Probably, you might have seen couple of headlines in the yesterdays and todays newspapers on the conflict between the views of traditional retail companies and that of online retail companies.
Traditional retail companies’ claim:
The ‘predatory pricing’ followed by e-retailers like Flipkart, Amazon, Snapdeal hurts the traditional brick and mortar retailers. The discounts provided by them are far below the landing price (the minimum price that is offered in retail shops). This has impacted 25-30% of the businesses of traditional retailers and have lost it to e-retailers in last 6 months. This may impact lakhs of jobs in the traditional retail industry.
Traditional retailers are also concerned if the owners of online retailers have funded the sellers to boost the sales. Boosting the traffic on these websites provide e-retailers higher valuation, hence more investments and improving their business.
E-retailer companies’ claim:
E-retailers provide only a ‘marketplace’ where sellers and consumers meet. They provide a website , a portal where the consumers can view the products from sellers and the respective prices from sellers. They do not own inventory or decide the prices for the products.
image courtesy: mytokri.com
Point of view from traditional retailers
E-retailers sell brands indirectly. Once has to be cautious about it. Assume premium products getting sold for low prices in a consistent way, that will impact the brand value.
As per the basic concept of marketing, any business selling at below cost like that of predatory pricing following by e-retailers now is unsustainable. They have to be cautious that such business model will fall down eventually.
Only way traditional retailers can sustain the competition from e-retailers – move to omni-channel capabilities. These days all retailers also have an online portal available. We have also seen signs of some small kirana stores now offering online ordering and delivering facilities.
Point of view from e-retailers:
At the same time, online markets have enabled small sellers, retailers take their products to customers. People living in small towns have access now to the same selection of products as that in metros. E-retailers can reach to larger customer base using a fraction of the capital they would require for traditional retail store. Adding with the low cost of sales and distribution compared to traditional retailers has contributed to higher profits.
E-commerce is not only a meeting place for consumers and sellers. It is also improving the logistic and courier companies, which employ lacks of people.
As per stats, Indian retail market will gear up from current $650 million to $1 trillion by 2020 and there are a lot of opportunities for both offline and online retailing.
Featured Image courtesy :www.business2community.com
Sharing as services
Websites like RelayRides and GetAround, which are peer to peer car rental sites, allow people to hire their neighbours cars for a duration. Unused cars can then be a service that owners get paid for. Here is there is no inventory the website holds or there is no supply chain. It just found the need of the customer and turned into a service. Though the same concept may not apply for our country, but there is a great scope of services one can think on. One of the older services in similar line is Sulekha that provides the details of accommodation.
It is quite evident that people started using Internet for personal use more on smart phones then the PC’s or laptops. All the major companies these days started building customized apps for the users. For example company Uber has a list of chuffer driven cars, the prices are fluctuated based on their availability as demand raises.
Secret behind retailing
In the era of Myntra,Flipkart, and snapdeal, the pressure on retail stores is more. One should create a great experience to the customer when he enters the store. Create embedded screens showing how to wear the trendy clothes, with trendy cominations, instructing videos, how to roll a heavy jacket into a small bag etc..t though the attendant would always be there to assist, this visual experience will make a difference.
Packaging plays an important role in marketing mix, in promotion campaigns, as a pricing criteria and finally in defining the character of new products. All good things come in small packages, but at the same time this art is not simple. In fact in many cases, package is the product itself.
Walter Landor of Landor Associates was one of the first to study and incorporate consumer response into packaging in a scientific way. Walter’s philosophy of ‘the package itself must do the talking’ is a basic idea behind even the modern day brand and packaging design practice. How a soap dispenser or a ketch-up bottle cap works without soiling the nozzle after repeated use, how an egg tray hold eggs without breakage are the kind of things that new technologies and materials have been trying to address.
And these days what happens to the package once the product is taken out of it, is increasingly becoming an important issue for a packaging designer. It also calls for innovation – In some of the laboratories, researchers have created examples like filling an orange membrane with orange juice, a tomato-flavored skin with soup and mini-membranes the size of grapes that are full of wine.
A package tells a story – a story of where the product has come from, who manufactured it, what it is meant to do and by consuming the product what kind of experience a user is going to fell himself/herself and finally what lifestyle statement is the consumer going make.
There are no more good old ideas of putting happy faces on potato chips packs. It is all about triggering emotional connect with the consumer
Facebook is no longer a social media; it’s a mass media. It’s more than likes, fans and followers.
Initially it is about acquiring fans and followers, but later it is about engaging them and turning into customers and finally into loyal customers.
- L’Oreal India has been using social media effectively!! To create advertisement for its premium hair color Casting Crème Gloss, it has created an app in Facebook where customers have to scan a unique code on the product. Then the customer has to upload an image with two of her best friends to get a shot at starring in an ad with Sonam Kapoor.
- One of the top FMCG company found that some fake products are sold on its prestigious brand name. The brand joined Facebook community. Guess what, in no time, the fans have reported 250 locations where the fake products are sold.
- ICICI bank recently launched a Facebook app ‘Pockets’ which enables its customers to carry out some striking banking services on the social media like booking tickets for a group of friends, transferring money to friend, mobile recharge etc.
- Shoppers stop has about 50 lakh fans. On hitting a million like, it ran a coupon offer. Within 2 days 10,000 fans has shopped on various outlets, and resulted in incremental revenues of 2 crore rupees
Social Media helps companies to understand what customers actually need. One the customer likes a page of a company; it shows he likes the brand or product. It is important to make him/her a loyal customer.
Facebook also in interlinked with Twitter, LinkedIn, YouTube, Pinterest etc. For instance Star TV that has 18 million fans and followers ensures that a dynamic response mechanism through tweets (twitter) is followed if there is a concern from its customers.
Starbucks in some areas is offering a gift card “Tweet a Coffee” to a friend by linking the Twitter profile to its own profile
The final goal of any company is to solve the business and marketing challenges through Social media marketing as above. It is all about service and experience!!
Refer to Brand Equity, 4th Dec 2013 for more details
The following review is posted after analyzing Harvard Business Review article “Advertising’s New Medium: Human Experience” from.
Today all the customers are drowning in many messages delivered across media from web, TV, radio, print, and outdoor displays to an increasing number of mobile devices. In the media saturated world, advertising strategies built on persuading through interruption, repetitions are ineffective.
To win customers attention and trust, marketers should think less about what advertising says to its customers, and more about what it does for them.
Author suggests a framework of four spheres – Public, Social, Tribal and Psychological.
All the marketers have placed their ads in one or more of these four spheres but not strategically.
- Public Sphere – Where we move from one place or activity to another – either in physical or in virtual (internet). It is relevant in a context.
- Using Ideal time of customers: Placing ads in baskets to move the laptop bags etc. in airport security check.
- Providing social service less cost (not as CSR)– proving online recharge points with brand endorsed on the trucks
- Social sphere – Where we interact with and relate to one another.
- It should be relevant with the social context
- Ex: Addressing a social need of finding the right present for a friend in Facebook. Walmarts Shopycat does this which was great success in terms of advertising
- Tribal Sphere – Where we connect with groups in order to express our identity.
- This is generally done by Luxury brands
- Ex: Enabling the customers of Manchester to provide stickers for their cars. This also signals that the customer is dedicated to the sports.
- Physiological Sphere: Where we connect the language with specific thoughts and feelings.
- Apple with “Think Different”, Nike with “Just do it”, Staples with “That’s easy”
- Facebook with “Friend”, Twitter with “Follow”
Placing the ads –
- Define the strategy: Is it about awareness or purchasing
- Creating value to customer – Each sphere has its strengths, and emphasis on the advertising.
- Evaluate an expansion strategy –
- Refresh the message
Beating Samsung is not easy. The Koreans have good designs and innovations and solid market knowledge. But by capturing the opportunities ignored by Samsung, Micromax has emerged as a serious challenger in mobile phone market.
Since the first launch in 2008, it has come quite a long way in a successful way. As per records from research companies IDC and CyberMedia, Micromax is the third largest seller in India after Samsung and Nokia.
Initial challenges posed and questions asked – it has no R&D. they eold merely like China phones with cheaper prices, so how can it be a quality product like that of Samsung?
So what made Micromax a success?
The rise of Google’s free Andriod OS was easily the biggest factor in MM success. Though hardware and software are the basic things based on which phone are compared, Android OS Software took the priority for differentiation. Both a 45K and 10K phone has same apps that are running on very similar OS. Nokia and Blackberry greatly lacked in this stream.
Samsung invests billion dollars in R&D and it has to recover the money. It goes for custom processors like Exynos, while MM simply buys Meditek or Snapdragon processors which is evidently the cheaper way. Though one cannot say the MM processors are better than Samsungs but it is never less in performance.
MM buys technology (which is cheaper than creating like Samsung does) which is one generation older. In Mobile phones older means few months old. Hence MM simply provides a phone with few months older hardware and latest software. The price is half that of Samsung’s. So why does people prefer MM?
Great Challenge with Micromax:
- Service is delayed. Its not that Samsungs and Nokias don’t have issues, but they are resolved soom.
Facts about Micromax Numbers:
- Micromax targets one billion dollars in revenue by end of 2013
- 2.5 million handsets is been sold each month
- Australian actor Hugh Jackman’s campaign costs 30 crore rupees.
Facts of Smartphone Industry:
- 18% of Indian mobile phone users are Smartphone users
- India stands 3rd after China and US in Smartphone usage and by next year likely to be the second in the world after China.
- Average smartphone user exchanges his phone every 9 months. He can bear 1.5 times than the previous ones.
Reference – Forbes india
These days most of the company’s advertising campaigns have one “strategy” in common – ‘go green’. Definitely going green is one of the key differentiating factor for any company, but a company should understand what actually “green” is about.
- The grand ideas such as saving the rainforest, or slowing down the melting of polar ice caps can be tagged as green, but it is more important that how a company will connect it to customers, mainly with respect to connecting sustainability with brand equity.
- When a company communicates it sustainability as green it should focus on sustainability, it should focus on it core principle rather than its other issues. Gillette, Pampers and Duracell are changing the way they advertise ‘green’. For example Pampers marketing its dippers saying that absorbency is better, it was chlorine free and perfume free etc.
- Another initiative is by Unilever’s ‘Project Sunlight’. 70% of Unilever’s carbon footprint is related to consumer use. Through films (mainly 4 minute videos) it hopes to spark and motivate consumers to change the way they consume. Though there has been a tough debate on whether this would really work to change the insights of people, the answer is ‘yes’ by many marketing gurus
- In this line, the FMCG giant P&G are putting sustainability at the center of marketing efforts in line with environment, waste and social responsibility.
Is it that the era of Facebook and Twitter is fading out?.. It’s now the time for WhatsApp, WeChat..?
- Facebook is not been used much now as compared to WhatsApp and WeChat
- Active users are more in WhatsApp and WeChat as compared to Facebook and Twitter
- WhatsApp, WeChat provide not just the chatting, but more than that!!
Facebook made an interesting statement this month that there is a decrease in daily users, specifically among teens, it means they are on Facebook, but just not using it as much as they did. As teens are the major target segment in terms of marketing terms, it is point of concern for Facebook.
They are spending much time on apps like WhatsApp, WeChat etc. which means Facebook is becoming a victim of its own success. Facebook has nearly 1.2 billion monthly active users. But the mobile messaging apps such as WhatsApp which emerged later than Facebook is threat to mobile carriers. (refer to my post – “Increase in smartphones impact the revenues of Telecom industry” – http://wp.me/p3YSj6-s) as well as social networking sites now.
WhatsApp, has more than 350 million monthly active users globally which is more than the active users of Twitter of 218 million. Most of the users who use WhatsApp are under 25.Compared to Facebook, WhatsApp provide private chatting with people you are friends with in real life. Instead of passively dangling with people you barely know on Facebook, messaging apps promote dynamic real-time chatting with different groups of real-life friends, real life because to connect with them on these apps you will typically already have their mobile number. One of the greatest advantage on WhatsApp is that one can send pics – “more personal!!”
The main, big reason why teen and young people are inclined towards messaging apps is that many of these apps no longer just for messaging, they provide services beyond games, stickers and music sharing from KakaoTalk (South Korea), WeChat (China) and LINE (Japan). Kik (Canada) and Tango (US) inviting software engineers to create games that run on their apps. In fact app stores such as Google Play and Apple’s App Store take the 30% of profits.
During the recent festive seasons, newspaperwala left a telephone directory instead of newspaper. It was as thick and fat as a telephone directory. When taken a closer look, it was mistaken. It was newspaper itself!! ‘Times Of India’ mentioned right on the masthead, logo of two elephants leaning their heads against a shield.
But the front page showed a youthful Mummy and Daddy, with their two baba log – headline – “SHOPPING MEIN CHANDI HI CHANDI”. What on earth does it mean?.. some code? An encoded report on the latest coalgate scam?…may be..the full story may come in next page..
But in the next page was completely taken up by a huge picture of a cell phone. What is cell phone doing in the second page of newspaper?.. May be Angela Merkel’s complaint about NSA tapping her phone..? Another encoded message..?
It took time to figure out… it is realized that the front page, next page weren’t full of encoded messages, they are uncoded ads.Unfortunately the actual news is published past the Government Tenders page!!
Marketing people say that newspapers cannot survive without ads. But the point of issue now, seems, can newspapers survive without news?!!
Reference: TOI, 8th Nov 2013
- Technology brands like Apple and Google are dominating in Brand Valuation, but cannot stay on top without new innovations and design.
- This list is based on three parameters: economic profit, role of brand and brand strength.
- Personal technology brands like Apple and Google have pushed the leader of the last 13 years, Coca Cola, to No. 3
- Google, Coke and McDonald’s have a brand value higher than brand revenue.
- Apple and Google do two things better than most brands: they are great at design and superb at doing the thinking for the consumer. Their entry into wearable gadgets like watches and glasses will test these strengths.
- In the Indian list, the brand value is significantly lower than brand and business revenue. Brands need focus and consistency. Brand longevity without innovation may lead to brand respect but does not create brand value.
- The top 100 in the list have 55 brands from the US, 9 from Germany, 7 each from Japan and France.
- Nokia is now 59 after being in top five for few years.
- Blackberry if out of 100
- Philips at 40 and Sony at 46
- No Indian Company yet in Top 100 Global List.
- Discussion on Technology brands versus FMCG brands.
- FMCG brands like Coke work on habit, distribution and owning consumer mind space. This combination cannot be copied easily and, hence, brand leaders in FMCG tend to be leaders for decades.
- A good example is Thums Up in India, which survived due to consumer loyalty, even when Coke tried unsuccessfully to kill it. In FMCG, innovation is slow and gradual, unlike in technology where it is disruptive.
- For Technology bands, missing an innovation in technology puts a company back by at least five years. Market shares swing in decimal points or small numbers in FMCGs over a year, while they can swing by more than 10 or 20 points in a few months in technology.
- In the Indian list, the brand value is significantly lower than brand and business revenue in each case. It tells us that a collection of businesses doesn’t make a powerful brand but a collection of brands makes a powerful business.
- We in Indian business value metrics like revenue, profit and market capitalization. Brand value, which is strategic, is common to all three and, hence, worth growing. Indian businesses must spend energy on branding. India is a huge consumer market.
Reference: “Why Indian businesses must spend energy on branding” The Economic Times, 7th November 2013