many a times its just bothersome direct marketing material that's churned out as an end product of a CRM system. 'Material' that invariably finds its way into our dustbins without even so much as a glance from us.

Mathew writes about two incidents, both of which had financial implications, no more than a dirham. Yet that li'l amount virtually sealed consumer loyalty. The lesson in the incidents is worth noting.

Its the lesson of the 'li'l things'. Marketers note; that's what matters!

My Blessing, My Thanksgiving!

The sense in 'Status Quo'

Amid all the political and media hysteria, national output has declined by less than one-half of one percent. In fact, it may not have declined even that much-- or at all-- when the statistics are revised later, as they very often are. We are not talking about the Great Depression, when output dropped by one-third and unemployment soared to 25 percent.

What we are talking about is a golden political opportunity for politicians to use the current financial crisis to fundamentally change an economy that has been successful for more than two centuries, so that politicians can henceforth micro-manage all sorts of businesses and play Robin Hood, taking from those who are not likely to vote for them and transferring part of their earnings to those who will vote for them...

Too many people who argue that there is a beneficial role for the government to play in the economy glide swiftly from that to the conclusion that the government will in fact confine itself to playing such a role. In the li…

My Thanksgiving

Just a few days ago, I left Dubai, a city built amidst the sands, standing tall and beautiful against the desert winds, to come back to Bangalore. On arrival, I was greeted by a city drenched in winter rains, with the the sounds of the rain, as they beat down on the bus I took from the airport.

The contrast between the two cities is compelling. Both enigmatic, in their own mysterious ways. Am glad I could be at both. Glad I could see how nature, the gift of God, ensured this contrast that I could sink in.

That's my Thanksgiving.

The 'Quantum of Solace' lesson in Brand Alterations

'If there was one line to describe the new Bond film, it would be, "in which Bond became Rambo"..., writes Movie critic, Namrata Joshi.

What she is in effect demonstrating, is how a brand's been altered to a level where it turns almost unrecognisable. 'Quantum of Solace' has chipped away the Bond Brand image by not having the famous 'Bond line', by ensuring that the gadgets and girls (two, of whom there is hint of sex with one) are in short supply and action is over the top. Bond is again, not witty or charming, but a mean machine.

For viewers, that's pushing the envelope too much, on Brand alterations. Its taken a toll on the 'image'. Now, does that mean a brand should never make changes to its identity? Not necessarily. In fact altering the Brand image at times becomes a must to retain consumer interest and to ensure there's no brand fatigue. But when done, it has to be managed carefully. The first Daniel Craig-Bond movie 'Casino R…

Are Chinese consumers brand loyal?

For marketers, the problem is that despite this infatuation with brands, Chinese consumers don't consistently buy the same ones or even those they prefer. Price differences and point-of-sale marketing vehicles can change a consumer's behavior in a heartbeat. Asked to choose among three leading television brands—two foreign and one domestic—49 percent of the survey respondents said they would pick Sony if prices were similar. But our analysis shows that a Sony premium of just 10 percent over the price of a TV from Changhong (a leading domestic brand) could make about a third of the people who say they prefer Sony choose its Chinese rival instead. In developed markets, companies that enjoy the level of brand preference that Sony TVs garner in China can routinely charge price premiums of up to 40 percent. And consumer electronics had some of the highest brand preference and loyalty scores among all the categories in our Chinese survey.

Read the complete McKinsey article (Registera…

Can the media be condescending?

Being condescending to customers is the worst mistake a marketer can make. But then, that's exact what a handful of Media editors resorted to. The effects are out there for all to see. The media is now being beseiged by 'Citizen reporters' who use whatever the means (Blogs, for one) at their disposal to propogate 'news' with greater credibiltiy.

Its interesting to note that Media mogul Rupert Murdoch has stated that 'the profession may still have a bright future if it can shake free of reporters and editors who he said have forfeited the trust and loyalty of their readers.'

He further stated, "My summary of the way some of the established media has responded to the internet is this: it's not newspapers that might become obsolete. It's some of the editors, reporters, and proprietors who are forgetting a newspaper's most precious asset: the bond with its readers,".

His remarks were part of a lecture series sponsored by the Australian Broa…

If yer 'smiley', you ain't watchin TV

Can't sport that smiley on your face? Bet you're watchin' TV then.

An extensive new research study has found that unhappy people watch more TV while those consider themselves happy spend more time reading and socializing. The study, published in the December issue of Social Indicators Research, analyzed data from thousands of people who recorded their daily activities in diaries over the course of several decades. Researchers found that activities such as sex, reading and socializing correlated with the highest levels of overall happiness. Watching TV, on the other hand, was the only activity that had a direct correlation with unhappiness.

What's the difference b'ween Sales & Marketing?

Anita asks a question that I think resonates with many out there. She asks, 'What's the difference between Sales & Marketing? Kotler does not talk about it at all; n' according to a coupla websites, Marketing is all those activities u perform, to reach a sale; such as: Advertising, cold calling etc.. My contention is, how about those activities that occur post sale, such as CRM, after sales service etc? I guess Marketing encompasses them too?'

Ok, here goes.

The difference between Sales and Marketing is steeped in the difference in the approach to what one terms a 'sale'. Before I explain what I mean, note this: What's common is, both a seller and a marketer look to securing that sale. Its just that the mindsets differ. The seller approaches a sale from a 'transactional' perspective, whereas the marketer looks to building 'relationships'. To the Seller, the sale is the culmination of his efforts. To the marketer, it is the beginning. That…

The 'Muffin Effect'

Reuters: Australians are anxious to know if they will avoid recession and are turning to some unexpected, unofficial economic indicators to find answers. Unconvinced by official data, which are sending mixed and sometimes dubious signals, pundits are instead turning to everything from muffin sales to home-brewing kits. Even economists and the central bank are being forced to play private detective and rummage through the rubbish bin of economics in search of important clues...
But the real harbinger of recession -- known as the "muffin effect" in alternative Australian economic theory -- is far from conclusive. Muffin sales appear to be holding up. Advocates of "the muffin effect," as it was dubbed by the Australian Financial Review recently, believe that when the economy slams into reverse, office commuters deny themselves their usual muffin with their morning cup of coffee.

The brands in our lives

Urmi has an interesting point that flows from an SMS she received; 'What feels like congestion in a train, feels like atmosphere in a night club.' She points to how perceptions influence consumer interpretation of situations/stimuli. That is, should the club not be crowded, it would be stamped with a 'boring' tag.

She also talks about how brands try and worm their way into a consumer's life, becoming part of the social fabric that adorns their social lives. Well, the brand then has reached its zenith of social acceptance. 'Acceptance' in fact has gone further to the consumer not wanting to be caught dead without the brand in question. I mean, 'Mango' as the 'T' for the party is a must. Not having it can even damage the kid's social reputation.

The lessons here are two fold. One, the brand's gotta get into the consumer's life and become a part of it (therefore, 100% acceptance, 0% conflict). Of course, easier said than done. Two, th…

The 'Stimulus' Myth

'Government stimulus bills are based on the idea that feeding new money into the economy will increase demand, and thus production. But where does government get this money? Congress doesn't have its own stash. Every dollar it injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It's merely redistributed from one group of people to another.

Of course, advocates of stimulus respond that redistributing money from "savers" to "spenders" will lead to additional spending. That assumes that savers store spare cash in their mattresses, thereby removing it from the economy. In reality, nearly all Americans either invest their savings (where it finances business investment) or deposit it in banks (which quickly lend it to others to spend). The money gets spent whether it is initially consumed or saved.

Governments don't create new purchasing power out of thin air. If Congress funds new spending with tax…

Retail Sales plunge

Even as Wal-Mart bucks the trend, their earnings for the third quarter rose 9.8% while sales rose 7.5%, retail sales in the US plunged by the largest amount on record in October as the financial crisis and the slumping economy caused consumers to sharply cut back on their spending.

Retail sales fell by 2.8 percent last month, surpassing the old mark of a 2.65 percent drop in November 2001 in the wake of the terrorist attacks that year. The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.

In defence of Capitalism

'Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity -- the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.

Free market capitalism is far more than economic theory. It is the engine of social mobility -- the highway to the American Dream. It's what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career. It …

Ah, Youth!

Young people have the enthusiasm for politics, but not practical experience or breadth of learning. They spend little or no time studying history. Instead, they are told from birth that they are the future, and that the future is in their hands. They rely on high-flown idealism rather than historical knowledge. Young people largely agree with the following precept: True idealism is nothing but the subordination of the interests and life of the individual to the community The purest idealism is unconsciously equivalent to the deepest knowledge. Such idealism is the most basic building block for dangerous movements.

- Ben Shapiro, 'The Sheer Idiocy of Following Youth Movements'.

Is Honda Hybrid price cut for real?

When Honda in India tells us, its cut its Hybrid version's price by 8.14 lakh, as there was a huge demand for the technology that Honda wanted to popularise, and the problems consumers were facing was the price, I can't help but smile.

At least not after reading a week ago that Honda Siel Cars India reported an over four-fold decline in its sales at 1,476 units in October as against 5,287 units in the same period a year ago. Note that sales comprised 707 units of flagship sedan City ZX, 422 units of premium sedan Civic, 244 units of luxury sedan Accord and 103 units of SUV CR-V. Its latest offering to the market, Civic Hybrid, which was launched in June, registered a sale of 52 units.

Now you know what's obvious.

Also, Honda says that it plans to go back to the original Hybrid price after December. Good idea, considering that the consumer's reference price for the Hybrid now drops to 13.36 lakhs. Post December imagine how it'll be when the Hybrid has the original pric…

Is the 'Tipping Point' the way we know it?

Influences on Consumers arise from two sets of sources. One such set emnates from the marketer and so is discounted by the consmer as its identified with the marketer. The more potent source of influence is the Socio-cultural environment. Now within that environment lies what Malcom Gladweel termed in his book, 'The Tipping point', the 'Influentials', the few who can start and spread a trend to reach gigantic proportions.Was Gladwell right in his analysis of how supertrends become just that? Consider Duncan Watts and his study of why and how trends happen and note his findings; 'Why didn't the Influentials wield more power? With 40 times the reach of a normal person, why couldn't they kick-start a trend every time? Watts believes this is because a trend's success depends not on the person who starts it, but on how susceptible the society is overall to the trend--not how persuasive the early adopter is, but whether everyone else is easily persuaded. And …

So much for the Intellectuals....

'It would be no feat to fill a big book with all the things on which intellectuals were grossly mistaken, just in the 20th century— far more so than ordinary people.

History fully vindicates the late William F. Buckley's view that he would rather be ruled by people represented by the first 100 names in the Boston phone book than by the faculty of Harvard.

How have intellectuals managed to be so wrong, so often? By thinking that because they are knowledgeable— or even expert— within some narrow band out of the vast spectrum of human concerns, that makes them wise guides to the masses and to the rulers of the nation. But the ignorance of Ph.D.s is still ignorance and high-IQ groupthink is still groupthink, which is the antithesis of real thinking.'

- Thomas Sowell; ‘Intellectuals’.

EMIs on Hardware purchase pose a peculiar problem

As much as this an opportunity to own a laptop and have an Internet connection at mere payment of Rs. 1500 a month, its also one that will provoke intense cost-benefit calculations. Its a smart move on the part of RCom. to get consumers to pick their connections by bundling it with a laptop and offering it at EMI payments that are quite affordable for the middle class. But then, don't discount the calculative mind of the Indian Middle class.

The tradeoff here is, by the time the payments are complete, the total amount paid out would be much more than the original price. Of course that's part of any installment payment scenario, but the added dimension is backdrop of furiously dropping hardware prices. The drop in prices would widen the gulf between what the consumer pays in total with the price prevalent when the payments are complete. Now, that's something that would make the Middle Class think a little longer before they buy into the Rel. Comm. scheme.

The Burger beats recession

Extend the 'low cost' thus 'low price' advantage into the Food & Beverage arena too. Consumers worldwide who are watching their spending bought more burgers and chicken breakfast biscuits at McDonald's in October, leading to a big rise in sales at established locations for the fast-food leader.

AP reports that McDonald's Corp. said Monday its global same-store sales jumped 8.2 percent during the month. That beat the company's own prediction for a rise similar to the one it recorded in its last quarter, when same-store sales, or sales at locations open at least a year, jumped 7.1 percent worldwide. The results were a bright spot in what was a dismal month for most restaurant operators. Many sit-down chains have reported steep declines in same-store sales during October as consumers grew more anxious about the possibility of a prolonged recession.
Pic: http://business.timesonline.co.uk

The advantage of 'low cost' during recession

Low cost carriers are better placed to ride the recessionary times as Business customers turn price sensitive. Take the Tourism Industry for example. Businesses are looking for ways to reduce their employee travel and lodging costs. And the only answer to that is either cut travel or travel and stay cheap. Cutting travel may not be feasible so the way out is, travel and lodge cheap. The answer to that is, Low-cost Carriers and Budget Hotels.

The World Travel Market 2008 report, conducted by Euromonitor International, said that budget carriers and hotels could expand their share of the business travel market as companies look to tighten their belts as many countries head into recession.

Why the hiring freeze

It ain't just bad because there ain't any hiring as there ain't new jobs, but also because attrition has dropped drastically. That means no hiring to replace the ones that leave. No one leaves as there ain't any jobs.

Get the 'circle'? Read it here.

Car n' Bike Sales, down....

According to the figures released by the Society of Indian Automobile Manufacturers (SIAM), domestic passenger-car sales fell by 6.59% in October to 98,900 units from 1,05,877 units in the same month last year.

Motorcycle sales in the country during the month was down by 18.17% at 5,38,353 units, against 6,57,874 units in the corresponding month a year ago. Total two-wheeler sales in October also dipped by 14.52% at 6,78,245 units, compared with 7,93,420 units in the same period last year. Commercial vehicle sales decreased last month to 28,027 units from 43,756 units in the year-ago period, a fall of 35.95%

Our mind plays tricks 'n the marketer grins :)

Its interesting to note how our minds play tricks on us. For the marketer though, the 'trick playing mind' is a treat. Let me tell you how.

I haven't been able to catch on good sleep the past few days. And good sleep for me means 5-6 hours, no more. Having worked on some projects, having to take a flight out to Dubai for a professional engagement, meant, not much of sleep. Last night, finally, I slept; I guess, well. But the funny thing is, I got up to the strike of Five thirty and started on my chores. A while later, looking out, I realised I got the time wrong. A check online revealed that I had set the clock an hour ahead. Guess what happens almost instantaneously? I feel kinda tired. Now that's funny 'cos since waking up, I was all energy. But once I knew I had woken up quite early, my mind tuned body my into a 'tired' mode. If I didn't know I was way ahead of time, nothing would have happened. I would have gone on as usual.

Most 'buys' too ar…

Climbing that 'Social Class Ladder'

Original thought, courtesy, Conservative Professor;

'Yesterday, in a consumer behavior class, I used Obama as an excellent example of how people can change social classes by,

1) getting the right education -- Columbia/Harvard in his case;
2) pursuing an occupation with prestige -- Congressman, Senator;
3) living in the right type of house in the right location (that's why Obama HAD to get that Chicago mansion -- no matter what); and
4) earning a salary -- not wages -- with other sources of income (Obama didn't have investment income, so he wrote two books).
As well, Obama had to move to a location where he did not have a history -- so that he could be a clean slate with his new-found credentials. Voila -- an upper-class, elite citizen.

As an aside -- so I told my students -- except for the occupation part, Sarah Palin failed on the other three requirements of social-class change, and she never really changed locations. She is Governor in the same state she was PTA president.…

Why music themed video games will do well

I am reminded of this game called Antakshari that's always been very popular in India. Any 'gathering', in all probability will dissolve into this game where people sing and and then others follow up with songs that start with the last alphabet of the first sung one. And it goes on and on till someone can't come up with a song. I've seen this game being played while people travel, when they are in classrooms, at competitions, at weddings, in fact, almost everywhere.Why this game does well is because it combines two activities that humans connect to, deeply. One, singing; never mind the fact we sound like something's stuck, we gotta sing. Add to that our desire to compete; its something that increases our self worth. Get the two together, and you have a winner called 'Antakshari'.Now, the combination of music and competition is being payed out on gaming devices and they are poised for stupendous success. Music-themed video games are multiplying so quickl…

Despite looming recession, silver screens blaze

Despite recession looming, Indians have flocked to Bollywood movies. A li'l cheer amidst the gloom is surely a good thing. ET reports that the movie, 'Golmaal Returns' earned Rs 72 crore gross in the opening week worldwide, while 'Fashion' generated more than Rs 33 crore worldwide. Both films were released on Wednesday, unlike the customary Fridays, last week to cash in on the Diwali-mania.

Udipi Restaurants downing shutters

Udipi restaurants, world famous for their affordable veggie fare, especially the 'rice thali', draw inspiration from the coastal Karnataka temple town of Udupi. They are slowly going out of fashion. Over 200 have closed in the past two years, and business is down 50-70 per cent.

The reasons: Rising rents, overheads, VAT Staff shortages. Fewer migrants to Mumbai from Karnataka because job opportunities are better at home. Changing tastes. Many customers now prefer the A/C fast-food joints. Original clientele in south Bombay, tempted by rising real-estate prices, has moved to the suburbs. Bank automation, online trading facilities means the client base in the business district has shrunk.Read the complete story here.Pic/Story: http://www.outlookindia.com/

The Obama story ain't inspirational, Its 'Marketing'!

I teach Marketing. A subject so powerful that wielding it manipulatively can, at least for a short period of time, bequeath on you the ability to 'blind' consumers and lead them to a 'sale'. Obviously it ain't recommended, as the consumer may buy once and then, its never. Its that sorta 'sale' that's happened for Obama. I admit the 'sale' was pretty overwhelming.I read with disbelief, the adulation that's poured in, since Obama's coronation. Take Ramesh Ramnathan for instance, 'Of all the reasons to celebrate Obama’s victory last night, it is this— how his extraordinary, audacious rise from anonymity to the highest office in the world can be an inspiration to billions of people, to believe that change is indeed possible. Hope is the ultimate elixir.'Sample Mitra Kalita, 'And we each signed off with the same thought: In the new America, maybe even our children might become president!'N R Narayanamurthy stated, 'Today i…

Can Brand Obama deliver on promises?

Hope this doesn't sound, sour grapes.The best thing that's happened to the Republicans is that they lost the White House. Brand Obama has over promised. World peace ain't any closer than before. Outsourcing will continue. There will be no pullout from Iraq. If there is one, the mess will be greater, worsening what's presently a state of reasonable calm. Troops for Afghanistan won't come easy. Its one thing to be a media built superstar at a rally in Germany, its another, when it comes to troops for Afghanistan, Angela won't be as forthcoming. The canard of 'global warming' will be hyped as always, but it won't in any way drastically alter present environmental policies. The list is endless.Brands gotta be careful with their claims and promises. The bigger the promise the greater the expectation. And if not delivered on, the greater the disappointment; there may be even a risk of consumer anger. And that's what I foresee for Brand Obama.Republica…

Barack Obama is President

Congratulations, Mr. President.
Welcome, Welfare state.

Economic downturn & Environmental concerns of consumers

The twin currents of an economic downturn and rising concern about the environment are merging in a shift in consumer psychology. After a decade of conspicuous consumption, many middle- and upper-income Americans are no longer comfortable showing off $300 Gucci sunglasses and $8,000 Hermes Birkin bags. They are developing a distaste for extravagance that promises to affect spending on everything from cars and travel to electronics, fashion and household goods -- and to last at least as long as the recession.

And that behavior (to be sure, a luxurious problem in a bad economy with high unemployment) dovetails neatly with environmentalism, another way people like to feel better. Over the past year, some affluent Americans have simply "given up the fight to keep up with the Joneses," says Pamela Danziger, president of Unity Marketing, a research firm in Stevens, Pa., while others have decided that "spending money on luxury is a poor use of resources in a climate of high gas…

Bankrupt Coal!

"If somebody wants to build a coal power plant they can, it's just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that's being emitted,"

That's the probable future American President for you!
Listen to him here. Business friendly?
You decide.

Canada waiting....

Barbra Streisand vowed to emigrate to Canada in 2000 if George Bush were ever elected President, an undertaking she refreshed four years later at the prospect of his re-election. But she was still sufficiently resident in California on September 16 this year to host a $US2500 ($3800) a head fund-raiser for Obama at the Beverly Wilshire Hotel. The actor Alec Baldwin and Pearl Jam's Eddie Vedder made similar threats in 2000, as did Robert Redford in 2004, but none has since enriched the Canadian cultural scene.

In fact, Canadian immigration records show that arrivals from the United States actually slowed in the six months after George Bush's re-election in 2004.