Of all the numerous advertisements I’ve watched, I could recollect only three advertisements:

1. The old Nescafe advertisement
2. The recent Flipkart’s advertisement of office-going children
3. The JK Cement advertisement

These are the only three advertisements I could recollect instantaneously. It is strange to think that I hardly could recollect any other advertisements.  Now, close your eyes and recollect a few brands.  I recollected a few brand names listed the following:

1. Dairy Milk (chocolate)
2. Kellogg’s
3. Dettol
4. Coca-Cola
5. Pepsi
6. ICICI Bank
7. Samsung
8. McDonalds
9. Ford Figo
10. Flipkart

Also, if one wants to understand which brands do consumers associate with a category, then we have to ask the consumers to recollect advertisements w.r.t those categories. The above shouldn’t be mixed with this.

Clearly, the top of mind (TOM) set of brands are the above. I read through the list and tried to recollect the last seen advertisement in each of these brands. I could recollect the advertisements of all the above brands. Now, why couldn’t I recollect most of these advertisements in the first question? It is because the first question lacked a context.

This shows that a television advertisement on its own is generally of not much use. But if you provide a context to the consumers, then the television advertisements will help the consumers connect the brand with the context. Consumers going to the shop will subconsciously recognize the brand that they’ve watched it on television.  This means if you are investing in television advertisements, you have to provide sufficient contextual support such as in-shop presence, BTL, distribution etc.

Until now, we spoke about two things: Advertising your product on television and creating a context offline. This helps the consumers connect the brand with the context. But what actually helps the consumer receive your communication in the first place.

To communicate something you need to first command the recipient’s attention

Consumers, as human-beings, switch on and off in various situations based on different factors. One of the key factors that make the consumers decide to switch on or off is Relevance.  A consumer who is about to buy a car will suddenly switch on (becomes attentive) while watching an advertisement of a car. The same consumer 2 years back might be passive and switched off to advertisements of cars.

Also, anything different from routine generally catches the attention of people. For example, the Flipkart advertisement having elderly looking kids. Another example is the use of celebrities. Because consumers become attentive when they look at celebrities, usage of celebrities and other unique elements commands attention.

I’ve put celebrities and unique creative elements under one category because they are good in commanding attention. But they are not enough. Only uniqueness in the creative will help consumers remember the advertisement, but consumers will not remember the brand of the advertisement.

To communicate something you should be relevant to the recipient

The presence of unique elements or celebrities doesn’t make a communication relevant. But the problem is relevance is something that has to come from the consumers. I cannot shout in the media that I am relevant to you, hear me! For example, a consumer considering to buy a car finds the advertisements of cars relevant. Does this mean that to communicate to a target audience I have to wait for the consumers to feel my category relevant to them? No, in such cases you have to build category relevance to the consumers. You have to give them reasons why they have to use the category.

But, how does one build relevance? Relevance is a recurring theme. You build relevance to a category by relating the category to what is relevant to the target audience. For example, if you want to communicate something on conditioners, you have to make consumers relevant to the category. But the category is very nascent and consumers don’t feel a relevance to the category. So, in such cases you have to build relevance to the category. You build relevance for conditioners by understanding what is relevant (1-level below) to the prospective buyers of the conditioners and connecting that (1 level below relevance) with the category. So, you come up with elements like softened hair, strong roots, etc which are relevant to the consumer and connect that to the category. This is building category relevance for effective communication. The recent TVCs on Colgate Sensitive Pro-Relief is also an example of the category relevance.

But what if the category is already a well penetrated category like shampoos or toilet soaps? As the category is already relevant, all brands clutter the consumer confusing him and he switches off to the category. This is where brand relevance comes into play. This means you have to make the consumer feel relevance, not by talking about the category, but by talking about the brand. Here you don’t talk about the category elements like softened hair, but you try to build relevance by distinguishing your brand such as natural, herbal, seeds of some plant etc. You have to give reasons to buy your brand and make your brand relevant. This is the true test of marketers on how well they can create the brand relevance – the brand associations, the aura of the brand, brand values, brand differentiation etc. Consumers have to feel a specific brand in the category relevant to them.

Most television advertisements today fail because they are not relevant to the audience and they failed to build relevance.  The media is so cluttered today that advertisers struggle to draw attention first, and the very few that draw attention fail in being relevant to the target audience. So, television advertisements are an effective tool to build brand awareness and recognition. But it is a difficult task to build brand relevance using TVCs, because consumers are not ready (and too much clutter) to receive the differentiating factors that should make this brand relevant to them.

In my next post, I will write about how to build effective relevance and how we can connect relevance with the consumer decision making process.

Conventionally, it has been seen that if a company desires to take a greater risk for bigger profits and losses, it reduces the size of its working capital in relation to its sales. If it is interested in improving its liquidity, it increases the level of its working capital. However, this policy is likely to result in a reduction of the sales volume, therefore of profitability. Hence, a company should strike a balance between liquidity and profitability.

Refer to the ppt working-capital mgmt on Working Capital Management and how it affects Profitability.

Dell has announced that the “Streak 7 is no longer available.” The death of the Dell’s Android tablet line doesn’t come as much of a surprise, but it points to some lessons that other tablets might learn from to be stronger competitors.

Dell has given it a valiant effort. It was the first major company to come out with a tablet to compete with Apple’s iPad, and it has developed—and subsequently pulled the plug on–both a 5-inch and 7-inch model of the Streak. It is sad to see Dell abandon the tablet market, but overall the death of the Dell Streak–or any single tablet other than the iPad–has little bearing on the tablet market.

Why, you ask? Basically, the answer is that up to now there hasn’t really been a “tablet market,” just an iPad market. It seems that the Amazon Kindle Fire will shift that debate some, but it remains to be seen just how much.

Based on recent figures, the Apple iPad is on pace to sell 40 or 50 million tablets in 2011, while all rivals combined have sold just over a million. It is also worth noting that the leader in non-iPad tablets is the HP TouchPad, which basically didn’t sell at all until HP pulled the plug on the device and clearance out its inventory for $99.

Using those figures, all other tablets combined make up a negligible segment of the “tablet market”, and any single tablet–such as the Dell Streak–has no significant impact one way or the other. Here are some a few things other tablet rivals should keep in mind if they don’t want to follow the Dell Streak to extinction:

$200 Subsidized Is Not the Same as $200

Price is obviously a consideration in comparing tablet options. Most iPad rivals have priced themselves on par with the Apple tablet–and most have failed to sell any appreciable number of tablets at that price.

As evidenced by the frenzy over the HP TouchPad fire sale, the relative success of the BlackBerry PlayBook at the greatly reduced price of $200, and the phenomenal sales of the Kindle Fire at $200, it seems that there is a market for non-iPad tablets when the price is right. But, some tablets resort to wireless carrier subsidies–like a smartphone–to get the price into that range.

Judging by the tepid reception and poor sales, customers don’t agree that $200 with a two-year contract tied to a mandatory wireless data plan is the same thing as a $200 tablet. For iPad rivals to sell, they need to be priced competitively without strings attached.

But, This Tablet Goes to 11

It might be comical—if it weren’t so sad—to see tablet vendors fixate on specs. Faster processors, more processor cores, more memory, more megapixels in the camera, SD memory card slots, and other differences in hardware don’t make up for a poor interface, or an inferior user experience.

That is not to say that specs don’t matter—just that they are not the only consideration, or even the primary consideration. Assuming two devices each have a solid user experience, the one with the better hardware specs is likely to be the better deal, but iPad rivals need to focus more on delivering a quality experience overall, and less on trying to outdo each other with leapfrogging hardware specs.

Comparing hardware specs of tablets is like comparing ingredients of food. I am sure a quinoa salad with organic beets and goat cheese is superior in many ways, but the user experience of eating a slice of cheesecake wins every time.

I believe the market is out there. I like my Motorola Xoom, and I have seen other very capable tablets. Tablets like the Dell Streak have competed in the wrong ways, though, and left a virtual iPad monopoly in their wake. Hopefully, the Amazon Kindle Fire can lead the way, and we will see more mainstream adoption of a diverse array of tablets beyond just the iPad.

You can find the original article at: http://www.channelworld.in/opinions/dell-streak-dead-lessons-other-tablets

Research done by Milward Brown suggests that there is no single mantra in advertising that works for the whole country. There are very few advertisements that worked well across the country. Some of the observations from the research are:

1. Celebrities can be the glue that binds markets

Celebrities can work across markets, but that definitely doesn’t guarantee the success. Using a celebrity reduces the risk of failure of     the advertisement across markets. Particularly in the South, the use of local celebrities is more followed as it is observed that people connect well with the local celebrities. Cricketers can certainly help communicate across the markets. It is true that every Indian lives on Bollywood and Cricket.

2. Children can certainly help

Children can help raise empathy and likingness quotient in the ad. However, an interesting stat is one-third of all the ads that don’t do well have kids in them. So, the mere presence of a child doesn’t increase the likingness of the ad. Generally speaking, it is observed that people tend to be active watching ads of children. Children, if used properly, can help in breaking the clutter.

3. Effect of humour is variable

Humour in India works well when it is based on visuals and music. Humour which is based on regional situations and wit may not do well across the markets. While some of the ads have worked well in some regions, the ads based on regional humour caused some serious trouble to the brand in other markets.

4. Product demonstrations are less likely to do well

Advertisements that focus on product demonstrations are less likely to do well. Differing expectations from advertising are at the root of this difficulty. There are clear differences across regions and town tiers in this regard. South India tends to be driven more by the need for information, as does small-town India.

Regional differences in receiving ads

First, something that all of us (in India) suspected: North is North and South is South, and never the twain shall meet. These two regions show the poorest creative transfer; an ad that does well in the South is unlikely to do well in the North, and viceversa.

Second, the West is a poor receiver of ads from the North. Looking at ads tested in those two regions, only 34 percent of ads that were highly enjoyable in the North did well in the West, while close to half the ads that did well in the West also performed well in the North. Therefore, if we need to prioritize between the two regions, the West provides a better litmus test of likely performance.

Third, the South is neither a borrower nor a lender. Ads that do well in the South transfer poorly to the North, moderately well to the West, and well to the East. Therefore, if the South is relevant for a brand, it must automatically be selected as a test centre.

Fourth, successful ads in the East transfer well to other regions, though within a specific and limited context. To clarify, the East is an important market for relatively few brands and categories, so any principle of travel would apply to this rather specific set of brands. The East also tends to be more critical of advertising compared to other regions. Hence, purely from the perspective of creative transference, strong performance in the East is an indication of good performance in other zones.

Most of the research above is done based on the Link scores, a evaluative tool of advertising by Milward Brown. Whether your objective is to raise awareness, promote trial, develop rational or emotional brand associations, or to convey a very specific message, Link will tell you how your ad will perform.

Thank you.

Let us take the example of a company whose manufacturing facility is present in Delhi, and it moves its goods down to South India. As the company sells in South India, it has to transfer its manufactured goods across the States. According to the current taxation, if you’re moving the goods from one State to another and selling it in the other State, then you’re liable to pay the Central Sales Tax (CST). The important point to note here is that you’re liable to pay the tax only if you’re transferring the goods for a sale. However, if you’re transferring not for a sale but for a stock transfer, you don’t need to pay the CST.

So, to avoid paying the CST, companies show the goods movement as a stock movement than a sale. But, to do this, they have to have a warehouse within the State where the goods are going to be transferred and stored. As a result, currently companies have warehouses within each State and show their goods movement as stock transfer than a sale. This essentially means that the current locations of warehouses are chosen to avoid the taxation, rather than to best service the customer.

For example, let us take the case of a city Hosur, which is a part of Tamil Nadu but it just 30km from Bangalore. So, geographically speaking, to service the customers in Hosur, the goods have to be shipped from the Bangalore warehouse. But unfortunately Hosur is a part of Tamil Nadu, which means the company has to pay the Central Sales tax (CST). So, instead of shipping  the goods from the Bangalore warehouse, they are forced to have a warehouse in Chennai and ship from Chennai, which is 250km from Hosur.

With GST coming in, companies will be freed from this problem and they can setup their warehouses to optimize their costs and best service the customers. This is going to save considerable costs for companies and improve the servicing levels.

Also refer to Tax_Structure_and_Supply_Chain_Network_Optimization_in_India.26491837  for an understanding of taxation from a supply chain perspective.

Earlier,

100% FDI is allowed only in the wholesale (cash & carry) market

51% FDI is allowed in Single brand retailing like Adidas, Tommy Hilfiger, etc.

FDI is not allowed in the Multi-brand retailing like TESCO, Carrefour, and WalMart

Now,

100% FDI is allowed in Single brand retailing. This means now companies like Adidas, Tommy Hilfiger are allowed to own 100% of their retail businesses in India. Earlier, they had to come with some partner like Nike entered partnering with Sierra Industrial Estate Private Limited and Bridgestone entered in partnership with ACC limited.

51% FDI is allowed in multi-brand retailing with some investment conditions to protect the kirana stores, and farmers and some mandates on back-end investments. This means retailers like TESCO, Wal-mart can set up their retail stores in India in a JV format and enter the $500 bn Indian Retail Market.

The policy of allowing 100% FDI in single brand retail can benefit both the foreign retailer and the Indian partner – foreign players get local market knowledge, while Indian companies can access global best management practices, designs and technological knowhow. However, there are some serious concerns that the global retailers may wash the mom and pop kirana stores of India which caused a lot of discussions in the Parliament.

Also the economic think tank of India, ICRIER has rejected the idea of opening up FDI gates, as they said it will cause harm in the long term to the small traditional retailers in India. This is a very big move by the Govt. of India, and its affects have to be seen in the next few decades.

Many think that this will help us improve the back-end infrastructure and the supply-chain which may help reduce wastage and curb inflation. However, there are other reasons to worry on how it would affect the food security for India.  There are some talks that it will create 10 million jobs and it will not kill the mom-and-pop stores. One thing that is certain is that the global retailers are going to give more varied choice, value, and experience to the Indian consumers. However, will this benefit us economically in the long-term? Lets wait and watch!

Increase in Modern Trade

With Modern trade contributing to 20% of FMCG retail consumption in the major metros and tier-1 cities of India, now more and more consumers are scanning your products. The Indian consumers love going to malls and the consumers find the “product talking” at the store more relevant. With these changing dynamics in India, packaging is going to play a major role in the future.

For most of these consumers, packaging is the first point of contact which attracts them to the product while they scan the shelves. According to some newspaper reports of shopper research, an Indian shopper typically spends 20 seconds scanning a shelf. Research always talked about the importance of packaging and the consumer perceptions built on packaging. It is just that marketers didn’t find its relevance, as Indian retail was majorly dominated by traditional trade.

Packaging plays the biggest role in winning the First Moment of Truth (http://brandalyzer.wordpress.com/2011/09/24/google-and-pg-on-zmot/) and plays a crucial role even after the purchase of the product, Second Moment of Truth.

At the point of purchase, packaging serves a number of key functions, namely:

• Cutting through clutter and letting the consumer notice your product
• Communicating marketing information
• Stimulating or creating brand impressions
• Providing brand cues and values – safety, style, value, quality, etc.

A product range is the total product offering expressed in terms of width and depth. The width of a product range depends on the variety or number of types in a product category. The depth of a product range refers to the amount of choice offered in terms of product and brand variation within a product category.  A product range with a lot of depth allows you to cover a range of price points. Similarly, the width allows providing a great variety and choices to the consumer with line extensions.

Brand Extension: The brand Rasna extended into another category like packaged juices.

Line Extension: The brand Maggi launched new flavours of Maggi. Here Maggi is still in the same category, but the variation comes within the offering. Line extensions are not necessarily in flavours, but happen in any of the product attributes.

Grammage Range Extension: When Surf Excel extends its Grammage range. Earlier it used to launch 50 gm and 100gm, and now it launched a 20gm and 250gm. Also, remember most Grammage extensions are considered as line extension.

How promotions help?

For example, let us suppose there is a biscuit company XYZ in India which is a very big brand. XYZ currently offers its packs in 90 and 150 gm packs. The challenge it faces in North India is from local competition. There are a few strong local players who offer more volumes at low price points. The local companies offer very large pack sizes and doing very well. The consumer behaviour in the North India shows that people tend to buy large packs, and generally don’t prefer to buy small packs.

Challenge1: The Company XYZ doesn’t have production capacity for large packs.

Challenge2: It is very difficult to create trials when consumers tend to buy large packs.

So, the company decides to have a two-pronged approach:

1. Give a rider promo (give your small pack biscuit free with another category) to induce trials.
2. Introduce large combo-packs to attract the large-pack buyers

To give a rider-promo, is to give a product with another popular product based on the target consumers you want to reach. Marketers ask the question: Which is the product in my existing portfolio that reaches the maximum target group of the new biscuit product? This will help them leverage the existing distribution. If there is no product that is present in your existing portfolio then you may negotiate with other companies who operate in similar categories.  Though there are other considerations, leveraging the distribution is one of the most crucial factors in a promotion, if the intention of the promotion is to induce trials. Because one of the most important factors to create trials is that the product should be present in the stores.

At most schools, people understand a subject than be able to do something in it.  Most people will be able to understand a subject that they study in college or school, but they will not be able to use it or do something with the understanding.  In fact, almost all interviews and entrance tests test you on understanding than on doing. More dangerous is the graduates from top schools mistake ‘understanding’ for ‘doing’. The top B-school or Tech-school graduates come out and think they understand everything about an area and they can do anything, only to later realize that they only understand it and it is not enough to do something in the subject area. To come up with new innovations one needs to have a ‘doing’ attitude apart from a lot of other requirements.

Some of the finest professors will have difficulty managing big businesses, because understanding a game is very different from playing the game on the field. You can give your expert opinions about how to play, but playing on the field is a very different ball game.

Understanding is more linear because there are no interferences and obstructions. On the other hand, doing will face a lot of obstructions and interferences. However, it can be reasonably taken that good understanding helps doing, and doing helps in understanding.