Wednesday, April 15, 2009

De- Marketing: Is it similar to Killing your own baby?






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Bharat Mundra IIM Calcutta

De-marketing is all about giving your product a back seat in a certain market where the company doesn't have proper profits,has more costs of manufacturing, demand/supply mismatch or it wants to
launch a new product in the same segment and thus de-popularizes its older products. But what de-marketing sometimes does is, it
creates a negative image in the eyes of the consumer when it tries to sell some new product in the same segment. More things
follow when a company tries and apply de-marketing in its strategies that reflects their overly safe approach in leaving some of the
available business and satisfying its profits rather than maximizing it. It results in a
negative image in the eyes of the share holders too. A close look at the product life
cycle reveals that de-marketing concepts are mostly applied in the maturity stage. Thus we find that our entire endeavor to reach this stage of product life cycle and motive of maximizing the returns to the fullest are
getting restricted by de-marketing. It’s not like killing your own baby, but its much worse than that; It’s killing your grown up kid!

It is more useful in the case when it is not a general de-marketing but segmental de- marketing. So that we can reap good returns
from the introductory and growth stages of the new segments even if we cut down the products in the existing segments. This again needs precision otherwise de-marketing is a
bad decision.

Counterview

Ninad Mande, IIM Bangalore

De-marketing is an attempt aimed at discouraging or limiting the demand of a product or service on a temporary or permanent basis. This often involves altering the marketing mix by raising prices, reducing advertising and promotion or eliminating product benefits. This strategy may be targeting all or a certain set of customers. The ultimate objective of a de-marketing strategy is to ensure that the demand of the product suits the objectives and goals of the company. It is considered to be an integral component of general marketing and needs to be positioned from a very wider prospect instead of a limited point of view. A de-marketing program will prove to be effective only when a large segment of consumers are receptive to such programs and ready to alter their behavior. De-marketing as a strategy strongly emphasizes on decreasing or rationing demand. Philips, Kodak HP, Wilkinson, Nokia etc are some of the companies that used ways of de-marketing for various reasons.
De-marketing, hence, although sounds like killing one’s own baby, is not exactly so. It’s a conscious and well-thought of decision taken by a marketer in order to meet the objective of the organization. It highlights a significant perspective that selling more is not always what one should be looking for and that there can be circumstances when reducing the growth of a product may be profitable when seen in the larger picture.



Indian Wedding: An Opportunity for Marketers!!!




Dilpreet Singh Gandhi , IIM Shillong


An industry, which is pretty recession proof, which gives an ample amount of opportunities to any creative person to let open his wings of imagination, which provides a chance to a shrewd businessman to exploit the huge untapped potential, is none other than the Indian Wedding Industry.
India is a country well known for its festivals, colorful life style and a unique way of celebrating the events. From time immemorial, weddings are sacred ceremonies in the Indian society. Now the importance of these occasions as an industry has up-scaled thanks to the burgeoning spending vis-a-vis its association as a status symbol in the society. Also, situation has come to such an extent that one wants to have a customized marriage i.e. somewhat different from the usual one in terms of decorations, catering, etc. to make it memorable one for all attendees. But the problem is that people are facing time

Wedding Planners
Generally in a wedding only certain aspects -like d├ęcor and catering – are outsourced. Now the time has changed and even the entire event is coordinated and managed by professional service providers i.e. wedding planners.
In simple terms, the main objective of a wedding planner is to remove the headache of bride’s father or his counterpart regarding the wedding arrangement and make it a successful event. Till now untouched, this industry is actually a part of event management industry.
Wedding industry is well established and flourishing in many countries. In India, wedding planner sector is in growth phase. The TIV (Total Industrial Volume) of this industry is about Rs. 1250 billions, and is growing at a stupendous rate of 25¬30% annually.
The work of wedding planners include all the activities related to wedding starting from selecting the venue, arranging for accommodation of guests, transportation, food, lighting, flowers, trousseaus, photography and video making, to even planning for the honeymoon packages for the newly wedded couples. Also some of the players of this field are making theme wedding settings like Japanese, Royal Rajasthani, or Gujarati etc. All these are planned and executed according to the client’s requirement and budget, to provide him maximum satisfaction from the services. Adhering to service compliance builds the promotion vehicle by word of mouth.
Target Market
For any industry to decide its target market, the first principle of marketing is to do a comprehensive market research. In this sector the target segment could be in terms of geographical areas, religions, economic level of your customers, and customized service requirements. Geographical area wise north India and Kolkata are major markets for wedding industry. Planner should be well acquainted with the various rituals and wedding events of the targeted castes and religions.

Nature & Growth of Business
Wedding industry is seasonal in nature. In India, people generally take advice from pundits and priests before taking such an important decision. Hence this industry thrives in certain auspicious months e.g. post October is considered as peak season.
According to Industry Pundits a good wedding in India takes place for about crore and a half, but the average wedding expenses for a middle class family is still about Rs 15 lakhs excluding jewelry. And it lasts for about 2 days to even 15 days.
In rich and powerful families, concept of Big Fat Wedding is in vogue now. Disposable money with these people is increasing, leading towards a desire to do something different in their wedding occasions. Customers not only expect a wedding in a five star hotel but also some unique arrangements. These could be entertainment shows by Bollywood celebs, theme wedding, dresses designed by big names of the fashion field etc.
Starters can initiate their business from any facet of wedding planning may be from bridal consultants, florists, caterers, etc. before entering in a fully fledged way. With experience, this could provide an annual turnover of about 1 crore.

Wedding planners are targeting both the Big Fat weddings and also the middle class in a single go.

Value Proposition
For attracting customers in this field, what could be the value proposition of a planner?
In this sector experience counts more than any professional degree or diploma. Hence planners should have talent, skills, and knowledge about intricacies of tradition. These skills lead to provide an end to end solution to the customers, such that planner becomes like a part of the family during wedding period and the actual host does not feel pain of organizing and can enjoy the event to the fullest.

One more aspect which can fulfill the sustainability objectives of this industry as well as can provide competitive advantage in the market is Green Wedding.
In services industry like this, reputation in the market is of prime importance. One failure could result in negative word of mouth campaign, so the risk management and ability to handle every eventuality are the major tools of a planner.
Importance of professional education might be less here, but it cannot be discarded. In India lack of awareness and unavailability of proper courses in this field makes it unorganised. Some experienced wedding planners have started to provide short term courses; there are short term 3 month certificate

courses in wedding planning by Eventwala -Academy of Event Management and Training, Pune and College of Events & Media (COEM, Pune). These courses can act as an added advantage for the professionals in the wedding planning field.

One more aspect which can fulfill the sustainability objectives of this industry as well as can provide competitive advantage in the market is Green Wedding.
It is a wedding which results in minimal harm to the environment. In December 2001, some people from a nearby village of Dehradun took the initiative of going for green wedding. They followed the concept of “a tree by each bride-and¬groom” to generate awareness and follow their path. This act was insufficient to make people responsible towards environment, but now this concept is gaining ground. Now-a-days sustainability and corporate social responsibility (CSR) are the buzz words in corporate world. Hence green wedding provides a chance to wedding planners to not only fulfill their part of responsibilities towards environment but also make this concept as part of their value proposition to attract big industrialist and politicians as their clients, because the society also expects these public figures to promote sustainability initiatives.

The concept is also making inroads in other countries at a fast pace. In United Kingdom there are some specialist Green Wedding Planners have started operation. The concept of sustainability can be valuable in many ways, like using recycled paper for invitation letter, wearing clothes made of organic cotton and bamboo etc., distributing the excess food in
orphanages, using organic flowers, avoiding use of fire crackers, using cloth napkins rather than that of paper and using bio gas tank to cook food etc. All this will lead to positive impact on environment as well as on society.


Major Players & their Strategies
There is a huge growth potential in this industry, which is attracting many biggies of event management. PDM-WMS (Percept D’Mark), 70 EMG, Touchwood Entertainment and Wizcraft’s wedding management division are some of the major players. Also, UK giant Tania Tapel set up its base in India last year.
These companies have more than ten years of experience in event management but are new in wedding planning e.g. PDM-WMS has organized one of the most talked about marriages of India i.e. of the Saharas’.
All these are leading to new practices in wedding industry. Last year, Ruia’s wedding in Mumbai, showcased events like Dutch circus, a live band, acrobatics and an orchestra for the entertainment of the guests -leading to addition of one more name in the lavish Indian Weddings history. Also this wedding included performance of renowned artists Richard Marx and The Gypsy Kings.

Even Indian companies are making alliances with foreign professional to share expertise. Ferns and Patel, known for its exceptional floral arrangement, tied up with celebrity event designer Preston Bailey. Preston has experience in techniques which have never been used in India like use of theatrical sets, providing a different touch to Indian wedding scenario.

No one can forget the extravaganza of wedding celebrations of Mittals’, Saharas’, Chatwals’ and Bachchans’, boosting the industry and also attracting enthusiastic entrepreneurs to enter in this field.
Emerging media channels like the internet, are also acting as a catalyst for this industry. Wedding planners are attracting customers using informative websites like shadionline.com, weddingsutra.com, bharatmatrimonial.com etc.


Links to other Industries

Wedding Exhibitions & Carnivals:
Celebrating Vivaha is such an exhibition where one can find the latest in this growing wedding and fashion industry. Every year it is held in major cities of the country including Mumbai, Delhi, Kolkata etc. Also there is Bridal Asia, an extravagant fashion wedding exhibition which presents a range of wedding attires for brides and takes place every year in New Delhi.
There are wedding carnivals such as the Great Indian Wedding Carnival, promoted by Leading Jewelers of the World, starting this April in Mumbai and will last for two months.
Wedding Tourism: Indian weddings are known for its grandeur and luxuriousness, which attract non Indians/NRI to plan their wedding in India. This provides a new avenue to many players which are providing information related to wedding tourism on internet and helping customers in booking. Few of these are indianholiday.com, indiatourism.com etc. which highlight the various aspects of Indian wedding like Royal wedding and exotic wedding venues.

Wedding Mall: These malls act as a one stop shop for all the wedding items from invitation cards to honeymoon packages. This concept evolved to provide convenience to customers by avoiding frequent visits to market for wedding shopping. Like in Kolkata there is concept of Shagun Mall. Moreover, the Omaxe group is planning to set up a chain of wedding malls in India.
There are other industries as well which are linked to Indian wedding like hospitality, food, and gold and are positively influenced by the growth in wedding market.


Effect of Recession
Wedding industry is the least affected by recession. Even in some foreign markets, it is able to isolate itself from the recession aftermath. Like in Australia, wedding market remains unaffected. There women prefer to cut on their personal expenses rather than on wedding.
Though in India, some effect can be felt at grass root level; people are trying to save as much money as they can. This has resulted in increased bargaining power of the customers. They are trying to get the same service at the least cost or are ready to do compromise on the quality.
Generally in India, middle class people save throughout their lifetime for their children’s wedding expenses. This in fact nullifies the effect of recessionary period as they have already saved money to spend. Moreover, in a wedding, traditions and customs will remain unchanged; hence people can save some money but can’t avoid the expenses completely. Probably the situation will become clear in the near future when the effect of recession could be quantified appropriately.


Future of Industry
Wedding planners are not just for the upper class people; even the middle class working population is opting for their services. These planners work in backward direction that is first asking the budget from the customer then providing the best services within that budget. This is the main reason that this industry is becoming more acceptable in the society by catering to the requirements of every customer.
Also this industry is acting as an employment generator and the Big Fat weddings are turning this industry more attractive and sustainable. At present, most of the wedding planning businesses are family driven and there are very less professionals involved in it. Largely it is unorganized. In future, this industry is bound to flourish and could attract many management graduates to make this sector professional and organized.
There might be many players entering into this field to make weddings more majestic and eye-catching but at the core, Indian Wedding will always remain traditional.

Rural India Calling



Neeraj Sharma,IIMS

“India is fast emerging on the world map as a strong economy and a global power. The country is going through a phase of rapid development and growth”
These lines from an article made me ponder whether “India”, as quoted, referred to the rural masses as well, or to just the select few echelons of the Indian society.
Once, the Father of the Nation Mahatma Gandhi said -“India lives in its villages”. I also recall some figures here -“Indian economy is predominantly an agrarian economy which employs 65% of the total workforce in the country”. With over 700 million people living in about 638691 villages, the “Rural India” certainly can’t be left out.

Seeking Insurance

Has the recent economic meltdown projected risk and uncertainty in the corporate world only? Or it incorporates the major chunk of India that lives in the villages? The rural mass have always lived under risk and uncertainty, be it the risk of nature’s wrath in the form of a hailstorm or a crop disease or uncertainty in the rains. The uncertainty casted a constant shadow of apprehension of being deprived of reaping the fruits from their sweat sown fields. Despite constant improvements in measures to act as a guard, the risk and uncertainty due to one or the other factor has always been, and, probably shall always be there.

A key ASSOCHAM finding reveals that the Life insurance market in semi-urban and rural territories is expected to rise from less than US$ 5 Billion to US$ 20 Billion in the upcoming 2-3 years. In contrast, inurban zones it is expected to surge to US$ 15 Billion. Similarly, the non-life insurance business in semi-urban and rural regions is expected to reach US$15 Billion by 2010 compared to US$ 10 Billion in the urban areas.

With some positive government policies and a more financially enabled rural India;
Do we see an “Emerging Rural Insurance Market in India”?
Be it LIC, Bajaj Allianz or Max New York Life insurance, their distribution network is being upgraded to reach this market. Adding to this is the fact that 177 RRBs together with 14,150 branches cover 516 districts and about 129,000 rural post offices.

Do we also see a possibility of “Cross ¬Selling” and “Strategic tie-up’s”, tapping the opportunity in this segment?

FMCGs Making Headway
A number of category products have established themselves firmly in the rural households. It is estimated that of the total expenditure on consumer goods in a rural household, approximately 44% is towards food articles such as biscuits, tea, coffee and salt, 20% towards toiletries, 13% towards washing material, 10% towards cosmetics, 4% towards OTC products and 9% towards consumables. It’s not that only local and cheap products are finding a presence, but, branded products from organizations such as HUL, Nirma, Colgate Palmolive, Parle Foods, Nestle etc have carved inroads into the rural markets. Maslow’s theory of “Hierarchy of Needs” is at work. And so are “The Bunty-Babli Syndrome” and “The Dhoni Effect”, as referred by Mr. C.K. Prahlad.

The rural youths are more informed, more aware, better earners compared to their elderly family members and are also open to fresh concepts and ideas. This has augmented the penetration possibility of the FMCG, apparels and consumer durables into the rural households.

A study has revealed the realization of the aspirations of Rural Indians for urban lifestyles as follows:
• Consumer of 53% of FMCG products
• Consumer of 59% of all consumer durables
• Have 60% of Rediffmail signups
• Purchaser of 55% of the policies sold by LIC
• Have 44 million+ Kissan Credit Cards & 42 Million Bank Accounts

They too want Surf and Ariel, Denim and Pond’s Dreamflower Talc, Pantene and Clinic shampoo. The sachet culture has made acquiring quite a few of these all the more convenient.

Do we see a call for FMCG Cos. here?

Reaching out for consumer durables
As per a survey by NCAER, Rural India’s market for consumer durables is estimated at Rs. 4500 crores with an average annual growth rate of 8%. Colour TVs, Refrigerators, Washing Machines, PCs
-once thought to be a characteristic of urban population are making rapid inroads into rural households. There is also a growing demand for 2-in-1 music systems, Fans, sewing machines, Wrist -Watches, Pressure Cooker etc. Growth of LG, Samsung and many more companies is augmented by leveraging this rural India facet. Even the health care industry is not far behind and has already started operations in the rural belts.

Do we see a welcome-note for Consumer Durable Cos here?

On Driver’s Seat
Traditionally restricted to tractors and two-wheelers, rural India is witnessing a shift towards modern four-wheelers. Maruti Suzuki is coming up with rural stations and generating 10 per cent (about 32000 cars) of its domestic sales from rural sales. Be it Maruti’s marketing campaign for rural India “Ghar Ghar Mein Maruti” (Maruti in every Household) or Hyundai’s promotional scheme for Santro -“Ghar Ghar ki Pehchan”(Identifying every Household), providing special schemes for government employees in rural areas and members of gram panchayats, both substantiating the above-referred trend of going rural. But still high investment, lack of finance facility and lack of service network are the hindrances for foray of passenger cars into the countryside. It’s likely that Tata’s Nano – the 1 lakh car would remove the “High Investment” bottleneck. Despite the recent controversy, Satyam has had some laudable initiatives to its credit. For example, last year it created a mobile auto showroom cum service center, which can be taken door-to-door in a bus, called “Edow”. Initiatives such as Edow, equipped with everything an auto dealer needs ( a display area, a workshop, a sales office and systems, hi-tech display systems and high speed connectivity) can certainly overcome major bottlenecks. Even in two wheelers, the penetration in villages is only 10% as compared to 25% in urban areas, leaving ample scope for growth. Hero Honda, the two wheeler market leader, intends to cover 1 lakh villages under its “Har Gaon, Har Aangan” (Every Village, every Household) campaign. Also, Mahindra & Mahindra is being heard of planning to foray into the two-wheeler segment.

Do we see an offer of a lift to Auto companies here?

Technology Touching Lives

Sam Pitroda’s once said: “Technology is for problem solving at personal, community and national levels. It is about doing things differently. It is about change in mindset, processes, products and preferences. Technology is about opportunities and experiences”

IIT Madras has come up with an innovative technology meant towards driving services through Rural Internet Kiosks (@ Rs 55000/Kiosk) and innovative business models such as n¬Logue/Drihtee/e-Chaupal. Apart from income generation and greater awareness and access in terms of education and health, the system is aimed at bringing various services such as financial, markets (Exchanges/Trading), e-Governance, water management, energy, communications and transportation to the rural doorsteps.
Do we see a possibility of Online Marketing and Rural BPOs here?

Mobicom. Calling

Mobile Communication (Mobicom.) -India is experiencing the fastest mobile subscriber growth in the world. The figures say-“80 million mobile subscribers in 2006 to over 300 million subscribers today, adding approximately 10 million every month”.
Government initiatives since National Telecom Policy 1999 have been bringing down the economic burden of taxes and charges on the telecom operators. The call tariffs in India today are one of the lowest in the world and what earlier seemed a remote possibility with wired telecommunication is now becoming a reality. The rural masses are getting connected to the mainstream through the mobile communication network at an unprecedented rate.Further, while TATA Indicom is roping in village panchayats as its distributor, Airtel is providing differential advantages through lower tariffs and value added services.

Can we say now that almost anyone in Rural India can afford it?

The opportunities galore, apart from the aforementioned and much are left to ponder over. But still, can we say that the lines I referred to at the beginning of this article, are also relevant to Mahatma Gandhi’s India, “that lives in villages”.

If the answer is “Yes”, then, are the unaware marketers listening?

SV - Helpage India




Created by : Meridian Communications


Mr. Sanjay Tripathy Executive VP – Marketing, HDFC Standard Life Insurance Co. Ltd.



Mr. Tripathy is endowed with the responsibility of leading the marketing portfolio of country’s one of the most reputed and respected insurance company HDFC Standard Life. Prior to the current engagement he was the Head of Marketing, International Business at Reliance Infocomm. Besides professional commitments, he is an avid traveller. This interview is based on his interaction with Asit Kumar Jain, IIM Shillong.

What do you feel about the effect of current market situation on the insurance industry?
Though the industry is growing at a lesser pace than expected, the need for insurance has increased due to increased uncertainty. ULIPs as a product category has slowed down because of market sentiments but the conventional guaranteed products & term plans have become more relevant in today’s market scenario. Today, we are seeing customers moving away from a scenario of purchasing ULIPs buoyed by the equity movement to a much more need based insurance purchase. The need for life insurance – either protection or saving – is universal, irrespective of market conditions.


The Indian insurance market is mostly unit linked based and companies are propagating the extended benefits instead of the core benefits of insurance. Do you not think that the core benefit is being diluted?
India is basically a savings market with insurance being as high as 17-18% in the overall savings portfolio. Insurance is one of the modes for financial saving / self dependence for self and one’s family members (esp. in his absence) and it gives customers the option of saving for the long term while participating in market linked benefits (i.e. In the case of ULIPs). ULIPs provide customers the option of purchasing transparent products wherein they can actively manage their investments (through fund options) unlike conventional products. Besides insurance companies it propagates the needs of individuals (e.g. our Children’s plan – U.S Scholarship Advertisement / Pension plans – Bicycle advertisement). ULIPs are just means to save for that need without losing out on the market linked benefits. We, as a company also propagates our Term plans e.g. Loan Cover Term Assurance Plan advertisement. Hence, I do not feel that the core benefit is being diluted in any way.
“Emerging channels such as internet, mall-assurance and also the possibility of mobile-assurance might affect the traditional agent network”. Your comments.
Business acquired by the traditional channels i.e. agents still account for a large proportion of overall business (more than 60%) for most of the private insurance players; Banc assurance being the next highest (30-35%) Emerging channels such as internet, mall-assurance have surely become channels for enticing customers, providing them information about products and services but are yet to show large contributions to overall business performance (2-5%). Certain impediments like after sales service, renewal premium collections, repeat purchase, need analysis etc. prove to be deterrents against these channels especially since Indians love to have a human interaction while buying financial products. These emerging channels will surely have their own space in new business acquisition and would always be an addendum to existing channels rather than being a competition to them.


How much do you see the opportunities for insurance industry in the untapped rural and semi urban belts and HDFCSL plans for leveraging it?
India is still an under insured market esp. the rural market. There is an urgent need for educating the rural mass on the importance of Life Insurance. Distribution reach, easy to sell products and building trust & brand equity will be the key to success in these rural markets. We do have our presence in quite a few Tier II and Tier III towns and plan to expand over the next few years. Currently we sell policies among rural customers but it is still on a pilot scale (through different models and for regulatory requirements). Scaling up the rural reach will take time and huge resource requirements esp. For servicing these policies over long periods of time.


Keeping in view the new emerging, educated and service oriented youth market segment, what are the future strategies of HDFCSL to tap that segment?
We strive to make HDFCSL a brand relevant to the target segment. We do this across our communication e.g. The Tulika Sharma – Car advertisement (TVC), Young Executive Plans promotion (online medium), offering products that are need based, relevant to the target segment and reaching out to these customers in the way and at the place they would prefer to buy the policy from i.e. through the use of new & emerging channels e.g. Online buying, telemarketing etc.
"Sar Utha ke Jiyo" campaign is regarded as one of the successful marketing campaigns in the insurance industry. Please share its secret of success which will act as a great learning for us.
‘Sar Utha Ke Jiyo’ has managed to re-define the way life insurance advertising has been done in the past. It has managed to bring a stronger connect and relevance of our category to those individuals who did not see a fit for life insurance in their lives. This core brand thought – Sar Utha Ke Jiyo – was derived at, after extensive research and insight that an individual doesn’t want to be a burden on his family and that he doesn’t want his family to depend on anyone after his death i.e. of ensuring financial independence and self respect for the family, irrespective of the metro-non-metro divide. In order to create and run such successful campaign (consistently) you need to have a strong & dedicated team who are very much aligned to the company’s vision and values and always believe in what they do. Our long term association with our agencies also plays a very important role in achieving this objective.


What is your take on the importance of brand equity in the foundation of a company with respect to HDFCSL?
Brand equity plays a very important role esp. for this category as customers invest their hard earned money over long periods with an organization. Customers need to have the right image and reasoning for considering / preferring your brand over 20 other private life insurance companies. In this regard building a credible Brand Equity for HDFCSL has been easy for us compared to any of the newer players. Its strong parentage i.e. HDFC Ltd. & Standard Life, UK organizations that have build high brand equity for themselves in their own category have surely helped us in this endeavour.
Besides it is also a continuous exercise. You need to keep working hard at sustaining, building it ever further esp. In a market scenario’s such as this downturn and amidst the growing number of competition in the category.


Insurance industry has not been an attractive proposition for IIM graduates looking at the past decadal result. But in the time of turmoil it has been a large head-hunter. How it is going to change the insurance paradigm and the competitiveness as compared to other BFSI's?
Insurance being a growing category there has always been a need for quality workforce; be it at the entry level or at the mid level. Even though it is part of the BFSI category the pay scales in insurance companies are unlike investment banks, MNC banks etc. and hence tend to lose out to these companies in campuses. In the downturn the long term nature and need based products has helped it to remain relevant to customers and is still showing growth compared to the Investment Banks/MNC banks and hence the need for quality workforce still persists. Also the total number of players in the category is still growing (today 21 private players) and another 5-6 are in line for licenses; hence the need for quality workforce will always exist in future as well. What is needed is a change in mindset among IIM graduates. They need to move away from the quick buck syndrome and look at long term career opportunity (growth & development being the key) with an Insurance company while contributing to society (through its noble cause).