Most Trusted Brands

• Crocin • Maruti Suzuki • Dettol • Tanishq • LIC

Ask ten people around you about the first car they have had in their household, and invariably nine will say Maruti. In the last one decade, however, people have moved on to other brands like Hyundai & Tata. But in difficult times, like the one we’re facing now-a-days, customers turn risk-averse and stick to trusted brands like Maruti. With a child around, you just cannot imagine not having a strip of Crocin or a bottle of Dettol in your house, because these two things are as precious as your child. LIC and Tanishq, in a similar fashion continue to influence the buying decisions of Indians with the trust they have instilled in their consumers. Who said trust-like Rome-was built in a day?

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

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Alarming signals!

The worst sedentary lifestyle habit gets uglier... and it is playing the devil with your system!

“Television has proved that people will look at anything rather than each other,” said Ann Landers. This statement proves to be so true in the present day scenario in India. Family interaction and bonding has hit rock bottom. People sit with each other while watching TV claiming it is ‘family time,’ but who does the talking? The idiot box! Like in the comedy series Friends, protagonist Joey Tribbiani got alarmed at the fact that one of his acquaintances didn’t own a TV and asked, “What is all your furniture pointed at?” Same is the case with most of us and we do tend to raise an eyebrow when we find out that someone doesn’t own a television set. Mankind has often jumped the gun and has overdone things, ruining thus their very raison d’être. It’s a known fact that excess of everything is bad, and with respect to TV, adults as well as kids are these days glued to it 24x7. Sedentary lifestyle has always been proven to be harmful to a person and its side effects have been noted in the form of obesity, heart problems, blood pressure ailments, etc. According to a recent study in the US and Spain, researchers claim that out of all the sedentary habits that one can pick up, TV watching is the worst as it increases blood pressure in adults and also in kids! So, next time your kiddo jumps out of his/her chair while watching a nail-biting cliff-hanger match between India and Pakistan, watch out for his/her pulse rate too.

“Cases of high blood pressure have increased in the recent times due to obesity, excess salt intake in junk food and high stress levels. But as far as TV is concerned, even if kids are watching a cartoon, a high-speed car-chase, a fight or a match, which goes on to excite them, their hormones are pushed and the adrenalin rush increases the blood pressure irrespective of the age of the viewer. I understand that it increases the blood pressure, but whether it affects one’s health in the long run is uncertain. Becoming overweight has been an independent factor for hypertension,” opines Dr. Sandip Jain, Consultant, Pediatrician, Fortis. Maintaining a work-life balance is essential even for adults, and when children are involved, their energy needs to be diverted towards outdoor activities and sports. With innumerable play-station games, video games, easy access to the Internet and of course the television, it isn’t going to be an easy task, but it is absolutely necessary. The physical activity neutralises the effect of all the oily, greasy and calorie-packed food they eat. Comparatively leaner and healthier children should be made to focus their energies on other productive activities such as reading books, painting, sketching, or playing an instrument. Children are gullible and their minds need to be given the right direction from the beginning. There can be a lot of learning from TV as well, but only if one strikes the balance and tunes into something informative.

Not many, until now, would have given a thought to the impact of TV on one’s blood pressure. But now we know, a rise in TRPs might also lead to the rise of one’s blood pressure!

Ravi Inder Singh

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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Heal it, now!

Are high heels a part of your dress code? There are reasons they shouldn’t be...

A stylish woman wouldn’t be caught dead without her stilettos, which makes a lady look taller and sexier. It’s no wonder then that the swish set swear by them and have managed to get accustomed to the discomfort caused by them. At the beginning, one unconsciously keeps reminding oneself to be cautious and maintain their balance, because if distracted, they realise that they can easily twist their ankle! “It gives me a stylish posture, and makes me look classy and confident, which is why I wear heels,” says the perky 23-year-old Ruchika who works for a restaurant in Delhi. Agreed, heels do accentuate the curves of the body and gives one a smart look, but it’s also important to be aware of the price one might have to pay in future...

A recent research highlights that high heels, and also the latest wedge heels, can cause enough damage to the body to last a lifetime. Especially with numerous brands of shoes flooding the markets, a steep rise in problems like knee injuries, hip injuries and lower-back problems has been noticed. Pam, who has a sedentary job, has been wearing high heels since her college days and says that she has read a lot and is “aware of the problems that heels can cause” and therefore, at the hint of the slightest of pain, Pam gives her feet some respite by wearing flats for the next couple of days or so. It’s important to give your feet comfort, like Pam does, but let’s also understand the fact that the damage caused to the body because of regular use of high-heeled shoes mostly shows when the lady reaches her 30s and 40s. Dr. Govind Singh Bisht, a foot-care specialist, says, “When we stand, our weight is equally distributed. High heels give pressure on certain muscles and joints of the knees and the back, which causes pain and can lead to arthritis. Girls mostly go with the latest fashion trend and usually don’t know that it’s around the age of 30-40 that joint problems set in.”

As a note of precaution, he advises, “For a sitting job, wearing high heels is alright, but in a place where one has to stand for hours or walk around, it’s always preferable to wear very little heels.” Not flat shoes, but ones with small, about one inch, heels because entirely flat shoes too can cause severe foot pain, shooting pains in the shins, bunions, back aches and arthritis!

So, whether wearing heels is a fashion trend or whether it increases one’s sex appeal, it’s always advisable not to harm one’s body! Instead, why not learn to carry off ‘comfort’? After all, it’s our feet, which will take us a long way!

Spriha Srivastava

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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AMIT PRASAD, CEO, SATNAV TECHNOLOGIES

IIPM Best B-school

1. Airtel’s recent ad campaigns depicting simple real life situations
2. Aircel – eye-catching positioning strategy
3. Sprite campaign – depict the trend of getting to the point without wasting time or energy
4. Center Fresh’s campaign – the message put across is really crisp and to-the-point.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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1. ‘Express Yourself’ campaign from Airtel
2. ‘Daag acche hain’ from Surf Excel
3. Pepsi’s ‘Oye bubbly’ campaign
4. ‘Thanda matlab Coca Cola’ campaign, where Aamir Khan dawns various attires of Indian communities in different ads targeting numerous communities across India

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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It’s a $10 billion bait that Aircel is throwing into the Indian waters... But will the fishing rod hold? Surbhi Chawla questions its logic & strategie

Four Phase of IIPM Global Plans

Perhaps it was nothing but the ‘Divide and Rule’ trick that made the British rule the Indian subcontinent for centuries. Dividing the region, on the basis of caste, colour and above all religion not only gave them a superb control over its natives, but also kept stuffing their treasure chest. It just appears that the thought seems to be swaying Aircel (a 76:24 JV between Malaysia’s Maxis Communication Berhad and India’s Apollo Hospital Ltd.) too, in the same direction!

‘It’s time to move on’ is what Aircel (which has recently become a pan-India operator) is professing these days. And all by dividing customers on the basis of demographics (region, age, likings, et al)! It is in fact this approach that’s making a lot of people to sit up and take notice of this new kid on the block. But the question is will the company be able to make a mark for itself and give established players a run for their money?

Though Aircel kicked off its operations from the Tamil Nadu circle in 1999, it was only in January 2008 that the company was awarded a pan-India licence and a chance to paint India red and blue. Growing steadily from just four circles (Tamil Nadu, Chennai, North East and Assam), in which it’s already a market leader, the company at present has operations in 14 circles out of the total 23 circles. In fact, as part of its strategy, Aircel has just earmarked a whopping $10 billion (over a period of 3-5 years) for expansion. All to take its subscriber base from 17 million (market share of 5%) to a whopping 30 million mark by the end of 2009 and make its presence felt across India. Well, it is has started the journey from the Delhi circle and by April, Aircel wants to see its flags flying high in Mumbai as well and is then planning to look towards UP, East and West.

But then, won’t Aircel be perhaps the eight (or even the ninth in many cases) service provider to offer its services in certain circles? Isn’t there already an overdose of competition in these circles with very little scope for a newcomer? Moreover, according to a latest report, as the competition ramps up, telecom players, who are in pan India expansion mode, might see their profitability taking a big hit. “We expect the high capex, network opex and subscriber acquisition costs to weigh heavily on the margins of telecom players expanding pan-India (Idea, Vodafone and Aircel), on alternative technology (RCOM, Tata Tele, BSNL and MTNL) or launching fresh operations (Unitech, Datacom, Shyam, Loop, Swan, STel),” says the report by Kotak Securities. Further, many even fear that in the current market scenario, given the high penetration levels, it will be extremely difficult for a new mobile service provider to venture into a new territory and survive. So, has Aircel really done its homework before taking a deep plunge into an ocean full of hungry sharks?

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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There was a lot of pressure on costs...

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

Abhishek Jain
Exec.Director – Precision Pipes

4Ps B&M: Do you believe that the hype behind the Nano will actually be able to meet the reality?
AJ: The whole concept of Nano is very sound and the opportunity to be capitalised upon is very huge. However, there is no denying that there will be a huge gap in the demand and supply in the short run.

4Ps B&M: Any particular incident that you can share while working with Tata Motors.
AJ: There was a lot of pressure on the cost aspect in the whole production process of Tata Nano.

4Ps B&M: Do you believe that Nano will be able to replicate the success of Maruti 800?
AJ: You can’t compare both the models with each other. When Maruti 800 came, the market dynamics were very different and more importantly, very few options were available to the consumer. But there is no denying the fact that Nano will surely bring a wave of excitement and change in the Indian market.

4Ps B&M: Will Nano be a profitable product for Tata Motors?
AJ: Well, if you talk about the long run i.e. when their Gujarat plant kicks off and production starts happening at the full capacity, it will surely be a very profitable product. And more importantly in my view, they should cut down on their production of LCVs as they are not doing pretty well.

4Ps B&M: Can you elaborate on your working experience with Tata Motors?

AJ: It has been a very overwhelming experience and very good for our company. We learned a lot from them.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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A miscued opportunity

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

Their financial health and brand image have taken a beating globally. Will there be any takers when India opens its arms to foreign banks?

Bayerische Landesbank AG (Bayern LB), an unfamiliar name in the Indian financial domain, is winding up its representative office in Maker Chamber VI, Nariman Point, Mumbai, even before it could make itself known. On the other hand, the oldest foreign lender in the country, Standard Chartered, is keen on making its hold stronger by acquisitions once the sector is opened for foreign players.

On the back of the global financial meltdown, the case of Bayern LB is not exactly what foreign banks are going through in India, though it’s true that most of them are critically reviewing their India strategy. The review is well justified for the fact that under the spillover effects of the global turmoil, growth dynamics of the Indian banking sector are undergoing changes. Also these banks are facing a real tough time on their home turf itself, which is forcing them to be more focused on their domestic strategies. But then, Darwin’s theory, survival of the fittest, is always there.

It is true that on the surface most banks in India have similar levels of profitability. But nonetheless there are “dramatic differences” in the underlying economics. A glance at the financials of Citibank, Standard Chartered, HSBC, ABN Amro and Deutsche Bank reveals that the former four have a similar split in revenues (65-70% from interest income and 30% from treasury) and for the latter the split stands as 50% form interest income and 40% from treasury. On a cumulative basis the net profit of these banks rose by 44.5%. Nevertheless, the foreign banks are experiencing a moderation in their growth rate (blame it on the fallouts of their global parents). Data from RBI (February 2009 bulletin) reveals that the credit growth of foreign banks operating in India dipped from 30.7% for the year up to January 2008 to 16.9% in January 2009. The net NPA ratio (2007-08) too has been escalating. To put into perspective the ratio for Citi is pegged at 1.23, up from 1.02. For Deutsche Bank it is 0.22 up from 0.01, for HSBC it is 0.58 up from 0.43 and for Barclays the ratio stands at 0.42.

The contours of the foreign banks (considering the review of policies on the presence of overseas bank in 2009) which are involved in a range of activities like consulting services, arranging trade finance, providing support to credit and project finance for infrastructure, energy, oil and gas through the balance sheets of their global parents is unlikely to yield any greater leeway. Dr. Rupa Rege Nisture, Chief Economist, Bank of Baroda, outlines, “Opening up the sector for foreign banks or infusion of foreign capital may help resurrect the weak banks in the private sector.” She further adds that the entry of foreign banks would greatly facilitate the process of consolidation and convergence of banks.

However, it will be a real challenge for the foreign banks, as they cannot raise money from the Indian market by getting listed on Indian bourses, which needs them to convert their Indian branch into a wholly owned subsidiary (WOS). And for the same they need to be registered. However given the fact that operating as a registered company has its own hassles including multiplicity of supervision, disclosure norms, minimum capitalisation (Rs.3 billion) et al, foreign banks would see no additional benefits in that. Changing global dynamics will ensure that despite the challenges, the entry of foreign banks will reduce the financial constraints in the economy. But then, that’s just theory. On pragmatic grounds, let the global parents revive first… till then rainy days ahead!

Gyanendra Kashyap

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The ‘bullion’ $ advice

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

Gold has always been a wealth preserver & not a wealth creator

“All that glitters is gold.” Though antipodal of the famous Shakespearean tad, it fits pretty well in the context of gold in today’s times. While investors are wary of the equity market, gold is hell bent on breaking all historic price records. So, is it a golden time to invest in the bullion?

From Rs.10,658.75 (per 10 gm) on January 1, 2008, gold prices have taken a giant leap and touched Rs.14,315.00 on February 11, 2009 – a phenomenal 34.30% increase in just one year. Even, between 2000 and 2008, gold has been averaging 14-17% annualised returns. Amar Singh, Head of Research, Angel Commodities confirms, “Gold buying in the last one year has not yielded any losses.” This is primarily because the base cost of bullion can never become lower than its cost of production unlike in equity market. So, “it’s always safe to invest in gold for long term gains,” agrees Pratim Patnaik, AVP and Head Retail Business, Kotak Commodities.

But then, this has not always been the case. In fact, gold has never been a real wealth creator; rather it has always acted as a wealth preserver. For instance, if you had invested Rs.100 in gold 20 years back, it would have fetched you Rs.387 today, however the same amount would have garnered Rs.2,310 if it had been invested in stock market. And of course, our favourite Buffett considers this commodity amongst the most useless investments. Well Warren, we don’t invest in gold, and we still aren’t ‘bullionaires’.

Savreen Gadhoke

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The whine-whine game!

IIPM set to beat economic slowdown

And this war is getting more intense with every passing minute! The reason for this is very simple – in most developed countries, including America, DTH competition is mostly into providing niche content; that is, all the big networks either have their own DTH services or they form exclusive agreements with specific DTH providers, encouraging customer to choose which channels they would want to watch and which they would rather give a skip.

However, this is not the case in the Indian market as the Telecom Regulatory Authority of India (TRAI) has clearly mandated that no broadcaster can offer content exclusively to a specific DTH player or have their own channels that would not be available on the other platform. The logic given by TRAI is that right now, the market is in too early a state and it is only when there would exist perfect competition that one can look at allowing content differentiation. Admittedly, some players in the industry do not agree with this point of view. Vikram Kaushik, Managing Director and CEO, Tata Sky, firmly states, “With so many players already in the market, I see no logic as to why we should not be allowed to offer content differentiation.” Justifiable? Perchance, as it is true that in the entertainment industry, it is the content that reigns supreme; not so in the Indian context. Leave alone channels, even the movies that are available on the pay-per-view option of various DTH operators is most of the times exactly the same.

Technology, what could have been the other differentiator in this industry, also does not hold its weight in water, as most operators are operating on the same technology platform. If one considers market dynamics, Tata Sky logically has been in an advantaged position to cater to the la-crème of India as it is the only DTH provider to offer a separate set-top box that enables consumers to pause/rewind live TV, apart from even allowing them to record their favourite programmes. But even this so called ‘differentiation’ is quite temporary. It is reported that BIG TV and Sun Direct are planning to offer similar set top boxes by the end of this fiscal. To that effect, Sun Direct is still quite tight lipped about its venture in this field, but insiders at BIG TV have already revealed that their pricing for a similar service would be around half the cost of Tata Sky! Applying similar strategic think, with competitive rivalries expected to go astoundingly high, most players in this sector have chalked out large advertising budgets, and even cornered many celebrities as brand ambassadors. As a matter of fact, Airtel Digital had as many as 10 celebrities in their launch ads; and the company has set an ambitious target of grabbing a market share of 20% in their first year of operations.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Brains that Built Brands in 2008

1500-plus IIPM students placed across the country with 44 bagging international offers

In the cutthroat world of marketing, where brands and campaigns have a tendency to become history quickly, it takes a lot of guts to create and sustain a brand in a way that it becomes an icon. It takes a lot of fanfare than just plain old hoopla, to make the brand live long and mesmerise the audiences forever. However, some enduring legends thrive on this extremely tough, unforgiving environment. With their focus on innovation, customer obsession, partnership and networking, they have not just brought their brands to our living rooms, but have also made them a part of our daily vocabulary. They are more than just smart people who understand their brands well. 4Ps B&M profiles the branding masterminds who created history in 2008...

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Take the call!

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Picture this – you buy an asset worth Rs.1651 crore during early 2008 and you manage to find a wiful suitor who values it for an unimaginable Rs.10,200 crore just nine months later! Murderous profit booking; but at a time when the entire Global Inc. community is finding cash hard to come by to finance deals, here is Unitech selling 60% of its telecom asset for a handsome Rs.6,120 crore to Norway’s Telenor!

Unitech Telecom plans to kick-off operations by H1, 2009 and thanks to the deal, Unitech would derive great benefit from telenor’s expertise in both emerging and mature telecom markets, and that certainly is not a bad business proposition in a nation where the monthly mobile growth stands at a healthy average of 4-5 million as Sanjay Chandra, Chairman, Unitech Wireless affirms, “We believe Unitech Group’s local position and strengths coupled with Telenor’s technical, operational and marketing expertise will form a winning team.”

However, this is not the only deal which has promises galore for the growth of telecom sector in the country. Earlier, Swam telecom had offloaded a 45% stake to UAE-based Etisalat for a huge $900 million. So was it another instance of insane profit-making too? Indeed yes! Swan Telecom had bought the telelcom licence for 13 circles on the 2G platform for a paltry Rs.1,537 crore ($330 million). Subsequently, it sold 45% of its stake to Etisalat for Rs.4,500 crore ($900 million), taking its book value to a monstrous $2 billion! Yes, the two telecom players booked huge profits, it was more of a lesson on ‘how to make money during a downturn and do good to the sector and economy at the same time!’

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Glittering like never before!

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Gold has always enjoyed the status of a safe haven. But will the glittering truth allow investors to heave a sigh this time too? 4Ps B&M’s Sunanda Roy explores...

D iamond or gold! Which one do you think is a girl’s best friend? Confused?! Certainly the fight has always been on (and will continue forever) when it comes to choose between the two. However, there are some that seems to have come upon a decision – of course that’s not girls – and have finally placed their bet on one! Well, those weary souls happen to be none other than stock market investors, to be precise the retail investors.

Certainly with a volatile stock market and FIIs pull outs amid equally dull macro indicators the worry of the hour is where should a layman place his savings? In a line – what is the best place to invest? And the sole resort at the moment seems to be gold. Raison d’être, prices of gold have almost doubled in the last few years and experts anticipate them to further keep on as they feel demand will continue to beat supplies for several years.

But then gold too, is now fraught with risks as the global economic outlook remains uncertain. Like everything else, their prices too move up and down. “If the global economy and thus the markets do bad, gold will climb in value. Else it might remain range bound or may even decline. For Indian investors there is an added worry of exchange rate risk since the rupee price of gold will be impacted by both dollar price and rupee-dollar exchange rate,” agrees Swapnil Pawar, Director, Park Financial Advisors. So, on account of this dual uncertainty, is investing in gold recommendable? “Yes of course! Gold or diamonds is anytime a better investment compared at least to real estate and stock market,” answers Sanjay Kothari, Ex-Chairman, Gem & Jewellery Export Promotion Council.

No doubt, gold enjoys the status of a safe haven, but it too has been underperforming in recent times due to continued sell off by fund houses and investor community. Although in the short run gold might be weighed down by the appreciating US dollar but in the long term its bullish sentiment is quite intact and its appeal as a safe investment tool in times of uncertainty may attract some fresh buying in days to come. Agrees, Pritam Kumar Patnaik, Associate VP, Head Retail Business, Kotak Commodities, “Gold has always been an investment for retail public. The risk reward ratio in gold is highly favourable for the long term investors as the returns are expected to be skewed positively”.

Moreover, as markets across globe are going through turbulent times where financial safety is of paramount importance and “since price of gold is negatively correlated to the movement in stock market, investing in yellow metal can certainly provide safety to the investors,” feels Amar Singh, Research Head (Commodities), Angel Broking. In addition, gold prices have remained almost the same as at the beginning of the year (in rupee terms) while all other markets have plummeted drastically. This too works in favour of gold. Adds Madan Sabnavis, Chief Economist, NCDEX, “Gold is a very good portfolio diversifier, hence can be used as an investment irrespective of what happens in other markets. The coefficient of correlation is low vis-à-vis stock markets and GSecs”. Further, as a high degree of uncertainty continues to be attached to paper assets, gold is likely to emerge victorious.

But then how long will this winning streak continue and to what levels? “We expect gold prices to touch a level of $640 per troy ounce in short term. Domestically by incorporating the average USD/INR rate at Rs.50 the expected gold levels will be Rs.10,360 per 10 grams. However, we expect bargain buying to emerge around $640-650 levels which may take the prices back to $780 levels in 3-4 months,” Ashok Mittal, VP & Country Head, Karvy Comtrade tells 4Ps B&M. But then Pritam Patnaik from Kotak Commodities offers a different view. “Gold is largely a currency play and lot depends on the developments post the G-20 meeting. We expect things to get worse in the next six months and gold is likely to trade around $1,130 an ounce during the 1QCY2009,” says Patnaik.

Certainly, the economic perspective to the price levels depends a lot on the dollar-euro relationship. If the dollar depreciates, then the price of gold will move up. So, one needs to take a call on how the dollar will behave which depends on the actions of the Fed and ECB in response to the monetary situation. Today both the central banks are focused on lowering rates, which in turn will speed up the economy, leading to higher spending and probably the deficits too.

So with the entire positive and the negative perspectives on the platter, their still remains a valid question – what portion of an investor’s portfolio should be in gold? “Normally it should be 5-10%,” feels Swapnil. No doubt, for the long haul, gold works as a good diversifier. But the portfolio should be created in a manner that it diversifies the risk of the investor. Hence, an even distribution based upon the risk appetite of the investor is the best way to go for. Even John Mulligan, Investment Marketing Manager, World Gold Council, says, “Our analysis, using state-of-the-art portfolio optimisation techniques, has shown that even with very conservative return expectations for gold, portfolios with a typical mix of equities and bonds will benefit from an allocation to gold, from as little as 4% in a low or medium risk portfolio to 10% in a high risk one”. So, by now you too would have definitely decided on who is your best friend!

Sunanda Roy

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Adam Smith, father of modern economics said...

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Adam Smith, father of modern economics said, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices (The Wealth of Nations, 1776).

So on October 13, 2008, when Kingfisher’s head honcho Vijay Mallya turned toward Jet Airways’ headquarters in Mumbai’s Andheri suburb to keep his appointment with Chairman Naresh Goyal, the air was agog with speculation. What was cooking between the foes turned friends? The drama reached a crescendo when later in the evening, Goyal returned the favour. Along with his senior team, he drove down to the Kingfisher headquarters at Vile Parle, a western suburb in Mumbai and sat closeted for close to six hours with Mallya and his team. When the duo finally emerged, they made public their plan, a deal to control competition in Indian skies and possibly even air fares, and that too in full view of the government, Monopolies and Restrictive Trade Practices Commission (MRTPC) and the public!

There are many who are thinking it, few who are mumbling it and just about one or two who are calling the Jet-Kingfisher alliance a cartel. Yes! We did say cartel. Mallya and Goyal prefer to call it an alliance, but call a cartel by another name and it still remains just that – a cartel! Oxford Dictionary defines a cartel as: “an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition,” a phenomenon that runs against the very grain of free markets. Dangerously similar, this ‘alliance’ offers the two airlines a combined share of more than 60% of the domestic aviation market, leading to a near-monopoly situation. The plans, among other things, include code-sharing, cross selling of flight inventory and overall route rationalisation between the two airlines. And route rationalisation effectively means jointly cutting down supply, and a class X economics student will tell you that with supply down, prices are bound to automatically rise. If this is not cartelisation, wonder what is! To be fair to both of them, Indian aviation is undergoing its worst crisis ever. Rising fuel prices, increasing overhead costs, falling air passenger traffic and their combined losses totalling Rs.20 crore per day, literally forced the two competitors into each others arms. Goyal even says that the alliance was “needed by both of us to avoid bankruptcy.”

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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What are your plans for the movie business?

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We are very keen on movie content production. In fact, we have already started our production company in Hollywood. We have signed a Hollywood producer to work with us and we are looking at producing around 5-10 movies in Hollywood in the next couple of years. One film is already on the floor with a $100 million budget and it is on the life of Lord Buddha.

What’s your strategy for the TV business?
Right now we are working with some of the existing channels. We have some tie-ups and there are many more in the horizon with whom we are in talks with. There is a general entertainment channel, which has not being doing well of late, I would not name it. But it is struggling and requires a revamping. We are looking to acquire it very soon. And we are not interested in the channel just for the stake, rather we are looking for an active participation to revamp the channel and bring the Spice brand.

You have also picked up 32% stake in Multi Screen Media. How are you looking at spicing it up?
The negotiations with the management are going on. We are trying to focus on the age group of 13-35. These young women and men are the future and they are looking for programmes, which move forward. I believe that we will bring this angle of youth, specially to their flagship channel SET.

What kind of leadership model do you follow?
I strongly believe in promoting young talent. You can train them, delegate and get best results out of them.

What is the best advice that you have received so far?
Re-invent yourself everyday, always look for new opportunities. Everyday you can do something new and something better. A lot of companies have got a strong foothold in their business through this and Google is one of them. So, keep reinventing yourself.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Subhiksha plans to increase its number of stores

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Even the consumer has turned his eyes towards hypermarkets and supermarkets (see pie-chart). But will organised Indian retailers stand to gain from this consumer interest, simply by expanding their hypermart footprint? Not really. Even though disposable incomes of the Indian consumer class has increased, it is still less, compared to international standards. McKinsey in its report titled “The Great Indian Bazaar - Organised Retail Comes of Age in India” says that a typical Indian spends between $7-10 in one hypermarket shopping trip as compared to $45 in the US and $10-18 in China.

However, another school of thought believes that the growing middle class will further demand and improve expenditure patterns of Indian consumers. “By 2016 more than half of the Indian households will be from middle class and this will create more demand for organised retail in India as compared to other countries, says Roopa Purushothaman, Chief Economist, Future Capital Holdings.

Another big difference area is in that Indian retail is dominated by real estate players. Land rentals have doubled in the last two years and have created a situation where acquiring real estate at affordable rentals has become a difficult task, especially in metros and Tier-1 cities. One reason why rentals have sky-rocketed is the ambitious expansion plans of individual retailers (Subhiksha plans to increase its number of stores to 2,200 by the end of 2008 from current 1,580; Spencers targets opening 300 convenience stores and 75 large format stores by March 2009...) and their herd-mentality to open stores in the same locality to compete with each other. Moreover, despite all talks to the contrary, almost all players are concentrating their retail engines on metros and Tier-1 cities, further escalating rentals. Naqvi of Technopak states, “The ratio of rental cost per manpower cost is high in India in comparison to the ratio in international markets, which is proving to be a hurdle in the expansion plans of most of the players.” Perhaps this is the reason why retailers are now targeting Tier-2 and Tier-3 cities.

Even on the plank of credit purchases, India lags behind developed nations. For generations, Indians have been purchasing goods on credit from their local kirana stores, primarily because of the trust and loyalty of both the kirana store owner and the customer. However, such credit purchases have not really kick started in the organised format because of lack of trust and confidence between the retailer and consumer. Yes, a few retailers have tied up with credit card companies to encourage credit purchasing, but Indians are quite unlikely to use ‘plastic’ to buy their routine daal and atta! In stark contrast, global markets thrive on credit purchases.

Shakespeare once said “Comparisons are odious.” Unfortunately for her, India has always faced the veracity of critics when it comes to comparisons. Be it the Delhi Metro being compared to London’s Tube; Western Express Highway pitted against America’s freeways or Indian superhero ‘Kkrish’ pitted against Superman. Despite bottlenecks, the retail graph is only moving upward. If Americans started from A and moved to Z, Indian retail has started from Z and is now moving to A. Some say that as long as all alphabets are there, who cares whether A came first or Z? But if retailers take too much time in this backward integration journey, the prophesied time-table for success may not be really met!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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CELEB USE OR GROSS ABUSE?!

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Idea Cellular is not an exception. In these times of a slowdown, marketers would do well to keep their marketing pennies close to their chest and not simply waste on having a celeb in their ad. Instances of celebrity abusement abound. The Dulux ad featuring Kareena & Karan Johar, Versa campaign sporting Amitabh & Abhishek Bachchan, the Tata Indicom commercial boasting Kajol & Ajay Devgan, Hrithik Roshan’s campaign for Macro Man and Acer, Hema Malini in an ad for a water purifier, the list is endless!

Even globally, the situation is not too different. Celebrities like Shaquille O’ Neal for Reebok and Britney Spears for Toyota’s brand, Soluna Vios had to go through similar abusement woes.

Given that such abusements are an embarrassment for both celebrities and brands, who is to be blamed for the quagmire? Well, in typical fashion, advertisers dump the blame on talent management companies, who in turn, swing the blame right back into the brand manager’s court. Playing tennis apart, fact is that unlike what every person in the endorsement supply chain claims, there is in fact, no science to the endorsement game. As Manish Porwal, CEO, Percept Talent Management justifies, “Just riding on the star appeal makes no sense. Moreover, offshore recommendations by talent management companies also leads to this abusement.”

This is not to say that celebrities should be cast out of the endorsement game altogether. If used correctly, they can boost the brand a million times. Beauty major Emami, which has pioneered the art of roping in celebrities since 1976 (Chayvanprash, Navratan Oil, Boroplus) in fact is quite gung-ho on its benefits. “We want to rope in more celebs, but rising costs are a constraint. Whenever this affordability is overcome, our strategy will centre around endorsements,” gushes Aditya Agarwal, Director, Emami Group.

As ad veteran Luke Sullivan says: “If you were to put five million bucks in a commercial, I wouldn’t worry much and put my five year old and tell him to shoot a commercial. But if you don’t have this (the money) then think of something else (innovate?).” A quick takeaway Mr. Marketer: It’s easy to spend big money and get James Bond star Pierce Brosnan to endorse your new, gadget-heavy, yet sleek bike. But it’s smarter to simply let your creative team take a 3 day-4 night holiday at some exotic locale, rack their brain cells and come up with a power-packed ‘big idea’, which will sell, with or without the celebrity!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Something’s cooking at Reebok. From being a sportswear brand, it is now expanding the net with its ‘Fish Fry’ range and ‘Reebok Classic’ stores.

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Something’s cooking at Reebok. From being a sportswear brand, it is now expanding the net with its ‘Fish Fry’ range and ‘Reebok Classic’ stores. 4Ps B&M’s angsuman paul caught up with man at the helm of Reebok India

Just one day before global sportswear major Reebok was about to unveil its till-then hush hush new global branding initiative – ‘Your Move’ – 4Ps B&M broke the story and indicated how the revamped tagline (Reebok’s earlier tagline was ‘I am what I am’) would fit in with Reebok’s new focus on capturing market share even in the non-sports category in India. But that was the beginning of 2008 and now it’s nearing the end of the year. Over the last six months, Reebok has taken at least six such branding initiatives to grab every possible corner of India’s Rs.11 billion sports footwear & apparel market. And why not, when India is the only market where this British brand enjoys leadership, leaving brands like Nike, Adidas and Puma behind.

To complete its transition from a sportswear brand to an overall lifestyle brand, Reebok has rolled out ‘Reebok Classic’ stores - which on entering give none of the regular sporty look & feel (a la Reebok); instead the stores wear a more elite, fashionable look – a taste of things to come! Reebok aims to open 70 more such stores by the end of 2008. The vision is that by 2009, the company would mint over 10% of its total turnover from these stores.

In contrast, globally Reebok had moved beyond being a mere sportswear brand way back in 1986, when it acquired the Rs.500 million haute couture brand Rockport. But as part of a global strategic decision, the two hardly ever highlighted their association. It was only in 2006, after its $3.8 billion takeover by Adidas, that Reebok started deeply penetrating and promoting itself as a bon ton lifestyle brand globally.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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iPhooon; too cool, too soon!

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iPhone entered the Indian market with its 3G iPhone... But what use is 3G in India? Is the party over already? Or is there more in store...?

The revolutionary iPhone finally landed on the Indian runway... However, what it received here, was just (literally) an empty bus of disheartened and disgusted enthusiasts... Yes, the technological ‘Swiss knife’ was launched across 6 cities in India, but the August 22, 2008 party was spoilt by its ‘hefty price’; and the ‘best buy’ terms, just seemed too ‘hollow’!

Anybody interested in the iPhone would be aware that globally, the 8GB & 16GB versions are available for just $199 & $299 respectively. The typical ‘I wanna buy the iPhone’ Indian therefore anticipated a price range of Rs.10,000 to Rs.15,000! But lo and behold! Apple decided to tweak pricing rules for India and launched the product for a hefty Rs.31,000 & Rs.36,100 for the 8GB & 16 GB models respectively (to be distributed through Airtel and Vodafone)! In a price-sensitive market, this pricing strategy was illogical, right?

For a change, look at it in the light of Apple adopting a skimming strategy, where it enters the market with a high price-tag and then lowers it in intervals, garnering higher revenues with each price fall. Also, the iPhone’s image is nothing but ‘coveted’ in the domestic circuits, hence a high-price point during entry would ensure that it maintains the ‘niche’ image. However, much as its high price is justified, the Rs.30,000+ range still means stretching it a bit too far.

So how will this Indian party be different? Globally, the gadget tasted great success as a staggering 1 million units of the 3G version were sold just 3 days post-launch in 21 countries. However, the figures stood at just a poor few thousands in India during the same time-period. “Buying at Rs.31,000 doesn’t seem to be an intelligent idea, especially when even the 3G technology is unavailable in the country. I will wait for the price to come down,’ asserts Rajan Malik, who was one of those disappointed. Sources confirm that the highest number of handsets sold by Airtel was in Delhi, whereas Mumbai proved luckier for Vodafone on the first day of its launch. Airtel sold around 200 handsets in Delhi and Vodafone around 250 in Mumbai on the first day itself. But these numbers aren’t by any means symbolic of a box-office hit! However, Apple has shown that it is willing to allow a lowering of price to boost demand, a glimpse of which was first seen with Vodafone slashing the price by Rs.1,500 already. A telecom analyst also opined on conditions of anonymity that, “Huge price-cuts can be expected in the coming 3 months as I don’t see iPhone capturing a really huge market share in India at the current pricing levels.”

Moreover, with the iPhone 2G already available in the Indian grey market for around Rs.20,000, the 3G enabled new iPhone’s 3G feature is rendered worthless in India. Vodafone and Airtel are also trying to save the day for Apple as they’re offering a free downloading pack along with the iPhone for the initial time-period. But don’t be surprised if the download happens at a dead pace as the user will be on a 2G network! Further on, absence of user-friendly blue-tooth, absence of zoom & flash feature et al, makes iPhone far less than the gadget that India most desires at a Rs.30,000+ range. And talking about the party, Steve Jobs (Apple’s CEO) was nowhere to be seen in India! Maybe he’s just avoiding those angry stares (he knew about it, didn’t he?). And as for Sanjay Gupta, CMO, Bharti Airtel Ltd. (who owns a Blackberry), he’s willing to wait for his first iPhone. “I will switch over to iPhone once all my customers are serviced...” Hopefully, Sanjay will get his iPhone soon.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
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IIPM, GURGAON
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When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...