FMCG Still Strong Amidst Crisis

In the following article I have tried to briefly analyse the Indian Fmcg industry and its growth patterns amidst the ongoing world financial crises. Views are personal.

Going by the current trends in the global economy, every thing seems to be plummeting and all the industries seem to be bearing the brunt of global crisis. However, the only industry which seems to be holding its horses firm and registering growth is the Fmcg industry.

The investor confidence in Fmcg is backed by some very robust principles:

1.)Increasing rural penetration by Fmcg companies which has happened due to creative and innovative ways to reach out to the masses.
2.)Sensible product modifications and category stretching.
3.)Adequate insulation from business cycles, inflatory trends & recession.

Let us look at these principles in detail.

Producers are eyeing the untapped rural market, the so called “bottom of the pyramid” which promises to provide lucrative profits. Apart from the premium products, firms are producing mass products which assure a sizable market. Also there are making their premium products available to the masses in innovative ways.
Sachet Marketing is one such pioneer effort in this context where world class FMCG brands were made affordable for the masses. This not only improved the product penetration but also achieved volumes for the company and made the developing countries prime growth destinations. Amidst intense domestic competition and consumer resistance for bulk packs, sachet marketing highlights that for the MNCs it was important to “unlearn” or “forget traditional approaches” and try micro-selling methods, serving up products, services and loans in small portions and sizes, light versions, or single-use sachets, so that aspiring consumers can afford and get to know and like their brand. Who ever thought that brands like “Garnier” (shampoo) and “Hienz” (Tomato ketchup) would be available at affordable price points and break the sales records of developed markets where the very same brands are sold in bigger, bulk packs.

In consumer goods parlance, `economy pack' has usually referred to larger pack sizes. The economy pack is the marketer's way of rewarding a consumer who buys more of his brand at one go. But the new rage for low-priced sachets in the shampoo market has just reversed this logic. With most shampoo sachets, one saves more if one buys less. As per Asscham, FMCG will be witnessing more than 50% of its growth in the rural and semi-urban segments by 2010. Currently, nearly 34% of the offtake of FMCG companies come form rural areas. In 2008, the rural areas would provide a huge potential. Companies like HUL, ITC and Colgate have already established good distribution networks in these regions. Other companies would start catering to these regions in near future.

Innovative initiatives and programs such as Project Shakti by HUL & e-Choupal by ITC are making way for sustainable long term development and demand. With managers adopting creative and unique ways to lure the customers the growth in rural penetration is going to happen at an accelerated speed, the fmcg companies are bound to make good profits, which make them come under the scanner of investment companies who would like to invest in this positive and evidently profitable trend.

Many products under the fmcg sector are showing tremendous growth potential in recent years. Besides soaps and detergents, products such as creams, moisturizers, body sprays are also making a big splash. The shampoo sales in India in 2006-2007 alone were 1,500 crores which grew to a staggering 14.4 % (quarter ended June 2007)
Apart from the big players like HUL and P&G, many new players are entering the market and trying to gain from the growth trend (e.g. Godrej: No.1 shampoo). A good example of category stretching can be highlighted by HUL. They very successfully launched Dove hair care range after the success of Dove Soaps. Value adding extensions with distinct positioning can do wonders for a company.
Firms are not only coming out with different product variants under this sector but also modifying the products in accordance with the changing trends and Indian sensibilities. The new innovations and offerings are backed by through research and testing (The increasing number of product accreditations by world renowned institutes have been growing.)

Another important reason for investors being interested in FMCG companies is that these companies are not massively affected by the different business cycles, inflatory trends, recession etc. The consumers do not change their consumptions pattern so easily. There is always a ready and enthusiastic market for these products. Even the second level/subsidized market for dumping of these goods is easily available which assure the performance level of companies.
I recently read interviews of marketing professionals across various FMCG Companies in India. All of them held a unanimous point of view that the consumer sentiments have dampened a little due to the ongoing financial turmoil, however this has not yet taken a toll on the consumer spending on the FMCG basket Interestingly the spending on the FMCG goods has seen an increase of over 30% of consumers spending. All the companies have reported decent growth numbers in the 1st Quarter. The managers said that if the liquidity crunch continues with rising inflation numbers, the growth of the companies might stagnate in the 3rd Quarter.

And finally, an emerging contributor for the good health of FMCG is retail growth. India is witnessing a retailing revolution in recent times. While some retail chains are of large retail formats enabling huge volumes, some are focused on affordability and thereby squeezing the margins. The Indian market is dominated by more than 12 m small ‘mom and pop’ retail outlets. However only 4% is in the organised sector, thereby reducing the reach. With FDI expected to be allowed, the share from the retail formats by the FMCG players is expected to increase.
How will FMCG continue in the times to come will be interesting to analyse. Will we see witness the industry mayhem or new path breaking efforts from industry stalwarts...only time can tell.

Falling Consumer Confidence Index !

Consumer confidence in India has fallen by 11 points to 122, the lowest level in the last five runs of the Nielsen Global Consumer Confidence Index survey, which measures consumer confidence, major concerns and spending habits in 51 countries. Some 42 per cent of the Indian online consumers who took part in the survey believe that their country is currently in an economic recession.

Globally, the latest Nielsen Consumer Confidence Index has dropped to 88 – down six points in the last six months and the largest single drop the index has recorded in the last three years. India dropped from 133 points in the last leg of the survey in November 2007 to 122 points. Across countries, the US has suffered the biggest fall in the Confidence Index, dropping 17 points.

Overall, Asia Pacific consumers are still amongst the most confident in the world. Five of the global top 10 countries hail from the Asia Pacific and the overall total for the region is one point above the global average. However, for many emerging countries in Asia that have enjoyed the fruits of economic growth and the boom in recent years, the last six months have been a stark wake-up call as consumers find themselves struggling with double-digit inflation, rising unemployment rates and stagflation for the first time in a decade.

According to Mr.Sarang Panchal, managing director, customised research, Greater China and Asia Pacific, The Nielsen Company.The last six months have been a turbulent period for the global economy and this has impacted the growth of the Indian economy as well. The rising crude oil prices, inflation and growing unemployment rates have all diminished consumer spending powers and have in a way shaken the Indian consumer’s confidence.

However, all is not lost. Despite the drop, India ranked second on The Nielsen Consumer Confidence Index, with 122 points, just behind Norway, which scored 129 points. Indian consumers continue to be the most confident in the region, despite posting a dramatic 11 point fall. India is one of the few markets that stand to gain from the grim economic outlook. In recent years, India has established itself as a hub for outsourcing technical and support staff, and as belts in the world’s leading economies tighten, we may well see India’s economy and the confidence of its consumers soar.

Portugal, Korea and Japan languished at the bottom of the rankings as the world’s most pessimistic nations.

Indians are optimistic about the local job prospects over the next 12 months. At 86 per cent, Indians are the second most optimistic people where the job market is concerned over the next 12 months. Around 26 per cent of the Indian respondents said they considered job prospects in the country “excellent”, while 60 per cent respondents said job prospects were “good”.

The promising job prospects over the next 12 months make Indians confident about their personal finances over the same period. Around 12 per cent of the Indian respondents said they considered their state of personal finances to be “excellent”, while 67 per cent said it was “good” in the next 12 months. At 79 per cent in this positive frame of mind, India figures along with Denmark and Indonesia in the list of countries most optimistic about personal finances.

Mr.Panchal adds that in spite of an alarming inflation rate, India is still a growing economy with the GDP ranging at around 9 per cent. There is still demand for talent in the market and, especially with the entry of various multinational brands, the job market looks lucrative.

Good job and financial prospects have sufficiently loosened the Indian purse and 45 per cent of the respondents surveyed were optimistic that this was the perfect time to buy things they want or need.

Indians are shopping more and buying well known brands as seen in the recent Luxury Brands Survey done by Nielsen, where India figured amongst the top three most brand conscious countries in the world. This shows that good jobs, hefty pay packages and exposure to global lifestyles are pushing the Indian consumer towards luxury items. “So, even when there is an economic recession globally, Indians are splurging and optimistic about their finances,” adds Panchal.

Compared to the last leg of the survey, the percentage of people putting their spare cash into savings has increased by 5 per cent and the percentage investing in shares and mutual funds has dropped by 3 per cent.

It is interesting that despite a downturn in the economy, concerns about inflation, etc., the percentage of Indian respondents who do not have any spare cash after their monthly essentials have been paid for remains the same – 4 per cent – as in the last leg of the survey. This shows that the majority of Indian consumers have money left even after meeting their essential expenses.

Savings are still a priority for Indians and 59 per cent Indians put their spare cash into savings, 48 per cent invest in stocks and mutual funds, this being the fourth highest percentage globally.

“Today, Indians are more careful about the financial risks that they want to take. The fluctuating market conditions have curbed risk taking behaviour and made Indian consumers opt for saving, rather than take a chance with their money on the market,” says Panchal.

Spending on holidays and vacations has increased by 4 per cent (to 37 points) and shows the growing interest of Indians in travelling and seeing the world. Incidentally, the amount of money spent on home improvement (27 per cent) and new technology (27 per cent) has been impacted by the rising inflation rates and dropped by 3 and 2 percentage points, respectively.

Paying off debts/ credit cards/ loans (35 per cent), buying new clothes (34 per cent), out of home entertainment (28 per cent), and retirement fund (22 per cent – fifth highest globally) are other areas where Indians spend their spare cash.

The Nielsen Global Online Consumer Survey, conducted by Nielsen Customized Research, was conducted in April 2008 among 28,253 Internet users in 51 markets in Europe, Asia Pacific, North America and West Asia. The survey provides insights into current confidence levels, spending habits/ intentions and the major concerns of consumers across the globe. The Nielsen Consumer Confidence Index is developed based on consumers’ confidence in the job market, the status of their personal finances and their readiness to spend.

The Age Of Neo Consumerism

I am writing this amidst the weekend cacophony at my place which is just getting louder with the grace of euro 2008 quarter finals, endless bollywood award functions telecasted on multiple channels, my desperate attempt to catch a glimpse of the late night edition news headlines and the never ending sound of my inner self.

I had somewhere read (yeah “somewhere”, it’s kind of difficult to remember where I read great articles, interviews or just random thoughts of people’s over fertile imagination... considering the massive overflow of information one is subjected to. Anyways, I feel that as long as remember things that I read, the source does not matter) that an urban individual on an average is subjected to 44 brands daily. My very first reaction on reading this was that of obvious over estimation. Just to satisfy my anxious self, one fine day I decided to actually sit down and note all the brands that I come across from the moment I get up till the wee hours of the night when my enthusiasm actually runs out. Any guesses how many brands figured out on my list? 54!!! And that too on a rather passive day which did not include any sort of major outdoor activity, that would have supplemented the list an made it longer.

So I guess the anonymous estimator’s estimates are pretty much fine tuned. Today I believe is the age of Neo Consumers, consumers who are aware, receptive to company’s offers, are qualified for the product or service offered and have the relevant incomes to actually make a well informed purchase decision. Rather than just buying something for the heck of it people actually weight their options, consider varied elements and go about making their choices. What I am saying pertains more to the modern urban India rather than the rural “Bharat”.

The quality of communication that is projected towards the consumers is becoming more and more sophisticated and polished. Consumers are not treated as intellectually challenged where the onus of consumer education falls on the agencies, but are treated with respect and in some rare cases even inspirational. The better reception and mobility of urban consumers have opened up new avenues for marketers to proliferate deeper into the consumer’s lives and carve out a niche for their brands. More and more people are conscious about their brand choices. They believe in brand associations and want to project a self-relevant image. People’s desire to stand out and have a distinctive appeal is augmented by the kind of brands they use. They let the brands speak for themselves.

Customer inputs for developing new products and services are vital. Companies which are constantly in sync with their customers and incorporate their insights are here to stay and lead. This fact can be proven by the tremendous popularity achieved by many companies who topped this year’s Brand Equity Survey.

I believe that the days are not far when people will have so strong brand connect that they will stand for the brands they believe in. Customers will have a greater say in the product design. This will facilitate a greater emotional bond that people will have with their brands. Companies that harp the tune of emotional appeal have a way to go. Needless to say that the product quality and product perceived-expected value equation need to be at par with the brand promise. Marketers have to scale unexplored heights and constantly develop better products and services, with better benefits that give actual solutions and make life easy.

I also believe that the marketing and the advertising fraternity shall have a great hand in shaping the way brands communicate with the users who feel the brand experience. The age of Neo Consumerism has begun, let’s just let it last as long as possible.

Latest Guide To Market Planning (Urban/Rural)

The fourth edition of the RK Swamy/BBDO Guide to Market Planning is now out. The earlier editions served as a source for market planning across the consumer packaged goods, durables, banking and insurance, telecom, automotive products, social marketing and government sectors.

This new edition, which is the fourth, is a comprehensive analysis of urban markets, rural markets and a combination of urban+rural.

As in the earlier editions, the guide provides three types of indices: Market Potential Value (MPV), Market Intensity Index (MII) and Market Exposure Index (MEI). All three are essential tools for market planning. The current edition of the guide has these indices separately for urban, rural and urban+rural.

MPV provides the relative aggregate market potential. MII provides the relative concentration of purchasing power. MEI is indicative of the relative ease with which the marketer can approach the task of marketing communication. These indices, according to the agency, have emerged as powerful marketing tools in the market planning process.

The new edition presents data for 515 districts in 21 states and three Union territories, covering 98 per cent of India’s population. (The country has 593 districts.) Now marketers can define the geography they want to analyse by way of districts or towns or rural only, and develop the plans that best suit their needs.

The usefulness of the guide has been further enhanced by the interactive CD that not only aids advanced market planning, but enables the marketer to see for herself the geographical area of the chosen market, with the map showing rail lines, roads, district boundaries, etc.

Dr Gowri Arun has been the prime mover of the guide which has used elaborate quantitative process using 24 distinctive sources of data. Weightages were assigned to each of the sourced in a most judicious manner. The team took nearly two years to develop the indices for this edition. It is invaluable because it reduces the cost of marketing, if used wisely.

Cartoon Network Survey

Cartoon Network is out with the seventh edition of New Generations, India’s largest children’s lifestyle research study. The survey attempts to map subtle changes in children’s behaviour and preferences. It throws up interesting facts relating to their mindsets and choices, considering their access to technology, TV viewing habits, media consumption and frequency patterns, spending power, favourite icons, and awareness about the nation and the world at large.The survey report clearly points out children’s increased access to emerging technologies. Interesting figures have emerged when it comes to use of mobile phones by the younger generation. Around 9 per cent of children across SEC A, B and C in the age group of 7-14 years have their own mobiles. Interestingly, more boys than girls own and use mobiles. The television consumption pattern thrown up by the survey will be a matter of celebration for all those who have a stake in the television business. Television is the No. 1 choice for kids – a whopping 98 per cent watch it daily. Newspapers are a distant second, followed by a close fight between radio, comics, magazine, cinema and the Internet. Television also scores high when it comes to kids’ consumption frequency of various media. As many as 98 per cent respondents watched TV throughout the week, radio and newspapers stand at second and third positions, respectively, with 47 per cent and 44 per cent children accessing these media at least twice a week. An interesting trend can be spotted amongst these figures – 25 per cent children read a newspaper on a daily basis. This is twice the level of readership registered among children in other countries covered by similar surveys. The survey finds that 76 per cent parents watch TV with their kids at some point of time in the day. This could be because India still has many single TV households. The figures for the combined TV viewing have been split into weekday and weekend viewing. On weekdays, 59 per cent parents watch TV with their kids at prime time (8-9pm); on weekends, 54 per cent watch TV with their children at prime time. Afternoons (2-4pm) account for the highest joint viewing of programmes by parents and kids. During holidays, 44 per cent parents spend their time watching afternoon TV with their children; on school days, only 29 per cent parents watch TV in that slot with their kids.Commenting on the purpose and significance of the study, Duncan Morris, vice-president, research and market development, Turner International Asia Pacific Ltd, says, “The research aims to gather facts and figures about the choices and preferences of kids in India. We invest heavily in the study to obtain better understanding of the changing needs, lifestyle and attitude of youngsters. The study helps us when it comes to deciding on programming, packaging and wooing advertisers.”Pointing to other interesting data in the study, Krishna Desai, associate director, research, Turner International India Pvt. Ltd, says, “When it comes to assessing the role and impact of advertising and Internet use by kids, the survey throws up interesting figures.”When asked whether TV ads give them any useful information, 74 per cent kids said ads helped them decide what to buy. When the same question was put to the parents, 78 per cent agreed that TV ads do give useful information on products for both them and their children. Around 14 per cent of the kids and 15 per cent of the parents felt TV ads are of no use. And, 11 per cent of the kids and 7 per cent of the parents believed advertising had nothing to do with what they buy.Some 40 per cent children reported using a computer on a daily basis; a quarter of these use the Internet as well. Children in the age group of 7-9 years use the Internet less frequently than older children aged 10-14 years. Online gaming is the most popular activity for 45 per cent of the kids, listening to music comes second (13 per cent).Pocket money given to children throws up some more exciting trends. The figures say that 36 per cent parents give their children pocket money. However, where pocket money was earlier disbursed on a monthly basis, now it is given out every week. The average monthly pocket money for kids in all the surveyed cities was Rs 193. Again, boys get more money than girls. Kids in Ludhiana get the highest pocket money (Rs 402), then Mumbai (Rs 215) and Delhi (Rs 213). Children also get to amass an average Rs 700 as gifts on various occasions. So, the total pocket money of the surveyed kids was Rs 330 crore, with gift money adding another Rs 138 crore. The total is a staggering Rs 478 crore per year. Now, that’s some food for thought for advertisers targeting kids as consumers.The children surveyed were asked what they would buy if they had Rs 5,000 in hand. Around half of them said they would buy bicycles, mobiles, video games and clothes, in that order. The survey also checked the general knowledge of the children: 60 per cent identified the Indian President correctly, while 80 per cent identified the Prime Minister correctly. Around 74 per cent of the children said India was their favourite country, 9 per cent chose the US, 4 per cent, Australia, and 2 per cent, the UK. Universal principles such as promoting peace and love in the world are high on the children’s minds – 34 per cent wished for peace in the world and 32 per cent wished for the elimination of poverty and hunger. The kids’ favourite icon is no longer Sachin Tendulkar; the Little Master has been run out by Mahinder Singh Dhoni, though by just 1 per cent – 33 per cent voted for him as against 32 per cent for Tendulkar. Actor Hrithik Roshan has usurped King Khan’s throne. Actor Aishwarya Rai Bachchan leads the list of female icons, followed by fellow actor Rani Mukherjee.The research study for 2008 covered 3,020 boys and girls, aged 7-14 years, SEC A, B and C, in 14 cities across India. The parents of the surveyed kids were also included for a few select queries. The cities covered included New Delhi, Mumbai, Bangalore, Chennai, Kolkata, Ahmedabad, Hyderabad, Ludhiana, Jaipur, Lucknow, Guwahati, Nashik, Kochi and Madurai.

Knowledge Management

This is of of my articles that i had written for my college's refreed journal.It deals with knowledge management and its importance in today's business processes.

Knowledge management started evolving as a formal academic and professional concept since 1995, with a body of university courses and both professional and academic journals dedicated to it. Initially it formed a part or sub-division of either HRM or IT, but today, it’s perceived value has increased, as it has been given a place of importance in the organisational mosaic.

The value of Knowledge Management relates directly to the effectiveness with which the managed knowledge enables the members of an organisation to deal with current situations and effectively envision and shape their future. In the absence of on-demand access to managed knowledge, every situation is addressed, based on the added value a particular individual or group brings to the situation with them. With on-demand access to managed knowledge, every situation is addressed with the sum total of everything anyone in the organisation has ever learned about a situation of a similar regard.
Knowledge Management aids in getting the right information to the right people at the right time, provides them with the tools and techniques for analysing that information and gives them the power to respond to the insight they gain from that information, all in a Blitz Krieg. Knowledge Management Systems enable manufacturing to adjust production to meet demand, based on real-time information from the sales force. It enables just-in-time delivery of supplies and products, as retailers can assess the company's inventory and the company, the suppliers' inventories of raw materials. It also eliminates the countless hierarchies of red tape that impede day-to-day business - paper-based systems that slow business processes; centralised decision-making that wastes the knowledge and experience of the workers, who are closest to products and customers and poorly connected computer systems that prohibit departments from sharing information.

Knowledge Management is a discipline that treats intellectual capital as a managed asset. Knowledge Management isn't a centralised database that contains all the information known by an organisation's workers. It's the idea of gaining business insight from a variety of sources including databases, web sites, employees, business partners and informal networks and cultivating that information wherever it resides. Business insight comes from capturing information and giving it greater meaning via its relationship to other information in the company. And to allay fears, Knowledge Management is not about making plug-and-play workers, dispensable because all they know is recorded for the next person who fills their shoes; it's about delivering information to knowledge workers, symbiotic culture, business processes and technology to make business houses and people successful.


Knowledge Management has come a long way, from its status as a traditional debate between two generations to its modern day glory. The older generation was with concerned information technology loaded processes, such as information collection, storage and distribution and focussed more on old knowledge diffusion rather than new knowledge generation, whereas the new generation believes in spreading knowledge and achieving dynamic results.

Today organisations are extremely dynamic, fast paced and evolving. To harness knowledge is a challenge. Knowledge can be generated at mainly 4 levels, namely the knowledge worker, organisations, processes and technologies.

Knowledge Workers:
Knowledge workers are individuals who effectively utilise knowledge assets within the organisations and make these avenues available to future employees. They are global citizens in the true sense, as they are always on the move and handle operations in different parts of the world. They accumulate knowledge from various sources, which go way beyond regional or national borders. They do not mind experimenting and thinking out of the box and are risk takers, who thrive on adventurous situations. Effective communication skills are not a rarity with them. Their vast experience and expertise is reflected in their business decisions. They believe in integration of knowledge processes and making information available to a number of people. Their ability to multitask and handle different sets of situations at the same time makes them dynamic and iconic. Most of the times, in informal communication circles, they are the prime change agents, who can effectively bring about change in people’s perception and attitudes. A Knowledge Worker's benefit to a company could be in the form of developing business intelligence, increasing the value of intellectual capital, gaining insight into customer preferences, or a variety of other important gains in knowledge that aid the business.

Knowledge Workers work in an environment described as a knowledge network where there is always an increasing need for knowledge to grow and progress continually, whether in a tacit or explicit manner.

Organisations:
As individuals differ, companies and organisations are also different. They are set in different external environments and operate with their unique internal cultures. They have different strengths and weaknesses, which they measure and quantify in various ways. No two companies are similar. Things that work for one might not be applicable to the other. Similarly, their Knowledge Management techniques will also differ. The key is to align one’s managed knowledge in accordance to the organisation’s philosophy.

Organisations should first identify their knowledge assets or sources. Knowing about them is half the battle won. Exploring the human resource database will give information about the employees and their demographics. Analysing business data will also give a lot of vital information, as a lot of people bring in their personal and professional experiences and view points while taking business decisions. The employees, their practices, policies, decisions etc. are sources of knowledge for an organisation. All an organisation has to do is to have in place a structured system, so that everyone in the organisation can gain easy access to this knowledge. Effective Communication and Change Management mechanisms are also essential while freshly introducing Knowledge Management to a company or a new business unit.

Caselet:
British Petroleum, one of the largest petrochemical companies in the world, gave users information about why the company was deploying its Knowledge Management System. It used newsletters and road shows. It published deployment plans and technical standards. It educated its users. After the company implemented its system, it gave users even more information over the intranet and a half- or one-day training course that taught them how to use their new system. Before dropping Knowledge Management in the users' laps, the company answered the big five journalistic questions—who, what, how, why and where—eliminating surprises.

Overcoming cultural and behavioural barriers is another hurdle, which an organisation has to manage. Knowledge Management Systems depend on a company’s culture and how well that culture supports the efforts of the people, who produce the information in it. High-value content, that an empowered staff produces, is more useful in a Knowledge Management System than the drivel that employees produce due to cultures that don't support sharing ideas openly and obviously. For example, one must encourage employees to take time to learn before jumping onto new tasks. Reward failure so that you encourage employees to take risks. One must create a culture that is conducive to sharing information, finding it, and creating knowledge.

Processes:
Process Management is the application of knowledge, skills, tools, techniques and systems to define, visualize, measure, control, report and improve processes, with the goal of meeting customer requirements profitably. Application of Knowledge Management to processes radically redefines business objectives and makes them more aligned to the needs of the management and the customers. Knowledge Management Processes helps companies deliver products and services and are usually found in technology based companies. But those kinds of systems are just as appropriate in other types of companies, such as those that deliver fast moving consumer goods and capital goods.

Not only can service companies use Knowledge Management Systems to develop better services, they can also use Knowledge Management Processes to coordinate, manage, and improve those services, once they go on the field.

Standardising on a single messaging and collaboration architecture helps ensure that users will be successful and makes the system more manageable in the long run. Collaboration allows product development companies to bring insight from its various departments together to produce results quicker than ever.

Well-designed Knowledge Management Processes can also reduce product failures significantly, ultimately leading to zero-defect policies.

Technology:
The goal of technological initiatives is to pour a firm foundation for building Knowledge Management Solutions. The success of Knowledge Management depends on the users' interaction with the company's information, so the initiatives enable them to use tools, with which they are already familiar, without requiring them to learn new ways of working. These initiatives also allow business houses to leverage existing investments in technology as well as existing sources of information, delivering information to users from every source that is relevant to them. Finally, these initiatives ensure that users who need information have access to it, whether they're using computers plugged in to walls or getting quality time on their favourite airline.

Digital dashboards give users one familiar place to go to, in which they can share knowledge and gain insight from important business information. They provide a rich environment for displaying and organising information, with which knowledge workers are already familiar.

Exchange Web Storage Systems seamlessly integrate information from a variety of sources and allow Knowledge Workers to access that information from already familiar user interfaces. It combines the functionality of the file system, the web, and a collaboration server, providing a single location for storing and managing information.

Wireless solutions allow Knowledge Workers to access information anytime from anywhere. New types of mobile devices such as phones, pagers, tablet PCs and handheld computers ensure that they can access the information they need, when and where they need it.

Intelligent interfaces enable Knowledge Workers to interact with computers in more natural ways. Types of intelligent interfaces include natural language processing, handwriting recognition and speech recognition.

How Knowledge Management will help Business Houses evolve?

The extent to which an organism engages in healthy rule-making and learning will, to a large degree, determine its outcomes in life. An agent that rarely tests its rules will tend to perform more poorly in practice than one that constantly challenges, upgrades, and refreshes them. A business that rarely revises its approach to the marketplace or its operating routines will tend to ossify and atrophy. On the other hand, companies that engage in healthy levels of rule-making and revision are inherently more capable of adjusting to changes in their environment. Indeed, organisational agility depends, to a large extent, on just how well an organisation’s learning and knowledge systems work.

Knowledge Management will not only bring about changes in the functioning of an organisation but change the whole approach and attitude with which business is carried out. Managed knowledge will work on the “Darwinian Principle” of “Survival of the Fittest” and ensure overall development of personnel, business processes and technologies and give them a long term sustainable competitive advantage.

Socio-Cultural Anthropology (Ethnology)- A Qualitative Tool To Analyse Consumer Behaviour

Prominent anthropologist Eric Wolf once described anthropology as "the most scientific of the humanities, and the most humanistic of the sciences." Anthropology as a concept has grown since European colonisation in the 17th century to the present date. In its evolution, it has not only branched out into various other sub categories but also enriched itself by the profound contributions of avid thinkers.

Ethnology is a science that analyses and compares human cultures, as in social structure, language, religion, technology and cultural anthropology. The study of Ethnology and its application in the management discipline will bring about a qualitative development in the way organisations perceive their customers.

Mankind being the most knowledgeable species has evolved into a complex mesh, which requires an intensive mental dissection, for the purpose of analysis and understanding. Social and cultural influences affect us in our day-to-day behaviour. A particular experience can have dramatically different interpretations across the world. Ethnology is a valuable tool that can be applied to business practices to make a difference. Understanding Consumer Behaviour, individually as well as in groups, is the crux of marketing research and a determining factor for the financial growth of organisations. Consumer-centric business practices need to be developed, with reference to social and cultural biases.The sensitivity attached to one’s society and culture needs to be tapped to understand and satisfy different consumer types. Because satisfaction is basically a psychological state, care should be taken in the effort of quantitative measurement; and though a large quantity of research in this area has recently been developed, there is a latent need to show qualitative progresses. This study can be of ground breaking value, which will contribute to differentiation and positioning strategies adopted the world over.

Culture refers to a set of values, traditions or beliefs, which guide individual behaviour. In a way culture is normative, as it prescribes norms of acceptable human behaviour. In other words, culture refers to values, ideas, attitudes and other meaningful symbols created by people, to shape human behaviour and how this behaviour transmitted from one generation to another. For examples, beef is not very readily accepted in the Hindu society and likewise pork in the Muslim society. These things form a core concern for many international food franchises like Mac Donald’s, Pizza Hut etc. Values in any culture are developed through socialisation and acculturation. Refusing beef or pork or garlic by a society is a value developed through socialisation. The use of a fork or knife to eat food, by Indian families, is a value acquired through acculturation. In any culture, there are subcultures that exist. These are different nationalities, religious and geographical groups. For example, in India, we have Hindus, Muslims, Jews, Christians and Sikhs, as exciting religious subcultures. A marketer needs to be aware of these cultural and sub cultural influences on consumer preferences. This will affect his/her brand, packaging, advertising, sales promotion and even distribution decision. A culture's values are likely to influence its member’s purchases and consumption pattern. For example, one consumer may place a high value on achievement and may demonstrate success with symbols of luxury and prestige. Culture not only influences consumer behaviour, it reflects it. The preponderance of exercise machines, fitness clubs, skin care lotions, diet foods and low fat products reflects the emphasis that Indian youth places on fitness. Culture is therefore a mirror of both the values and possessions of its members.

Some organisations have remarkably built a sustainable competitive advantage, by laying emphasis on diverse cultures. For example, the HSBC Bank has quite sucessfully positioned itself as the “World’s local bank”. Being global and personal at the same time is the key to its success. HSBC's international network comprises over 10,000 offices in 83 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. It has sucessfully adapted itself to variours cultures and sub-cultures and constanly thrives on the changes that affect these societies. Its popularity is evident from the numerous awards and the recognition that the bank has be showered with, the prominent ones being The Best Consumer Bank (November 2004 by The Banker Magazine) and the World’s Best Bank Award (July 2004 by Euromoney Awards for Excellence.)

The coffee giant Starbucks has also started capitalising on cultural pluralism. This year during Ramadan, for its customers in the Middle East, Starbucks created a new drink, that it hopes would go on to becoming a Ramadan tradition — the Date Frappuccino.It would seem like a real blunder, maybe even cultural insensitivity, for Starbucks to market a new food product just for the month of Ramadan — the month Muslims fast from sunrise to sunset. But Starbucks executives seem to think, this caffeinated version of “think globally, act locally” strikes the right marketing balance.Starbucks, now with 200 stores in the Middle East (mostly in the oil-rich Gulf countries) has operated in the region, since 1999, with the help of a trading partnership from the region. We have to wait and see if this new move works for Starbucks.

Not having appropriate cross cultural awareness can lead to disastraous consequences for companies. It might result not only in poor penetration and low sales but also a lot of damage to the company’s reputation and goodwill. It is crucial for today's business personnel to understand the impact of cross cultural differences on business, trade and internal company organisation. The success or failure of a company, venture, merger or acquisition is essentially in the hands of people. If people are not cross culturally aware then misunderstandings, offence and a break down in communication can occur.
The need for greater cross cultural awareness is heightened in our global economies. Cross cultural differences in matters such as language, etiquette, non verbal communication, norms and values can, do and will lead to cross cultural blunders.

We can illustrate this with a few examples. In 2002, UMBRO, the UK sports manufacturer, had to withdraw its new trainers (sneakers) called Zyklon. The firm received complaints from many organisations and individuals, as it was the name of the gas used by the Nazi regime to murder millions of Jews in concentration camps.
In 1985, Bechtel pulled out of a joint venture in New Guinea. It seemed flawed from the beginning. Bechtel had 33 months to build a new plant, organise services and meet a production deadline or face financial penalties. They planned to place a mine, at the top of a mountain, in an isolated rain forest, creating a town of 2,500, camps for 400, a power plant, an air strip, roads, hospitals and support services (for natives who had never seen a Westerner). The natives, who were recruited to work (while receiving 400 inches of rain during the rainy season), had no concept of private property, modern money, central government or work regulations. The multicultural workforce of 5,000 comprised mixed indigenous people and imported technicians from the United States, Canada, New Zealand, Korea, and Philippines. The road builders did not believe in working round the clock (the contractor finally went bankrupt). Natives also did not like the work schedule, so they went with bows and arrows to shut down telephone lines, roads and frighten personnel. There was an 85% turnover in the native workforce. It is a classic example, where the company was not able to manage and understand diverse working groups and behavioural patterns of the different socio-cultural people.

Another example of lack of etiquette awareness is that of Proctor & Gamble. They used a television commercial in Japan that was previously popular in Europe. The ad showed a woman bathing, her husband entering the bathroom and caressing her. The Japanese considered this ad an invasion of privacy, inappropriate behaviour and in very poor taste.
A nice cross cultural example of the fact that all pictures or symbols are not interpreted in the same way across the world. Staff at the African port of Stevadores saw the "internationally recognised" symbol for "fragile" (i.e. a broken wine glass) and presumed it was a box of broken glass. Rather than waste space they threw all the boxes into the sea!

American Motors tried to market its new car, the Matador, based on the image of courage and strength. However, in Puerto Rico the name means "killer" and was not popular on the hazardous roads in the country. Some genius, at the Swedish furniture giant, IKEA, somehow came up with the name “FARTFULL”, for one of its new desks. As you can imagine, sales did not exactly hit the roof! Pepsodent tried to sell its toothpaste in Southeast Asia by emphasising that it "whitens your teeth." They found out that the local natives chew betel nuts to blacken their teeth, which they find attractive. Thus a keen understanding of the people, in their social and cultural context, is essential before delivering value through business.


The traditional and obsolete approaches in understanding diverse cultures have to end. We need to have a paradigm shift in our customer orientation. Application of socio-cultural anthropology or ethnological studies to management will make us more culturally sensitive and help us in understanding the end consumers in a better way. In this era of “Glocalisation” where more and more people are integrating and boarding the bandwagon of standardisation, the players who will capitalise on the cultural, social and ethnic differences of the people and address their specific needs will stand apart. Multi-linguistic and multi-cultural people have needs that need to be dealt with differently. One has to play in their field to satisfy them and establish a customer value chain. The role of socio-cultural influences is not necessarily the foremost driving force behind customer purchases, but it is definitely a big part of their conscience and plays an eminent role in their buying decisions. Achieving a tandem between similar economies and buying habits is imperative, but understanding the dissimilarities is also of equal importance. One has to market the products, services, ideas and experiences in a way which will harness their underlying conscience and promote satisfaction-driven sales. This will establish a win-win situation for everyone involved.