Tuesday, March 24, 2009

Pester Power

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Tuesday, March 3, 2009

Redefining Marketing during an economic slowdown


दुरिंग Economic Slowdown, consumers become value oriented, retailers are concerned about cash, and employees worry about their jobs. But a slowdown is no time to stop spending on marketing. In my opinion it's important to understand how the needs of your customers and partners change, and adapt your strategies to the new reality. Key concepts include:

  • Brands that increase consumer interface through consumer activation and advertising during a downturn can improve market share and return on investment.
  • Little extra trade margins, reviewing financial terms may be extended financing and generous return policies motivate retailers to stock our full product line.
  • In tough times, price cuts attract more consumer support than promotions.
  • Business and Marketing along with Sales Heads must spend more time with customers and employees.

The signs of an imminent economic slowdown in our country are all around us. Companies should bear eight factors in mind when making their marketing plans for 2009 and 2010:

Research the customer. Instead of cutting the market research budget, you need to know more than ever how consumers are redefining value and responding to the slowdown. Price elasticity curves are changing. Consumers take more time searching for durable goods and negotiate harder at the point of sale. They are more willing to postpone purchases, or buy less. Must-have features of yesterday are today's can-live-withouts. Trusted brands are especially valued and they can still launch new products successfully, but interest in new brands and new categories fades. Conspicuous consumption becomes less prevalent.

Focus on business family values. When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising to replace images of extreme sports, adventure, and rugged individualism. Zany humor and appeals on the basis of fear are out. Greeting card sales, telephone use, and discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends. An opportune time to drop your weaker distributors and upgrade the sales force.

No short cuts in marketing spending. This is not the time to cut advertising. It is well documented that brands that increase advertising during an economic slowdown, when competitors are cutting back, can improve market share and return on investment at lower cost than during good economic good times. Uncertain consumers need the reassurance of known brands, and more consumers at home watching television can deliver higher than expected audiences at lower cost-per-thousand impressions. Brands with deep pockets may be able to negotiate favorable advertising rates and lock them in for several years. If you have to cut marketing spending, try to maintain the frequency of advertisements by shifting from 30-second to 15-second advertisements, substituting radio for television advertising, or increasing the use of experiential marketing, which gives more immediate sales impact.

Review/discontinue product portfolios. Marketers must reforecast demand for each item in their product lines as consumer’s choices of models that stress good value, such as cars with fewer options. Tough times favor multi-purpose goods over specialized products, and weaker items in product lines should move completely out of production line. In grocery-products categories, good-quality private labels and regional brands gain at the expense of national brands. Stay away from gimmicks; reliability, durability, safety, and performance are in. New products, especially those that address the new consumer reality and thereby put pressure on competitors, should still be introduced, but advertising should stress superior price performance.

Extend Support to retailers. In uncertain times, no one wants to tie up working capital in excess inventories. Trade discounts, extended financing, and generous return policies motivate retailers to stock our full product line. This is particularly true with unproven new products. Be careful about expanding distribution to lower-priced channels; doing so can jeopardize existing relationships and your brand image. However, now may be the time to drop your weaker distributors and upgrade your sales force by recruiting those sacked by other companies.

Continuously review pricing tactics. Customers will be shopping around for the best deals. You do not necessarily have to cut MRPs, but you may need to explore offering more temporary price promotions, reduce thresholds for quantity discounts, extend credit to long-standing customers, and price smaller pack sizes more aggressively. In tough times, price cuts attract more consumer support than promotions such as sweepstakes and one on one offer.

Focus on market share. In all but a few technology categories where growth prospects are strong, companies are in a battle for market share and, in some cases, survival. Knowing your cost structure can ensure that any cuts or consolidation initiatives will save the most money with minimum customer impact. Companies with strong positions and the most productive cost structures in their categories can expect to gain market share. Other companies with healthy balance sheets can do so by acquiring weak competitors.

Reinforce core values. Although most companies are making employees redundant, chief executives can cement the loyalty of those who remain by assuring employees that the company has survived difficult times before, maintaining quality rather than cutting corners, and servicing existing customers rather than trying to be all things to all people. CEOs must spend more time with customers and employees. Economic slowdown can elevate the importance of the finance director's balance sheet over the marketing manager's income statement. Managing working capital can easily dominate managing customer relationships. CEOs must counter this. Successful companies do not abandon their marketing strategies in a slowdown; they adapt them.

Cartoon Courtesey - www.cartoonstock.com


Saturday, February 28, 2009

Interim budget

थे interim budget presented for FY10 in which the government left the tax rates unchanged and added to this Government also announced cut in both excise duty and service tax by 2% pts in a bid to stimulate domestic demand. Though the immediate impact on some of the key sectors is likely to be minimal but Government may incur estimated revenue loss of Rs. 300 bn for FY10.
Real Estate
The impact of the cut in service tax on rentals paid by tenants in commercial properties is insignificant in our view. The extent of the cut will not materially improve affordability of commercial property. Service tax is a pass-through item for real estate developers; hence the cut will not benefit them.
IT Services
The ambiguity over computation of export profits at SEZ has been clarified. Till date, only the proportionate profits (SEZ revenues/overall revenues) of the SEZ entity were tax free. It has been now clarified that 100% of SEZ profits are tax free. This would not have any major implications for Indian IT services sector. With a flat revenue growth over the next year, contribution from SEZs is very low at Indian IT services vendors. If the STPI tax benefits are not extended further, sector leaders run the risk of sharply rising tax rates from the current 15% to higher level in 2011.
Auto
As per the current duty structure only commercial vehicles (excluding buses) and three-wheelers fall in the 10% excise bracket (Small cars suffer 8% duty and bigger cars 20%; Tractors suffer no excise duty) and would thus benefit from the 2%pt reduction in excise duty. We expect most of the 2% cut to be passed along.
Cement
Excise duty on bulk cement is reduced from 10% or Rs 290 whichever is higher to 8% or Rs 230 whichever is higher. Bulk cement forms 10% of the total dispatches of the industry. The benefit to consumers from duty reduction of 2%, on average cement price of Rs 200 per bag works out to Rs 4 per bag. We believe that companies are unlikely to pass the benefit entirely with strong seasonal demand.
Consumer
Excise duty on certain consumer goods items such as soaps and detergents has been reduced from 10% to 8%.Companies with majority of production outside excise free zones would benefit. The benefit is likely to be passed on to consumers in the form of price cuts to spur demand in categories like soaps and detergents which have witnessed stagnating volumes.
Telecom
Telecom companies will enjoy a double benefit – not only will service tax reduction increase affordability (though in addition to price cuts that are already happening through competitive pressure), but also, their cost of procurement of equipment will fall through a reduction in excise duty / CVD(particularly passive infrastructure as also some elements of active infrastructure) while services will become cheaper, especially important as telecom companies are continually increasing outsourcing. Total reduction in cost may be more than 2.2%m, though we suspect only the consumer pricing end of it (since not all elements of ARPU will fall, etc. termination charges will not fall, only subscriber revenues will fall, hence the cost reduction will be ~1.6%) will be passed on. The remaining 0.6% will likely be kept by the telcos, marginally improving profitability.

Friday, January 30, 2009

The 1.13Kg kidney stone the size of a coconut



The 1.13Kg kidney stone the size of a coconut The largest kidney stones most doctors ever get to see is the size of a golf ball.

So surgeons in Hungary were taken aback when they removed a stone the size of a coconut from a man earlier today. Sandor Sarkadi underwent an abdominal operation in Debrecen, 150 miles east of Budapest, after doctors discovered he had a kidney stone inside him that was 17 centimetres in diameter.



Mr. Sardaki was rushed into an operation theatre in the Kenez Gyula Hospital when an X-ray revealed he was carrying around the gigantic lump. The delicate procedure to remove the stone, which weighed a staggering 2.48lbs, passed without incident. Kidney stones vary in size. They can be as small as a grain of sand or as large as a golf ball, which makes Mr Sarkadi's stone all the more remarkable.

Saturday, January 24, 2009

Fragile India in the hands of Ramalinga Raju and Danny Boyle


The year started with Ramalinga Raju tainting the image of the country by siphoning funds close Rs.7000 Crore from his listed Public Company called Satyam Services. This episode left the whole world dumbfound and the week Indian Corporate Governance was under scanner. The investigation is still on and the culprits are yet to be bought to book to present the strong ethos of the Indian system.

Within less than 16 days a British Director Danny Boyle portrays the dark side of India and wins accolades by winning four Golden Globe and getting 10 nominations for Oscar. Our TV News Channels are abuzz with repeat programs showing the celebrations.



The only saving grace is our Music Maestro ARR winning the Golden Globe for Original Background Score, three Oscar nominations and Resul Pokutty - Sound Engineer getting nominated along with Ian Tapp, Richard Pryke.

Why am I so ruffled?
A street Kid of Mumbai being nick named as Slumdog.
Portraying the Hero worship of Indian Matinee Idols by Indain masses that the protagonist during childhood jumps into a shit whole to get a glimpse and autograph of Superstar of the Millennium – Amitabh Bachchan.
Hindu – Muslim riots.
Children being kidnapped by Mafia and blinded for undertaking begging on the streets of Mumbai (The Mafia goon trains these children in singing Bhajans and also recognizing a Dollar Currency Note by the smell including the kid is in the know that Benjamin Franklin adorns a 100 US Dollar Note. This goes on to prove that the Mafia Goon is an educated unemployed youth?
The girls kidnapped are being sold to Brothel houses.
Robbing of shoes from places of worship.
The childhood protagonist tells the most hilarious story of Taj Mahal. (Cautioning the tourist to be more careful while hiring a guide).
Stripping a Mercedes Benz of International Tourist couple; while they go around for sightseeing.
A packaged water bottle is being filled by Tap water by the protagonist’s brother while working at a restaurant.
The narration of the story was fairly creative but there are some gaping holes! How does the protagonist answer the question Inventor of Revolver – Samuel Colt? Because no where was this aspect covered in the movie.
Betting racket in sports by Mafia Dons
Portraying that cheating the participants by the host is a common aspect in Indian Reality shows.
Lastly, the song Jai Ho sounds like a dig at India. (For all the dark side you still survive as one of the powerful economies of the world)

Thank you Ramalinga Raju, Danny Boyle, Golden Globe Jury and finally the Oscars for painting India as a country that still baffle the world audience and continue to survive.

Jai Ho!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Wednesday, January 14, 2009

Together we stand strong and undivided

was at Barista and came across a very interesting conversation this evening. A group of friends got together and the conversation begun by loudly saying, "So, Satyam is gone"! What are you guys planning to do now? One of the group member (a Satyamite) was not in the habit to reply to lose talks, but in front of entire team.... the satyamite thought he needed to fix this guy's thought process. Therefore, the Satyamite asked him, as my military training has imbibed in me the habit to fight till last breadth.
Who says Satyam is gone when I am very much alive here and committed to create value on behalf of my company? . He shot back, Hello Mr., your chairman has resigned, you guys are facing financial turbulence and you still have a face to say that Satyam is not gone!
At this juncture, the Satyamite thought of replying to this guy in his own language. He asked him, Tell me, what will you do and where will you go if our country India was not there? He was not prepared for this level of thought and asked back, What a stupid question, How can India be gone, it is a country?
Satyamite asked him back., Country! What makes a country? Land? Economy? Our PrimeMinister? Our President? Our Geography? Or the PEOPLE? If our PM resigns, will you say India is gone? If our economy faces a slowdown, will you say India is gone? But yes, if the people of a country are lost for any reason, we will say that country has no meaning.
Who cares of vast land of Antarctica today which has just one permanent resident, Father Georgy? Which country does it belongs to? Why does not it has any government? Why does not it has any economy? Or, how many countries were there when humans used to hunt for food in pre-historic times?
Countries, Wealth, Infrastructures and booming economies are nothing but creations of efforts of PEOPLE, and they do not have any existance on their own. And the final blow was, When one man can create Satyam as an organization of 53,000 people, why not 53,000 committed people canrebuild one SATYAM? By now, everybody saw my point was well placed and he stood up and shook hands with me and murmured, Yaar, when I used to hear from my roommate who work in Satyam that EVERY SATYAMITE IS A LEADER, I used to laugh it off. Now, I know why! "