Global trading has been a way of life for hundreds, if not thousands of years, but it is only recently that the environmental and social implications of global sourcing decisions are being taken more seriously
 
Global trading has been a way of life for hundreds, if not thousands of years, documented by legendary tales like the travels of the explorer Marco Polo or the Silk Road, one of the world’s oldest and historically important trade routes. However, the scale and pace of change of global trade has changed dramatically in the last half century. Figures from the World Trade Organisation (WTO) show that since 1950, world trade in manufactured products has increased 50-fold, reaching a total of $10,500 billion in 2008. If commodities such as fuels, minerals and agricultural products are included, the total trade figure exceeds $15,000 billion.

Trends in global trading are the result of independent decisions taken by businesses around the world looking for sources of competitive advantage. However, these decisions have consequences, not just hidden costs but sustainability implications, which are often unaccounted for. A recent study conducted by Cranfield aimed to address this problem by looking at how companies make global sourcing decisions and how they analyse the costs, risks and sustainability implications of such decisions. The study included 15 case studies from seven different industries which included: retail, electronics, aerospace, fashion, mechanical equipment, oil & gas. The case studies allowed us to look in-depth at the processes used by organisations when conducting sourcing decisions, and allowed a comparison of the practices in different industries to be made.

It was clear from the research that in most cases the primary motivation for global sourcing was to reduce costs by relocating production to low labour cost countries. However, the definition of ‘cost’ was somewhat limited – often only including the purchase price, transportation and customs duties. The use of the ‘Total Cost of Ownership’ (TCO) concept whereby all supply chain costs, risk costs and transaction costs are included was conspicuous by its absence. Even more evident was the lack of consideration of the impact that global sourcing might have on greenhouse gas emissions and on social issues such as child labour, working conditions and living wages. This blinkered and short-term view is also at odds with the concept of sustainability which is defined as the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.

It is almost always the case that global sourcing will result in longer pipelines than the local or regional equivalent. Apart from the cost of financing the additional inventory that extended pipelines require, the likelihood of disruptions to the flow is increased. It is paradoxical that in an era of ‘just-in-time’ the typical lead-times for re-ordering and replenishment of goods and materials have increased as a result of global sourcing. In light of this, it is perhaps surprising that the use of formal supply chain risk management procedures in the context of global sourcing decisions is not the norm. Our research identified that more often than not, the potential impact of sourcing decisions on supply chain continuity is not formally considered.

Growth in global trade and the associated increase in transportation is contributing to higher emissions of greenhouse gases, particularly carbon dioxide. Alarmingly few organisations participating in the study had a clear understanding of the environmental implications of their decisions. However, it was evident that awareness of environmental issues was increasing and that companies were putting more time and resources into understanding and managing the environmental impact of their operations
 
There is now a growing realisation that in the not-too-distant future, organisations and even individuals will probably have to pay for the carbon impact of their activities. For the business sector, this penalty may take the form of taxes, levies or the capping of allowable emissions under carbon trading regimes. These additional costs could bring the commercial viability of their operations into question. For any organisation, it is not just the carbon impact of its in-house activities that needs to be understood but rather the total carbon effect of its wider supply chain.

With the current trend to off-shore sourcing continuing rapidly, the implications for total carbon impact are significant. To understand the true carbon footprint of a supply chain for any product requires the ability to conduct a ‘through life’ analysis of the emissions generated from cradle to grave. What is the total environmental cost from raw material sourcing through manufacturing and distribution to consumption and disposal?

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Source : IIPM Editorial, 2013

An Initiative of IIPMMalay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Although annual enrolments in higher education have grown steadily at 6.3% over the last decade, the GER (Gross Enrolment Ratio is a statistical measure used by the United Nations to measure education index of a nation) in India still stands at 12.4%, way below the global average of 26% and pathetically low when compared to an average of 36.5% for developing countries. Even the Human Development Index for the year 2011 ranked India at 134, one of the lowest among the League of Nations. This clearly indicates that India requires more institutions to address the issue of accessibility, which is only possible if government encourages entrepreneurs to set up private colleges and universities.

The good news is that, according to a recent report (Private Universities in India: An Investment in National Development) by management consulting group Parthenona, private universities in the country have more than doubled in the last six years. While the country had 20 private universities prior to 2005, that figure surged to 107 last year. However, the bad news is that India still ranks one of the lowest in terms of number of universities per population. While US has nearly 2,500 universities for a population of about 313 million, India has a little over 350 universities catering to a population of 1.3 billion. Even Germany and UK have over 350 and 125 universities for a population of 80 million and 60 million respectively. Experts estimate that India needs 1,000 universities more and the higher education enrolment ratio to be increased by 20% in the next 10 years, to meet the challenges of country’s development.

This certainly compels the government to make room for non-governmental educational institutions to shoulder this responsibility while, at the same time, increasing its efforts to strengthen and empower the existing universities. And not just government, even educational institutions need to look inward and at the paradigm shifts happening all over the world. Apart from the fact that we are now looking at an increasingly multi-polar global environment and a shift from a single ideology, it is a foregone conclusion that leaders of tomorrow will need a radically different approach as compared to their predecessors. Hence, it is important for educational institutions to realise that they have a critical role to play in building these leaders, and to understand how they can fulfill their role responsibly, as it also links to their own long-term sustainability. Listed below are the “Power Private Universities” and “India’s 25 Most Promising Engineering Colleges” which are imparting high quality education in India. They are providing a professional learning environment that acts as a catalyst not only for the exponential growth of students, but for the country as well.

Methodology:
The Indian Council for Market Research (ICMR) conducted a perception survey to identify Power Private Universities. The survey was conducted amongst education consultants, industry experts and students. The respondents were asked to name and list a few upcoming universities in the country based on course contents, faculty, infrastructure, affiliations and accreditations awarded to them, brand equity and media visibility. Based on these responses, the final list of 15 Power Private Universities was generated.

Apart from Power Private Universities, a separate perception survey was conducted by ICMR amongst engineering students to identify 25 Most Promising Engineering Colleges. Faculty members of esteemed engineering colleges were also interviewed on the parameters of infrastructure, course content and R&D. An overall sample of 250 respondents were covered using a structured questionnaire through telephonic and email techniques. Then, based on the frequency of responses, a list of the 25 Most Promising Engineering Colleges was generated.
 
This year’s survey also included some of India’s most respected industry professionals with wide experience in various sectors and geographies across the globe

Alok Bharadwaj
Senior VP, Canon India

Alok has been the driving force behind sales, marketing, corporate planning & brand building activities of Canon in India for over a decade now. He has successfully led the company towards achieving exponential growth & market leadership in India. At present, he is also the VP of MAIT and a part of the CII’s National Committee for IT & ITeS.
 
Jiby Thomas
Co-founder & VP Marketing, Quickr.com

With a prime focus on developing Internet based transactions for Indian community, Jiby has used his 17 years experience in building a strong e-commerce brand Quikr.com that currently is being accessed by over 25 million users every month.

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Check out 4Ps B&M’s latest ranking of the nation’s best business schools. But first, here’s a summary of our annual survey and ranking methodology
 
The annual 4Ps B&M ranking of India’s best B-schools is based on a national perception survey among students, parents, faculty and industry voices. The survey itself was conducted by ICMR (Indian Council for Market Research) in two distinct phases:

THE FIRST PHASE: In the first phase of the survey, ICMR generated a list of 500 B-schools across India. The list was prepared based on a secondary study conducted by ICMR. The 500 B-schools were then divided as per geographical zones, i.e. North, South, East and West. (Institutes offering only 1 year certified courses have not been covered under the purview of the survey). The list was then circulated amongst a select set of 25 B-schools professors (having work/industry experience of at least 5 years) to name “India’s Cult Status B-schools.” A list of the top 30 B-schools named by these 25 B-school professors (based on the frequency of responses) was generated.

SECOND PHASE: In this phase each of the 30 B-schools were further scrutinized based on the following parameters:
•    Global Exposure: Student/faculty exchange programs, global linkages, et al;
•    Fun Factor: Debates, quizzes and other management based curricular activities
•    Course Contents: Number of subjects/papers, upgradation of syllabus, et al
•    Faculty: Student/faculty ratio, ratio of permanent/visiting faculty, faculty with relevant industry experience, et al
•    Infrastructure: Campus area/location, number of classrooms, library, wi-fi campus, laptop facilities, cafeteria, et al
•    Personality Development: The school’s focus on overall personality development, role plays, enhancing communication skills, et al
•    Student Profiles/Admissions: Student qualification, background, age distribution, et al
•    Research and Writings: Internal journals published, newsletters/magazines/books published, faculty contribution
•    Industry Interface: Number of Management Development Programmes/ Executive Development Programmes/seminars, joint corporate training workshops, projects undertaken with corporations, et al
•    Placement and Packages: Number of students placed each year, domestic vs. international placements, maximum salary, number of companies hiring – both domestic and international – campus visiting by industry luminaries, et al;
•    Alumni: Alumni profile/strength, alumni meets, career paths taken up by the alumni, depth of alumni network and other alumni association, et al
•    Parental Perspective: Parental perspectives on respective B-schools
 
The respondents for the parameters given above were students, faculty members, parents and corporate executives, primarily from the HR departments (as they recruit and interact most with B-school graduates) and CMOs (Chief Marketing Officers). The parameters were divided among respondents on the basis of relevance. However, the ratings for parameters of infrastructure and faculty were collected both from students and faculty members.

The sample size of students interviewed pan-India was around 800. Students covered under the purview of the study were primarily current management students and management graduates. Faculty members of esteemed organisations such as IMT (Ghaziabad), IIT-D (Delhi), IIFT and others were interviewed on the parameters of Faculty, Infrastructure, Course Content and Research and Writings. Apart from this, ICMR also conducted interviews with the corporate HR & CMO fraternity to gain inputs on the parameters of Industry Interface, Placement & Packages and Alumni. The industry/HR professionals and CMOs covered under the research were from well known organisations in the industries of banking & financial services, automobiles, telecom, retail, information technology, consulting and various others.

Each of the above mentioned respondent groups were asked to rate the top 30 B-schools on respective parameters on a scale of 1-10 (1 being the worst & 10 being the best). The final ranking is based on the cumulative mean score on each of the parameters. However, since the parameters of faculty & infrastructure were both rated by students & faculty members, we have shown the cumulative scores. The parameter of parental perspective was rated by parents of students who have pursued or are currently pursuing a management course.

A separate perception survey was conducted by ICMR among management students to identify the Power B-schools apart from the Cult Status B-schools as mentioned above. Students were shown a list of 100 B-schools (excluding the top 30 Cult Status B-schools as ranked in the following pages) and were then asked to name their most preferred B-schools.

The students sampled were also asked to rate the business schools named by them on a scale of 1-5 (1 being the worst and 5 being the best). Based on the overall perception scores that ICMR generated (the median score being 3 on the Likert Scale), the ranking of 70 Power B-schools in India was obtained (see page 100).

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Product and Brand Clutter is Forcing Auto Companies to Rethink Marketing Strategies

The indian passenger car market has visibly reached a stage of perpetual flux for both sellers and buyers. 4Ps B&M elaborates on the key marketing trends set to shape the future of indian highways


In one of the first few marketing campaigns of significance in the history of the Indian automobile industry, Maruti Suzuki tried to position Omni as a passenger vehicle. Executed by Hindustan Thompson (now JWT) in 1989, the campaign – which was shot in Maruti’s factory premises in Gurgaon and featured the then renowned model Malvika Tiwari – focused only on the print media. The company found that the looks and size of the product were giving it a rather commercial appeal and hence, decided to come up with this campaign. However, many in the industry opposed the idea of a marketing campaign, as there was no real competitor for the company then.

With over 19 passenger vehicle manufacturers operating in the country today offering over 135 products to the Indian consumer, the industry has transformed both in terms of volumes and stature. The competition has increased by manifolds compared to the days when Maruti 800 was the only practical choice available to the consumer. Just three years back in 2008-09, Maruti Suzuki held over 52% share. But its market share has since come down to 42% in the passenger car segment. Players like Ford, Volkswagen, GM, Nissan, Renault, Honda and Toyota have launched a muliti-pronged attack on Maruti’s bread-and-butter small car segment in the recent past. Last year’s SIAM report also reveals that market share of small cars was 47% of the total market in 2011; making it the first year when small cars accounted for less than 50% of total passenger car sales; showing the extent to which market dynamics have shifted.

The new players have already announced their bullish plans for the Indian market, hinting towards the intense dogfight for market share that will be seen in coming times. This is reflecting in advertising spends as well. As per the Adex report for January-September 2011, the automobile sector was the sixth largest spender on TV advertising with a 4% market share and cars were the fifth largest product category with a 2% market share. As far as print is concerned, the segment grew by 36% during January-September 2011. Cars ruled the charts as compared to other product categories in the industry with 67% market share followed by two-wheelers with 13% market share.

While the 1980s didn’t need marketing, the current decade demands that players not only have a marketing strategy, but also keep it sharply focussed with the customers and the competition in mind. Otherwise, the margins for error are lower than ever before and one can easily get caught in the great Indian traffic jam – that is, in a clutter where prospects for growth are seriously compromised. 4Ps B&M analyses some contemporary out-of-the-box innovations by Indian auto majors and why the new paradigms being witnessed are set to reshape auto marketing in the years to come.
 
Experience Counts

Over the past few years, the ways to communicate with the consumer have changed. With new channels like social media and experiential marketing, automakers are trying to make the consumer experience more engaging and interactive to build a stronger brand connect, rather than going for just plain vanilla TVCs and print advertising. “Usage of such platforms makes the consumer experience with the brand more engaging and interesting. The Ford stall at the Auto Expo used various interactive applications to create an impact, which is remembered by the consumer,” affirms Michael Boneham, Managing Director, Ford India. These efforts were visible during the recent Auto Expo. Apart from Ford, Mahindra, Hyundai, Maruti, Land Rover and Renault among others also used experiential media integrated with social media at the event with a view to build a strong connect with the consumer. “The idea of executing a successful experiential marketing campaign is to make the experience of the consumer more engaging and at the same time, ensuring that the message of the brand doesn’t gets diluted,” adds Marc Barrett, CEO – Asia Pacific, Imagination, an agency that has created experiential campaigns for companies like Ford, Land Rover and Renault in the recent past. Players like Maruti Suzuki, Hyundai and Volkswagen are spending 8-10% of their marketing budgets on digital media alone and are looking for newer and better ways to engage. “Each and every market is unique in its very own way and India is no less. In fact, the ways to communicate with consumers change with the media consumption pattern of every market apart from many other things. For instance, Indian consumers are very much available on mobile and the market is way ahead as compared to many markets in terms of mobile penetration,” says Christopher Dahlin, Director-Marketing, Volvo Car Corporation.

It is not only digital, which is changing. Even traditional mediums like TV, print and OOH are witnessing a change in the kind of advertising being done. Volkswagen’s roadblock in the Times of India, the speaking newspaper, Polo cut and other clutter-breaking campaigns have pushed up brand engagement to impressive levels in a short span of time. The ‘Swap your drive’ campaign from Ford India is another brave campaign, which encouraged Indian customers to swap their car for a Ford car for a week and then give detailed feedback on their experience with the car. Companies are willing to take the unconventional routes more often than not. “Our marketing strategy is very different. We make a nation-wide impact via print and then go selective on the TV part complemented by OOH and digital. Our marketing budgets are not huge, although they look like they are. We are not even in the top 10 spenders from the automobile category,” clarifies Lutz Kothe, Head – Marketing, Volkswagen Group Sales. There is a clear need to refine strategies for product launches too. Normally, awareness and recall is at its peak during the launch phase of the product. But it goes down with the falling interest of the consumer. Rather than focusing only on the short span in the pre and post launch period, auto marketers are ensuring that media spends are evenly distributed over a long period of time towards different channels to ensure high recalls & sales. Ford has been adopting this approach of late globally and the results have even surprised their top brass.

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An Initiative of IIPMMalay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Another round of comparative ads is on, this time between media giants. Does this oft deployed tactic actually work in favour of brands?

Another classic, no holds barred battle is brewing in the advertising space, where hitting ‘below the belt’ becomes a question of tactical, rather than ethical relevance. The battle is being fought for supremacy over the Chennai market, and the opponents are India’s leading newspaper brands – The Hindu and the Times of India. In an attempt to garner attention and awareness for its 4-year old Chennai edition, Times of India delivered the initial blow. Going by the Times of India’s advertisement in question, the people of Chennai are subscribing to a newspaper that is so dull and boring that it makes you go to sleep, as depicted by the sleeping man amidst the slow moving police drill or atop the political cavalcade. The attack, it seems, hit The Hindu where it hurt, and the latter responded in kind. Its campaign, which runs across print and television mediums, attempts to highlight the lack of awareness of its rival newspaper’s readers by showing various clips where the rival newspaper’s readers are asked quite simple general knowledge questions – none evidently is able to answer. Though the ad does not openly point out the giant, the silent mouthing by the featured individuals of their choice of newspaper makes the elephant in the room quite visible.

The country has been witness to numerous comparative ads over time, and undoubtedly, these ads are often fun to watch for viewers. But does directly targeting competition help you or leave you ill disposed?

In December 2006, the New Yorker quoted a 40 year study that documented that 66% of companies which placed more emphasis on defeating competition and getting market share than primarily on increasing profits, went out of business. A much cited analysis (on data spanning 45 years) by Dr. J. Scott Armstrong (Wharton) and Dr. Fred Collopy (Case Western) concluded that “firms should focus on profits, and not competition.” Even the classic Blue Ocean strategy authors Drs. C. Kim and R. Mauborgne of INSEAD repeat the rhetorical, yet powerful statements: “Stop benchmarking the competition”; “Turn your attention away from competitors”.

But what about our Indian markets then? P. S. Mann, Creative Director, RKS BBDO, feels targeting your competitor doesn’t work. According to him, consumers are more intelligent than they are perceived to be and therefore they do not base their buying decisions based on what they see in advertisements. He believes that even if the competing brand gets a negative image, the publicity won is enormous. Mohit Ganju, CMO, IndusInd bank, feels that comparative ads do not benefit anyone since they leave the customer confused, and while these ads create a lot of buzz, the noise surrounding them stops customers from taking a final decision.
 
When talking of comparative ads, the cola brands cannot escape mention. Pepsi and Coca-Cola are up there among the leading brands that made this concept popular in the Indian advertising world. Thums Up vs. Pepsi (Akshay Kumar’s car accident ad and the followup spoofs, 2008) and Sprite vs. Mountain Dew (The Do jhaadhi ke peeche spoof of Sprite, 2007) are popular in marketing folklore. So intense has been their battle that it even reached judiciary, when Pepsi took Coca Cola to court over their spoof where cricketers portrayed in a Pepsi ad were called monkeys (‘Don’t be a bandar, drink the thunder’ went the punchline). One problem with comparative ads is that they prove to be a whirlpool-like trap; where once a brand starts to fight, it has to deliver blow after blow when the opponent responds, or else accept defeat. Therefore they often turn out to be highly expensive ventures and should be undertaken by brands with fairly deep pockets. Moreover, some battles are inconsequential, whereas others have winners and losers. The Candico Mint-O campaign that positioned itself as ‘All mint, No hole’ to counter Polo’s ‘Mint with the hole’ campaign, was a brilliant concept. But the company could not sustain the brand for long and Mint-O finally was sold off to ITC.

A case in point when it comes to such campaigns going overboard is the billboard war between Audi and BMW, which began with Audi displaying its vehicle with a confronting statement saying, “Your Move, BMW”. It was followed by BMW putting up a billboard next to Audi’s saying, “Checkmate” with its car below it. Audi, not accepting defeat, replied by putting yet another billboard next to the two previous ones, with the statement - “Your pawn is no match for our king”. Below it was the photograph of its concept car. Heights were reached when BMW, not finding any more billboards to buy, brought in its inflated air balloon to place above the existing billboards, with the statement, “Game over”, above the picture of it’s F1 sports car. That marked the end of this battle, but the war wages on to this date.

This may be short if one goes by the standards of some other landmark campaigns. One of the longest running series has been the Mac vs. PC ads, where Apple continuously and openly derided Microsoft’s successive operating systems and the brand Microsoft was represented by a guy who looked like a far bulkier looking version of Bill Gates. While Microsoft kept responding to the campaign with ads of its own, Apple ran 66 ads between 2006 and 2010, and a general consensus is that Apple gained much more in comparison.

Something similar seems to be taking place in the current battle, with TOI coming out with a new advertisement, in response to (The) Hindu’s campaign that says, “Congratulating the competition for finally waking up to the Times of India”. Clearly, the brand recall is up for both brands in the fray – this very article being evidence enough of that. Yet, should not these giants give at least a considerate ear to international research that forecasts negative returns for companies focused on anti-competitive marketing? Well, before you say yes, the fact also is that Indian markets are quite unique and need not behave critically like their Western counterparts. The Indian consumer purchases products based on quite uniquely different parameters and that may well work for such anti-competition marketing campaigns. We’ll keep watching, and reporting (and by the way, did you hear about how our chief competitor A_ Age goofed up on its statistics big time?).

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Source : IIPM Editorial, 2012

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Ferzad Palia, Senior Vice-President & General Manager – English Entertain-ment, Viacom18 talks about the group’s new venture comedy central

Expanding Viacom18’s English entertainment portfolio, the group is bringing popular foreign comedy channel Comedy Central to India, of course with a promise to spice it up with some local flavour. On this occasion Ferzad Palia shares some insides of Comedy Central with 4Ps B&M and explains how Viacom18 plans to maintain its leadership in the Indian entertainment industry.


A large part of Indian audience base still enjoy watching Hindi comedy shows. What prompted you to bring a full-fledged English comedy channel to this market?

We realised that there is a large chunk of urban audience who want to see more evolved comedy shows and were reaching out to various platforms to find it. With Comedy Central India we bring world’s biggest 24-hours comedy channel to India. We did an extensive research with an agency and found out that the urban audience who is under so much stress needs something that offers a genuine laugh and that is the philosophy of Comedy Central – Laugh it Off ! We want to offer them simple laugh, even if they do not know what the serial is all about, they are going to laugh. We tested the shows, the concepts and it turned out to be very positive for us. Our idea is to deliver clever and disruptive content to our viewers; titles that have been handpicked from across the globe, especially for India. We are showing mix of all genres ranging from sitcoms to sketch comedy, British comedy, stand-ups and gags, among others.

It is interesting to see these days that a lot of focus is given on promotional activities. How significant is this factor for a new channel like Comedy Central, or for other channels under Viacom 18?

We believe in creating brands and not just channels. If you talk about MTV or VH1, the channel and all its programmes today are brands that have a certain value attached to it. Yes, the first and foremost thing with Comedy Central is its channel, but we do not want to be bound in its limitations. Here, we would be doing a lot of merchandise activities, something to do with the characters and taking them everywhere, we would be exploring the whole gamut of comedy. There are a lot of LIVE events in the pipeline too. Through these we are providing a stage for Indian artists who want to groom their talent in English comedy. You can say we are leaving no stone unturned to establish Comedy Central as a ‘brand’.

What would you cite as the biggest USP of the channel? How are you going to differentiate your channel from others in the same block?
The fact that we bring some of the world’s best all time comedy shows to one channel is the biggest USP of Comedy Central. Shows like The Daily Show with Jon Stewart, South Park, Saturday Night Live, 30 Rock, The Office, Seinfeld, The Wonder Years and That 70s Show are shows people yearn to see. We have also added Indian colours to the channel with shows like Kumar’s at 44. The biggest difference that sets us apart from Hindi programmes is the language and both formats have their own share of viewers. Our 80-85% of the target audience lives in the metros who fondly watches English comedy. So I would say we already have a distinguished audience for the channel. And since, it is a 24-hour comedy channel, one doesn’t have to wait for a particular time slot; whenever you put on Comedy Central you know you are up for a laughing session.
 
A lot of media houses are feeling the brunt of an erratic global market. How has it influenced Viacom18’s business?
Not much. All all our channels have performed well and businesses in 2011 have been above expectation. I can say that we have not faced a bad time like many other channels. All our brands are in the leadership position, be it in the General entertainment or English segment. And we expect to maintain the supremacy in the coming years too. All Viacom18 channels in India are doing extremely well and we’re confident that Comedy Central too will carve out its own space within no time.

Beside the conventional platforms for marketing, what different strategies are you planning for Comedy Central? What are your plans with regards to distribution?

We are doing massive through-the-line marketing across TV, print, outdoor, radio and digital. Our plan will involve strategic partnerships with lifestyle touch points, the target audience frequents like coffee chains, theatres, clubs, gyms, salons, shopping destinations and other hangouts. A lot of focus will be given on Below-the-Line activities. You will get to see us at unusual places, where channels do not opt to reach out to their target groups. For example, one can see Comedy Central at a chemist store or on a doctor’s prescription pad. We are saying look at the funny side of life. There are so many upsetting and annoying things happening around, so we suggest switch on Comedy Central and laugh it off. Social media is another space we are widely exploring. A large number of our target audience is active social networking site users, so it is important for us to have presence on Facebook and Twitter.

The distribution side is very well taken care of. We are available in approximately 20 million households in seven metros – Delhi, Mumbai, Kolkata, Bangalore, Hyderabad, Pune and Ahmedabad through digital cable, analog and DTH. And this is an adequate number for a kind of channel Comedy Central is.

If we talk about television TRPs and the whole mechanism of it, what according to you are the weaknesses in TAM research?
Well, to answer this candidly, already there has been a lot of discussion where we talked about the relevancy of TAM ratings and its methodology. TAM’s criteria has often been questioned by television fraternity pertaining to where these sets are placed and how such a small number out of millions of households watching television can give us a fair picture of the number one GEC or news channel. But then I would say there is no point in taking digs at the mechanism of TAM because TAM’s weekly result is the only medium for us to know the trend. So, it does show an overall trend going on television across various genres and it definitely helps in gauging audiences’ mood and sentiment. Since, it is the only system available for us to know a broad trend and details of viewers’ likes and dislikes, talking about TAM’s mechanism often becomes redundant and we largely believe that the TAM’s result are credible.

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An Initiative of IIPMMalay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Since expanding its footprint globally, the Italian coffee retailer has been making big investments in India and is opening a new line of coffee stores.

From Barista to Lavazza India, your operations in India have gone through quite a few changes. How do you see the brand evolving in the days ahead?

The way we have envisaged our business model is different from the traditional café management. We have introduced shops which are franchise-owned or managed directly by us. Lavazza entered India in 2007 when it acquired Barista (based in Bangalore), and Fresh & HonestCafée Ltd (based in Chennai). Over the past four years Lavazza has been in the process of consolidating its business. Also, we aim to further enhance our share in the dynamic Indian coffee market. Today, the Lavazza logo is present on all the three brands (Barista Lavazza, Fresh & Honest, Lavazza Espression) owned by the company.

Lavazza Espression is a completely new chain you’ve started. What’s the idea behind its launch, considering you already own Barista Lavazza, which you could have extended?

If you look at our Italian model, we never felt the need for a proper coffee chain. In Italy, Lavazza is mainly served in bars. But outside of Italy, the tradition of coffee drinking is totally different. So we felt the need to showcase our products and offer international consumers a standard experience of Lavazza in terms of environment, menu and products. Lavazza Espression is targeted towards those who like to experiment with new tastes, and share an affinity for the European way of life. Starting in 2007, we now have over 30 Lavazza Espression stores internationally, in cities like Barcelona, Turin, Dublin, London, Shanghai, Beijing, New Delhi, Chicago et al. We have opened our first Lavazza Espression shop in New Delhi, and plan to cover all the key metros in the next 12-18 months. Espression’s USP lies in innovation in the product’s offer and its original creative environment, marked by exclusive and very modern design.

What is your overall investment in the Indian market?
Since 2007 when we started in India, we have invested close to Rs. 600 crore in acquisition of Fresh & Honest and Barista. A large part of that money will also be invested in a new factory we are setting up in 7-8 months time on the Andhra Pradesh-Tamil Nadu border in Sri City, for producing roasted coffee.

Starbucks will soon launch its operations in India? Is that the reason for your new international chain?
We have an advantage over Starbucks in terms of making our first move in India in 2007. So we are no longer a newcomer to this market. Espression would have come here anyway, regardless of Starbucks coming here or not. Competition will only help the coffee culture grow in India. The market potential is huge and still very much open. Just to give you a perspective, in India the per-capita consumption of coffee is just 60 grams, while it is 5 kg in Italy, and the ratio between coffee and tea consumption is 1:7. So there’s huge growth potential.

Where do you place yourself in terms of increased competition in this space?
Right now CCD is the biggest player, and anyone who comes to India will have to face them. But we are not fighting any battle right now. We are positioned in a different space, we are not interested in numbers like opening 3,000 coffee stores around the country. For us coffee shops are a way to reach consumers. We are not dependant on it for business. Like CCD, Starbucks are the masters of coffee shops worldwide, they stand for the coffee shop business. For us it’s different, our focus is more on the retail side of the coffee business.

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

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Café coffee day, the 1,200-strong largest Café chain in India is targeting the youth segment and growing the market in the north to expand its business.

Though café culture is slowly catching on, coffee consumption is still very low in India in comparison to tea intake. What are you doing to promote it?
Cafés are acting as facilitators for coffee consumption. We are trying to ensure a good experience for our consumers, which they can take home, and that is how café culture will grow. If they don’t like the experience they are not going to take it home, and that’s where we are focusing on with our more than 1,200 cafés. Through the cafés we are trying to promote a coffee-drinking culture among people who are young at heart, and like to experiment with their tastes. We are also the second-largest exporter of coffee from India, which is the fifth-largest coffee producer in the world. So this whole ecosystem we have created over the years is what will perpetuate café culture in the country.

What’s the marketing strategy you are following to woo consumers and promote your Café Coffee Day chain?

We are the largest aggregators of youth in the country. We don’t do TV or press ads. Our 1,200 cafés are our billboards, and the biggest communicators of our USP. Besides, we use the digital medium aggressively to reach out to our target audience, which is the youth. We have a big presence in social media with over 1.1 million fans on Facebook. The residence time per person in our cafés is about 45 minutes to an hour. So during that time there’s also an opportunity to communicate with them subtly. The look and feel of the place, the service that you offer, the ambience, those are the things we use to communicate what CCD stands for.

What coffee-related products you offer to create the right environment?
In coffee we have premium offerings like French Press. And then we have lots of coffee powders. One that we have recently launched, about seven months ago, is called Drizzle. Here you have to just pour hot water over the coffee powder to prepare it, and it’s quite close to instant coffee.

Starbucks has announced plans to launch its India operations, Lavazza and Costa Coffee are getting aggressive by the day. How does CCD react to this growing competition?

Yes, there will be competition. But the Indian market is big, with a lot of untapped opportunities still. We would like the industry to grow and more players will help achieve that. Competition will create new benchmarks, and there will probably be new learnings for us. So far, most industry benchmarks have been set by us.

As in-home coffee consumption grows, that will be a big market to tap. What are your plans to boost retail of roasted coffee and beans?

We have been growing coffee since 1860. Our coffee is entirely grown in our fields. Some of the best people in the coffee industry are working with us. So we have the expertise in that space as well. As far as the growth strategy is concerned, there are two areas in India to look at. One is the coffee-shadow region, which is North India, and the coffee-strong region in the South. In the coffee-shadow region we are trying to promote coffee culture through our cafés and vending machines, which are driving out-of-home consumption. Besides, we have another subsidiary – Fresh & Ground – which looks after the retailing business of coffee beans. The major retailing market exists in the South, where in-house coffee consumption is high. As in the South, we hope that in-house coffee consumption will grow in the North in the future. And then we will have a strong retail opportunity there as well.

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

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What is the general scenario with respect to succession planning in the advertising industry?
It depends upon individual agencies. The truth is that the advertising and marketing environment is changing rapidly. So frankly, one can plan three years ahead. Anything beyond that is probably not practical. If you look at major global networks, there is a huge question mark on how the industry will evolve. Should the new chairman be from the traditional advertising space? Should he be from digital space? Should he have certain special skills? Or should we look for someone who just has damn good management talent? Therefore, because of the rapid change in the media environment, for anybody to be able to forecast the width of exact skill sets that would be needed for the next line of leadership is a challenge. Even if you look like a company like Pepsi which has a very strong management bench, they’ve revealed that they are looking for someone from a totally unrelated industry. Having said that, succession planning is important. One should certainly have a plan with an understanding of where the environment is headed. It is important to have contenders for succession. It’s fluid who will succeed Sir Martin Sorrell at WPP. It’s fluid who will replace Maurice Levy at Publicis. And that just reflects into structures.

Do you think this sort of a scenario is justifiable or should there be much more planning going into it?
In a stable environment, you work with firm plans. In fluid environments, you work with scenarios. And clearly, today we’re working in a fluid environment. Look at the amount of change that has happened over the last five years. We couldn’t have forecasted the magnitude of change that was about to come. Each one of us does our best to forecast it. But we realise that beyond three years, such forecasting isn’t very productive.

Does such an environment create a kind of uncertainty for people who have been loyal to a particular agency and have been expecting to end up at the top?
No. It rather creates opportunities. The only thing is the possibility of future shocks. Now the future shock is here and that fundamentally changes the nature of how you manage people and how you plan for them.

So if a top executive quits from an agency, do you think there is ample talent to replace him?
I think so. The talent might not have been life long at that ad agency. He might not be the senior most person, but is definitely a person who is more suited for the job.
 
The quality of people coming in to the advertising industry has dramatically changed over time. The level of commitment is not the same as it used to be. Do you think this is true? If yes, what impact has it had on succession planning?
A number of changes have taken place. What has happened is that as I said, the media environment has become a lot more complex. So if you look at a CEO of what has now become a brand agency, if he had very strong training in building brands and particularly training in building brands through TVCs and good team management skills, I think he would be a prime candidate for an ad agency. Today, when agencies are searching for how to provide services full circle to the clients, it is not that clear that the guy who has managed to build brands through television advertising is the right candidate to handle the width of such responsibilities. The compensation environment is far less fixed. New skill sets have to be built. So even if you acquire talent in two areas, four other areas are still left. So you need higher management caliber talent.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2012

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

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