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Monday, October 19, 2009

Supply Chain Effeciencies



I read this great article the other day which was written by Mr.Raj Jain who is the President,Wal-mart India and MD and CEO Bharti Wal-Mart Pvt ltd. The article throws light on how Bharti Wal-mart is testing the Indian Retail scene and taking calculated and well structured steps to get the Indian retail story buzzing. Droughts, infrastructure issues, wastages etc are the problems that India has been facing. The challenge is to how to be well equipped when times are trying and get the best out of a situation.

It is interesting to note that even this promising joint venture was struck by industry behemoths, they have taken their time and effort to study the Indian market, developed well thought of business practices, are building mini- business models and learning the tricks of the trade through the learning curve.
Mr.Jain is of the opinion that the supply chain issues of India are because if wastages, and inefficiencies and the 3 things to get things back on track are as follows:

1.)Creating Regional Supply Chain to reduce food miles-

It is true that in India, food taste and food habits change every 200 kms. Food miles mean how much distance does food have to travel before making it to consumer’s plates. Hence it is imperative to create regional/local supply chains instead of national supply chains. Bharti Wal-mart has adopted this approach and sources all of its requirements within 150 kms of the store.

Following are the advantages of this approach:
A.Reduces cost
B.Greater predictability
C.Qualiy &
D.Focus

2.)Develop a world class Supplier Base-
Walmart is known for procuring their goods at lower prices. People have an incorrect assumption that because of Walmart’s scale and negotiation power are instrumental fow them getting lower prices. However that’s just not the case. Walmart works with the suppliers to “save their money” by reducing excess cost and wastages out of their system, and inturn, suppliers given them a better prices. Not only this, Walmart also improves their technology, market access and product quality.

3.)Fix the Infrastructure-

Infrastructure development is key for growth. India’s infrastructure plans have to stick to the schedule and if possible get done faster. Bharti Wal-mart has made sure that the stick to shorter transportation routes so that infrastructural inefficiencies do not cause hindrances.

Drought is no doubt a problem, however wastages compound the problem. It’s upon us what we segregate as a controllable issue and an uncontrollable one.
It is interesting to follow this great retail revolution in India which will be a great example of glocalisation and how a sustainable business model is built to suit this great, diverse country.

Sunday, October 18, 2009

Pharma Industry: Patents call the shots?



The underlying idea behind granting patents is to encourage pharma innovators to advance the state of technology, and increase the development of better formulations. According to the UN definition, a patent is a legally enforceable right granted by countrys government to its inventor.

Patent Law represents one branch of a larger universe known as intellectual property rights. Patent offers exclusivity covers to many pharma companies and they have literally built and empire out of their patented discoveries. So wonder what is going to happen after the patents of Pharma giants expire?

I am eagerly waiting for 2011...as it will represent the beginning of the end for some of the industry leaders in Pharma sector.Maximum number of innovator molecules are going off patent between 2012-2018. Its going to be a splendid display of shifting loyalties, division of market share and dwindling prices.

The veterans of the industry still have some time to fine tune their strategies and decide on the way ahead. Some of the options are:

1.)Price reduction of your current offering

2.)Launching a fighter brand before your patent wears off, and then tackling the competition head on with price wars.

3.)Authorized Generics/Co-optition


Lets see how each of these options can misfire and what are the learnings that we can have from them.

1.)Price Reduction: Premium offered by your brand will wear off, customer perceptions may change which might increase switching. Patent may go off only in certain geographies, hence this strategy cannot be evenly executed which might lead to inter-geo exports, black marketing and price confusion.

2.)Fighter Brand:

Here s a case which demonstrates how an MNC(Merck) was not adaptive enough and how its fighter brand strategy backfired miserably:

Merck's blockbuster drug Zocor was going off patent in Germany. Zocor—a statin used to treat high cholesterol—had been a major cash cow for Merck, but after the patent expired, generic drugs would offer identical efficacy would be made avialable for as little as 30% of Zocor's price!

The obvious strategic response was a price reduction, but for Merck that was not an option, because it would have encouraged parallel exports of Zocor from Germany to EU markets where patent protection still existed.

Instead, Merck decided to launch a fighter brand called Zocor MSD. It rolled out the fighter brand four months before the patent expiration to give it some time to cannibalize Zocor’s customers, who would then, Merck hoped, remain loyal when generics invaded the market(obvious mistake). Because Merck was competing with only itself during this initial stage of Zocor MSD’s launch, the fighter brand was priced just slightly less than the original premium brand(there should have been a significant price-value erosion to make a difference and change people's preferences). Once generics entered the market, the new brand’s price dropped to 90% of Zocor’s.

Within three months of its launch, Zocor MSD had missed its modest sales goals by 50%. More than 30 generics would divided the lion’s share of the category among themselves. Merck’s desire to protect its profits for as long as possible had prevented it from launching a brand priced low enough to seriously compete with the generics.

Even when Merck realized it had set the wrong initial price, it was incapable of quick course correction. As a blue-chip multinational, it lacked the competencies to win the kind of price war it was entering. Merck was used to maintaining prices for long periods of time and altering them only after much consultation and reflection(Typical of any MNC). Its generic competitors, accustomed to competing on price, obviously benefited. With losses mounting fast, Merck withdrew all marketing support from Zocor

3.)Striking strategic alliances with low cost manufacturers and opting for co-opetition.

This I believe, is one of the most sound policies that neither calls for the efforts required to launch a fighter brand nor pushes the competition to go crazy on price wars. One can strike a strategic price alliance with one of the local generic manufacturers and control the price at a certain point(still a little above the generic drug providers).It calls for shifting and creating a relatively new category, called "authorized generics". Essentially, the original manufacturer licenses exact copies of its branded drug to a generic manufacturer, allowing it to hang onto some of the generic revenues.

This approach also appeals to those patients who feel most comfortable with a name they know. The premium drug manufacturer can retain its brand name and positioning and let the price go down.This way it can fight with other generics on price, saves its brand name and also expect very limited erosion of loyalties.

So,lets wait and see how "molecular" strategies shape Pharma industry in times to come!

Friday, October 16, 2009

Brand Cannibalization



In today's world “premiumization,” “trading up,” are receiving the same attention as "commoditization" and "trading down".A strategy which might click in one part of the world might have to be executed in complete opposite way in the other part.

Economic downturns are now causing consumers to trade down, and many midtier and premium brands are losing share to low-priced rivals. Their managers face a classic strategic dilemma: Should they tackle the threat head-on by reducing prices, knowing that will destroy profits in the short term and brand equity in the long term? Or should they hold the line, hope for better times to return, and in the meantime lose customers who might never come back? Given how unpalatable both those alternatives can be, many companies are now considering a third option: launching a fighter brand.

A fighter brand is designed to combat, and ideally eliminate, low-price competitors while protecting an organization’s premium-price offerings.In its best applications, a fighter brand strategy can have even more impressive results.A fighter brand not only eliminates competitors but also opens up a new, lower-end market for the organization to pursue.

But launching a fighter brand is like walking on a double edged sword. Great application might leap frog you way beyond competition and have your success stories illustrated in b-school cases however there are also chances of misfire and lead to significant collateral losses for the companies that initiated them.

Account For Cannibalization

Most fighter brands are created explicitly to win back customers that have switched to a low-priced rival. Unfortunately, once deployed, many have an annoying tendency to also acquire customers from a company’s own premium offering, which is called cannibalization.You must ensure that it appeals to the price-conscious segment you want to attract while guaranteeing that it falls short(in terms of value/quality) for current consumers of your premium brand. That means you must match your fighter brand’s low price with equally low perceived quality.To prevent cannibalization, a company must deliberately lessen the value, appeal, and accessibility of its fighter brand to its premium brand’s target segments. It may even need to actively disable existing product features and withhold standard marketing support from the fighter brand.

Managers need to weigh the effects of cannibalization before rolling out fighter brands. Because these brands are explicitly oriented toward the rivals that have stolen share from a company, the initial break-even calculations used to justify their launch often are oversimplistically derived from an estimate of the lost sales that can be recouped, which not usually the case.An accurate break-even analysis must account for cannibalization as well. How can you predict whether excessive cannibalization will occur? Test-marketing is the best way to ensure that a fighter brand can compete with low-price offerings without robbing significant sales from its higher-price, more profitable sister brand.

The Gospel:

To calculate the effect of cannibalization, the Break Even Cannibalization rate for a change in a product is:

New Product Unit Contribution / Old Product Unit Contribution.
New Product is the planned addition to a product line (or change to a product within a product line), Old Product is the product that loses sales to the new product (or the product line that loses sales). The cannibalization rate refers to the percentage of new product that would have gone to the old product, this must be lower than the break even cannibalization rate in order for the change to be profitable. When making changes to a specific product, cannibalization of other products may occur. To calculate the effect of cannibalization, the Break Even Cannibalization rate for a change in a product is:

Monday, July 20, 2009

Can Crowdsourcing kill Outsourcing?



Crowdsourcing is essentially an idea, concept or problem that is introduced to a “crowd”, usually through electronic means such as the internet. Once an idea, concept or problem is introduced, the “crowd” is then called upon to generate unique solutions in response. The crowd is typically brought together through online communities in order to collaborate on the crowdsourcer’s (the individual or business who introduced the idea, concept or problem) issue. The crowd systematically submits their own ideas and solutions and then sorts through them in order to identify the best ideas. Although the solutions are owned and acted upon by the crowdsourcer, the individuals in the crowd with the best ideas are sometimes rewarded. In some cases, these individuals are compensated through currency, prizes or even simple recognition.

The concept behind crowdsourcing is not new. It is essentially a brainstorming session aimed at solving a problem or generating something which did not exist previously. However, true crowdsourcing uses contemporary tools, technologies and communities in order to tap a wide range of ideas. It uses the resources associated with the internet age to generate a larger volume of ideas and potential solutions. Crowdsourcing produces solutions from amateurs, business professionals, students, volunteers, experts and small businesses alike. Where businesses were previously restricted to the brainstorming power of their employees, contractor and consultants, they now have the collective wisdom of the internet crowd at their disposal.

The word "crowdsourcing" was first coined by Steve Jurvetson and popularized by Jeff Howe in a June 2006 Wired magazine article.

"Crowdsourcing represents the act of a company or institution taking a function once performed by employees and outsourcing it to an undefined (and generally large) network of people in the form of an open call."

-Jeff Howe, June 2006

Crowdsourcing is a relatively new concept which is poised as a formidable threat to Outsourcing. It has many merits and competitive advantage which can see its growth multiply. As is evolves with respect to people,reach,technology and complexity of the problem solved, its intensity and challengingly dominant positioned can be evaluated.

Thursday, May 14, 2009

Economist's Advertising Strategy 2009- Going the Typo Way!!!






The Economist, the brand that comes with the promise of 'Interpret the world', is out with its next campaign that surely needs some serious interpretation on its part.

The Economist had launched its first ever campaign for the sub-continent in early 2008,(have written about the same in my previous post) wherein the brand used the print and outdoor media and then followed it up with a similar version on TV as well. It communicated its India specific positioning of 'Interpret the world' through a series of alphabet based creatives, which gave the reader a surprising and unique interpretation of regular terms.

Now, continuing its drive to spread awareness about the brand, it has launched yet another OOH (out of home) and digital based campaign that makes an interesting use of typography to drive home the message.

Team: AOR- O&M India.

Campaign- The campaign comprises six creatives, each highlighting recent events from different countries. At first glance, it appears to be something written in a foreign language. Only after a closer look, one can comprehend the message, which is actually written in English. The headline also tells a relevant international story. (have uploaded 4 ads...chk thm out)

So for example, if one sees the Tibetian hoarding, at first glance it looks like something written in Tibetan. But a closer look reveals a headline written in English that reads - 'Journalists stopped by Great Wall of Tibet'. The innuendo here points towards the internal turmoil that has been tearing apart the 'Roof of the World.'

Objective of the campaign- spreading awareness was a key necessity. Research conducted by the brand showed that there exists a top level of the consumer section which knows and follows the brand. The next level, though a little aware about it, neither indulges in the brand nor tries hard to find out more. Next to it is the lowest level, which is completely clueless about the brand.


Rationale behind the campaign-

1.)The campaign functions on two levels. First, it arouses and intrigues the consumer and then leaves him asking for a solution. This is where the engagement with the brand takes place and consumer learns more about it. The headline is an entry point, from which the consumer probes further and actually ends up reading the real story! I am not sure about this!

2.) Relevance of global events is absent in India due to geographic seperation and happenings around the world are not read or discussed as they are not directly related to peoples own lives. Hence, the campaign accomplishes dual goals – to make 'foreign' events relevant and to keep the advertising as close and true to the product promise as possible.

The brand, which is famous for its obsession with copy-centric ads and innovative ways of execution since the 1980's, has always emphasised the OOH and direct media specifically. However, it indulges in print, too, from time to time. Suprio Guha Thakurta, managing director, The Economist Group, India attributes this specific way of advertising to London-The seat of the Economist brand.Also concentrating on OOH & Digital proves to be less costly.

Recepie for Disaster- If one goes by the thumb rule of outdoor ads (according to which a person spends only three to four seconds on a hoarding while he drives past it), the use of complex typography can prove to be a disaster!

Rule Breakers- The Economist as a brand has been engaging in path breaking advertising over the years and for this campaign, they have broken yet another rule of the medium.


Digital Campaign- the brand has also opted for digital as a medium. The digital campaign, too, uses a similar strategy of intrigue leading the reader into the story. Apart from spreading awareness, digital campaign has the responsibility to ensure sampling activity.

High Hopes- The campaign hopes that once the reader has got the lead, he can easily visit the brand’s website and read the whole story. How many of us actually remember stuff like this? We read something somewhere and actually come home and google about it! My bet is rather few! The online campaign has been spread out on popular websites such as Rediff.com and Yahoo.com, apart from other horizontals.

VERDICT-

My VERDICT is, the campaign is good, very creative (now thats what expected outta O&M Afterall!!!) But,the idea (of clever typography)seems a tad bit far-fetched for OOH medium. It still suits print meduim to an extent, where the consumer can actually ponder over it (Read:engagement...sigh!this jargon)Advertising on OOH medium has to be smart, quick, crisp and immediately understandable. I think they did quite well with the previous campaign.

Also London being the hot bed for this sort of originality should not warrant the use of similar campaign in India. The reason being, in London, a thumping majority of the communication happens in English, this kinda campaigm will clearly stick out over there and be registered. In a place like India, where there are 19 strongly followed regional languages, people in the Metros(thats where are ads are currently fighting for eye balls)are used to seeing advertisements and hoarding in regional languages. One might just miss out on this one my mistaking the "clever typo" for some regional text. So much for the "Cleverness". To be blatantly honest, i too thought that the ads were in some language alien to me, and i was not at all appealed by them. The very reason that I studied them further and am actually writing about it is becuase of my devilish curiosity!!!

So I think O&M guys should follow the K.I.S.S. rule...(for the uninitiated...KISS= Keep It Simple, Stupid)

Monday, March 16, 2009

The Economist - Mktg & Advtg Strategy







Running Period: 1Year and still counting.
Advertising agency: O&M, India
Key Person: Sumanto Chattopadhyay


Critical Elements of the Campaign:

1.)Iconic Campaign with a sharp departure from earlier tried and tested campaigns.
2.)The entire campaign sported the colours that The Economist ‘owned.’
3.)No Special price offered in conjunction with the campaign
4.)Cost-effective communication.

What did The Economist expect to achieve through their advertising and marketing strategy?

The primary objective: raise the awareness levels in Mumbai, Bangalore and New Delhi and the National Capital Region.

The secondary objectives:

1.)Increase sampling
2.)Increase subscriptions and
3.)To reduce the cost per acquisition of the subscriptions.

Focus on: Subscription sales, newsstand sales and advertising sales.
Broad definition of The Economist’s reader: Age 35+, male, living in a metro – and not restricted, as one might feel, to corporate top management. We have fashion designers, copywriters, project managers, MBA students. All Ideas people

Nature of Campaign: The awareness was created largely through their disruptive A-Z campaign.

Step1: Mobile updates channel - A first in The Economist world.

Objective: Sampling of content

Methodology: Everyday a message is sent out at 11:00 am to the channel members. The message is either a summary of the Leaders in the current week’s issue, or a snippet of a couple of interesting stories. Directing the person to read the entire story by picking up a copy from the newsstand, or visiting www.economist.com or even m.economist.com (which has been launched recently).

Launched: 4 months back

Result: 35,000 members registered on it. These members were potential people who would try/sample the product.

Barriers to Trial: High Price Point.

Single most effective source of subscriptions: was through www.economist.com.

Insight: People who sampled content online were most likely to subscribe to the newspaper. Hence, a lot of our subscription effort was needed to get people to sample and in generating trials.

The Way Ahead:

Step2: Driving traffic to www.economist.com through online campaigns and previously established mobile channel
Step 3: Introducing a trial pack @ Rs. 1100 for 12 weeks
Step 4: Partnerships such as Jet Airways, ICICI Bank Credit Cards, Deutsche Bank, etc. In all these partnerships, exclusive offers to their customers, with benefits which were linked back to the partner brand (for example, a Jet Privilege member who bought a subscription to The Economist was given Jet Miles).
Step 5: Using the Internet as a sales channel- Online databases and sending out Electronic DMs to them. (CPAs being much lower than other channels)

The Number Game: (Refer to Graphs)

Advertising growth: Impressive 73%.(The South Asia pages have seen as many as 25 new advertisers, including Oberoi Hotels, Kotak, Coca Cola and Edelweiss)

Average monthly Sale: In February 2008, the average monthly sale was 16620 and, in February 2009 the figure submitted to the ABC is 23183!

The growth is despite the fact that, unlike a lot of publications targeting the same reader, The Economist has an audited circulation figure that pales in comparison to those of Indian publications.
It is the area of growth in subscription and newsstand sales which is a final testament to the effectiveness of the marketing strategy.
(The projected 2008-09 average circulation is 19% higher than the corresponding figure for 2007-08).

February 09 figures:

Circulation when compared to February 08 show a growth of 39%
Subscriptions show a growth of 26% and
News stand sales show a healthy 15% increase.

Not a bad end-of-the-year report card.

Launch of TVCs: The 6 TVCs created and produced by O&M cost merely Rs. 14 lakhs.

Bravo!

Costs per acquisition down
Healthy increase in advertising sales
Newsstand sales and subscriptions
Absolute budget that is almost miserly.

With uncertainty being the only certainty in this year, The Economist should be high on every decision maker’s reading list.

With the foundation for growth in place, The Economist’s financials for India should be an interesting to follow.

Wednesday, March 11, 2009

Media for Equity Business



Action Advertisement Construction Equipment Ltd (ACE) is a Faridabad based company, which manufactures the mobile cranes used in construction. In its decade-long existence, the company has never really had a budget for advertising. Like most B2B companies, it never felt the need for advertising its ware. Business expansion was already taking place by winning competitive bids and tenders. Other possibilities were not in the frame of necessities. In recent years, though, ACE has been advertising itself aggressively. Is this because of a change in its marketing approach or a change in its equity structure? Or is it both? The truth lies somewhere in between. ACE is one of more than 200 – often little-known – companies that have taken to advertising in the last three to four years thanks to a most unusual initiative by India’s largest media company,
Bennett, Coleman & Co. Ltd (BCCL).

Begun about three years ago, the initiative, which is called Times Private Treaties (TPT), has been gathering ever greater momentum. TPT tries to identify and tempt promising advertising-shy companies to take media space in BCCL publications and media platforms in return for equity in those firms. BCCL believes that the Indian market is commodity rather than brand driven, which explains why only around 14,000 brands are actively advertised here as compared to about eight lakh in the US, for example. The media company’s broader objective is to increase the advertising pie by drawing in companies which have chosen to stay away from mass media for one reason or the other. Some of these companies would possibly have turned to advertising in a few years, after they reached a certain size. The TPT initiative accelerates the process by convincing the entrepreneurs that advertising would hasten their growth. Considering the spate of deals that TPT has signed, it apparently has.

However, TPT won’t comment on the value of its investments, which have been variously estimated at between Rs.1800 crore and Rs 3,000 crore (though some suspect that it is lower than this price band). The ambiguity of the figure notwithstanding, it is certainly a huge sum of money that is under consideration, especially by the standards of the fragmented Indian media business, in which only a few companies have true financial scale. The list of investee companies includes big, mid-sized and small entities. At one end, one would find companies such as Kabirdas Motor Co. and Raja Rani Travels, while on the other, one would see a handful of giants such as Pantaloon Retail and General Motors Corp.

Even more interestingly, other media companies have been adequately intrigued by the TPT initiative to dip their toes into the media-for-equity business. HT Media, NDTV, Dainik Bhaskar, Dainik Jagran and Mid-Day have all launched their own private treaties division, though with differing degrees of seriousness. Many of them have signed a few deals, but perhaps not much more than that. For instance, NDTV has signed a deal to invest about Rs 25 crore of media in the infrastructure company, EMAAR MGF. Mid-Day, too, has clinched a deal with a software company. However, barring one, none of the other companies was forthcoming, possibly because it is still early days.

Fund of inventory

What has brought the media-for-equity business into sharper focus is a recent attempt to get publishers together on
this via the Rs 900 crore Morpheus Media Fund (MMF). The MMF is being promoted in partnership with Ozone
Capital Advisors (o3 Capital). Media agency Maxus is the media advisor.
The MMF intends to procure inventory from leading media owners across the country and buy equity in mid-sized
companies across sectors that need advertising for growth. The media inventories will be provided to these midsized
companies and, in return, media companies will get units in the MMF in proportion to the inventory utilised.
The MMF wants to help the creation and growth of new Indian brands in the consumption sectors – primarily FMCG, but also consumer services, including education, health care, telecom and financial services. The MMF expects to make about three dozen investments, with a couple of them at about Rs 90 crore each and about half of the total at under Rs 10 crore.

The Morpheus Media Fund aims to garner 48 per cent of its media inventory from print companies, 38 per cent from television, 10 per cent from outdoor media owners, and 4 per cent from radio players. When a person invests in the stock market, he has two options. He can either take the direct route and buy stakes in different companies himself or decide on a mutual fund, which offers a number of advantages such as diversification, professional management, cost-efficiency and liquidity. The MMF is like any other fund and comes with the risks and advantages that are attached to any mutual fund on offer.

Are we looking at a passing financial fashion? Or, with some of India’s largest media companies exploring the media-for-equity business, are we witnessing the beginning of something truly significant? Suppose the MMF does find takers, could there be other funds – bigger funds – that will mop up significant chunks of available inventory? Like the airline business with its empty seats, the media business worries perennially about liquidating excess media inventory. Firms have tried to create media exchanges as well as platforms to get rid of last-minute inventory.While the idea seems desirable in principle, publishers are reluctant to be associated with anything which even
suggests discounting, or which would compromise their brand with clients in the long run. Some publishers have used media barter, either with another publisher, or to acquire the odd asset. The approach has been opportunistic, not strategic. Is equity in return for media the answer that the business has been looking for all these years?

There are no lessons from abroad because, peculiarly, India is the only market in the world where media-equity swaps are being practised. TPT thinks that’s because in the West, there is a plethora of opportunities and avenues to fund various activities, including brand building. The Indian market, on the other hand, is relatively nascent.

Executives familiar with the business emphasize that the publisher who harbours a short-term objective of merely cashing in on excess inventory in return for shares is bound to come to grief. For it to work, the play has to be long term. It may also be more complicated – and expensive – than it first appears.

One of the perils of playing long term is evident even in TPT’s own portfolio of companies. The bulk of the investments were made in 2007 and 2008, during which the BSE stock index climbed steadily from 14,000 points to 23,000 points – only to settle later at around 10,000 points.

What’s happened to companies worldwide will hold true for the TPT investments, too – they will be valued far lower now than at the time of entry. BCCL will presumably ride it out because of its size and sheer pile of cash, but any other media company would have been reduced to making a desperate exit for its investments. Even when the markets are stable, there is the question of working capital. The media business is geared around receiving payment within 60-90 days. How much inventory can a company commit when it knows that the payback –assuming things go well – will happen only in three to five years? TPT concedes that it is a working capital intensive
business in which the money is blocked for a long period of time “since realisation is contingent on the liquidity event of the underlying investment” – in other words, an exit.

While there is an unstated notion that media inventory is free, when committed on a sustained basis, it costs money.Listed media companies tend to have an operational profit of about 20 per cent. This relatively low margin, coupled
with cash-flow requirements, means that a media company can’t put aside a lot of inventory for equity swap deals.Senior executives and analysts think that even a determined media company could not set aside more than 5 per
cent of its ad revenue towards equity. Going by that broad logic, the most that media companies could invest in,say, 2009, in equity through inventory would be about Rs 1,250 crore (assuming advertising spends at about Rs 25,000 crore, going by media agency GroupM’s estimates). And mind you, this is only potential – it assumes that every single publisher would want to get into it. Naturally, the real sum would be much smaller.

The other aspect publishers tend to overlook is that the investee companies have to be given media as agreed upon, according to that company’s need – not just in the lean advertising season, when it suits the publisher. In fact, it is more than likely that most companies will want ad space when cash-paying advertisers want space, so the creation of the inventory will cost real money.

Because BCCL is not publicly listed, it has the freedom to invest in smaller, less known ventures and it can also take a greater degree of risk. A listed company such as NDTV, on the other hand, limits itself to investing in well established and profitable companies because it wouldn’t like a notional loss reflected on its balance sheet. In any case, finding small companies with high-growth possibilities isn’t easy. TPT has more than a hundred employees scouring the market for potential investments. In the absence of a full-fledged team, says an investment
banker, it would be difficult for a media company to identify lesser known players in low-profile businesses.

The flip side

Finally, there is the issue of how target companies might perceive an offer such as this from a media company. A top TPT executive says that while banks and financial institutions are happy to fund physical, tangible assets, the funding of intangibles has always been a challenge. The advantage to an entrepreneur, he says, is that “he is using the future balance sheet to fund today’s advertising need”. While most entrepreneurs would rather have cash, there are few avenues to raise this, especially if they are in traditional businesses. Going by the TPT experience, they are clearly happy to accept the opportunity. Would a Morpheus have the same acceptability factor? It is early days yet, but the scheduling of ads across media, as the fund proposes to do, involving a large number of companies, could prove to be a complicated business. Each media company has its own bundle of processes. Therefore, ensuring that a few dozen investee companies can avail of the media in the best possible way could prove quite challenging.

A media fund is a truly original concept and while publishers are intrigued because it gives them a relatively risk-free way of exploring the media-for-equity business, they also have concerns. One prominent publisher, for example, wanted an assurance that the MMF wouldn’t target his cash paying advertisers.
That, indeed, is one major issue that makes publishers frown: Could this new initiative persuade cash paying advertisers to try equity instead? How does BCCL deal with this conflict, which surely exists? TPT argues that the two options between them “aid the overall expansion of the advertising pie rather than cannibalising it”. The choice made from among the two avenues depends on the “business compulsions and growth drivers”. The BCCL ad sales tam may not share that view.

The other point of conflict is editorial. BCCL has been repeatedly attacked in the media for compromising its editorial independence in favour of private treaty clients – favouring them in print without revealing to its readers that it holds
a stake. While the company denies that this is the case, there is no doubt that its editorial reputation has taken a ammering. The media business routinely deals with the issue of editorial independence vis-à-vis the advertiser – it is in the nature of the beast. So, it is not clear why the media-for-equity business should lead to any greater conflict than what already exists by accepting advertising.

In fact, the MMF presentation categorically states that editorial support is not expected; advertising support is good enough. So, one can only surmise that BCCL mishandled the issue – either by going out of its way to favour TPT clients or by not dealing with the matter transparently enough. In fact, the TPT executive refused to address theissue when it was raised by afaqs! The issue of conflict – either with editorial or with sales – does not change the fact that the media-for-equity idea is full of possibilities. However, like all new concepts, it may prove to be an expensive one to develop.

(The article was published in Agency FAQs and is based on interviews with dozens of industry professionals, who include S Sivakumar, principal secretary and chief executive officer-designate, Times Private Treaties; Lynn De Souza, director, Lintas
Media Group; Manajit Ghoshal, chief executive officer, Mid-Day Multimedia; Salil Pitale, head, media and telecom,Enam Securities; and Balu Nayar, managing director, Morpheus Capital Advisors.)

Wednesday, March 4, 2009

Consumer is Queen



Following Essay was submitted by me to Council for Fair Business Practice's Annual Essay Competition.

"If you understand women's consumer DNA and implement strategies that ring with authenticity, you will improve all of your marketing efforts. If you make it women-friendly, you make it everybody-friendly!"
- Joanne Yaccato (Gender Intelligence Expert & Founder of Toronto-based consulting firm The Thomas Yaccato Group)

Origin of Concept: Women Consumers
A consumer is a person who uses any product or service. Typically when business people and economists talk of consumers they are talking about person as consumer, an aggregated commodity item with little individuality other than that expressed in the buy/not-buy decision. However there is a trend in marketing to individualize the concept. Here is where the modern marketers distinctly segregated the concept of Women Consumers and saw them in a different light as to how they can be better reached and influenced. Women Consumers are presumed to dictate what goods are purchased and are generally considered the center of economic activity.

Women: Centre of Choice, Therefore Centre of Economic Activity
One of the major contributions that we all make to the economy is through buying things. Women's role as care givers has meant that women play an especially prominent role in buying things that provide sustenance for home and family. Women have been ignored in the past because they're in plain sight, but not anymore. It's standard marketing wisdom that women control 80% of all household purchases (Consulting firm A.T. Kearney estimates). As a result women have to face a number of decisions related to products/services & brands. This insight proves why marketers of household supplies, kids' gear, food, cosmetics and clothes are good at reaching women. But women buy gender-neutral stuff, too: cars, auto services, technology--the list includes everything but Viagra! Increasingly, women take responsibility for buying larger items such as houses and cars. And women are also often responsible for buying gifts on behalf of their families. When kids go to birthday parties, it is usually the mother who purchases and wraps the gift. It often works the same way when a couple attends a wedding or anniversary. Women are faced with endless choices and decisions in their lives as consumers. These facts make them centre of economic activities.



Women-O-Nomics: Underestimation of Economic Contribution of Women
Even the non-monetary part of consumption is part of the economy. Shopping for the goods that we need to survive takes time and attention. Buying food and clothes and school supplies and home furnishings often means watching out for sales and discounts. Comparison shopping, searching for offers, and finding the best deal, is also time-consuming. Shopping is work and is part of the unpaid labour not counted in the formal economy. But whether or not it's recognized as work, shopping is an activity fraught with dichotomy.

Women-O-Nomics: Escalating Economic Power of Women
Younger generations of Indian women have been profound. Whereas Indian women traditionally have been submissive to parents and husbands and valued frugality and modesty, a number of sociological studies show that young Indian females now prize financial independence, freedom to decide when to marry and have children, and glamorous careers. TOMORROW'S BUYERS. A generation back, women would sacrifice themselves and believed in saving, today, it is spend, spend, and spend. It is O.K. for a woman to want something for herself, and people will accept it if she goes out into a man's world making a statement. Because today's young women are the key consumer group of tomorrow, these shifts have big implications for marketing companies.

Women- The Evolved Consumers
Freud famously wondered, "What does a woman want?" He never figured it out, but many business owners have and are making money in the process. What women want right now is attention to detail in product design and service; the right choices, not endless choices; and a nuanced, longer selling process that respects their desire to understand what they're buying before they take it home. This prevailing wisdom doesn't just apply to the obvious categories like clothes, kids' stuff and cosmetics but too many more product categories. Apart from this, women tend to be far more evolved with respect to the kind of data that is assimilated from them through marketing research; they are excellent feedback providers and come up with ingenious insights. Also women are in the forefront to advocate ethical marketing practices and often take up action against fraudulent practitioners. Marketers of any product or service can adopt a service philosophy that delivers what women want. Once you translate these expectations to your market niche, you'll win the hearts and of women which directly translates into a loyal following.

Caselets


1.)A survey carried out in USA (in year 2006) states that 60 percent of women 16 and older are working. In nearly two-thirds of households, women are the primary shoppers, but 72 percent of married women who work full time are the primary shoppers. This reinforces the fact that women are the key decision makers and keeping focus on them is the key.

2.)Recent studies by Grey Global Group (In Year 2005) examined 3,400 unmarried women aged 19-22 of different income and social levels. Altogether, the project involved 40 focus groups in five large metro areas and five smaller cities in India. In some cases, the researchers lived with the women for a while to study them more closely. The researchers supplemented this data with interviews of journalists, teachers, and psychologists. The important trends recorded were as follows:

1.)Guilt-free materialism- 51% of young single women in major metro areas say it's necessary to have a big house and big car to be happy. In smaller cities, 86% agreed with this statement.

2.)Parental ties-67% say they plan to take care of their parents into their old age -- and that means they need money.


3.)Marital freedom- 65% say dating is essential, and they also want to become financially independent before they marry. More than three-quarters -- 76% -- say they want to maintain that independence afterward. Sixty percent say they'll decide how to spend their own salaries


4.)Individualism- Female role models in Indian culture used to personify perfection, Now, 62% of girls say it's O.K. if they have faults and that people see them.


5.)Careerism- 45% of young single females say they would like to be journalists. 39% say they would like to be managers, 38% are interested in design, and 20% think they want to be teachers. Interestingly, 13% say they would like to be in the military. The percentage of those saying they want to be a full-time housewife was minuscule.

6.)Modern husbands- The traditional role donned by husbands is changing and they are more involved with household chores.

Grey Global Group is of the opinion that For Indian society, the changes in young women's outlook on life is revolutionary. For marketers, they offer interesting new opportunities to exploit.

Queen Rules
Women are not just passive recipients of products & services. Women are powerful and have a powerful role to play. Working together as consumers and producers, women can make the world a more just place for all people and for our earth.


"No business owner can afford to ignore The Queen- women, and few would admit to doing so. But not ignoring them is not the same as attracting them, and attracting them is not the same as winning their loyalty. Try hard to woo the Queen, for you are sure to succeed with her!"
- Namita Parekh (Marketing Student & a Women Consumer)

Wednesday, January 21, 2009

Green Marketing - The Sustainable Way Ahead.


Following is a paper I had written for my B-School's Journal related to Importance of Sustainable Strategies.

“Do you really dare put your head above the parapet by touting your greenness and attract very knowledgeable consumers who are going to crawl all over your business... and Greenpeace and every other environmental group you can think of?... If consumers think they can catch you telling a half-truth, they will"
- Mike Longhurst, Senior Vice President McCann-Erickson.

GREEN MARKETING - INTRODUCTION


The term Green Marketing came into prominence in the late 1980s and early 1990s. The American Marketing Association (AMA) held the first workshop on "Ecological Marketing" in 1975. The proceedings of this workshop resulted in one of the first books on green marketing entitled "Ecological Marketing".
The American Marketing Association (AMA) defines green marketing as marketing of products that are presumed to be environmentally safe. Another definition states that "Green or Environmental Marketing consists of all activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants, such that the satisfaction of these needs and wants occurs, with minimal detrimental impact on the natural environment." This definition incorporates much of the traditional components of the marketing definition, that is "All activities designed to generate and facilitate any exchanges intended to satisfy human needs or wants" Therefore it ensures that the interests of the organization and all its consumers are protected, as voluntary exchange will not take place unless both the buyer and seller mutually benefit. The above definition also includes the protection of the natural environment, by attempting to minimize the detrimental impact this exchange has on the environment. This second point is important, for human consumption by its very nature is destructive to the natural environment. So green marketing should look at minimizing environmental harm, not necessarily eliminating it.
Green Marketing incorporates a broad range of activities, including product modifications, changes to the production process, packaging changes, as well as modifying communication. Yet defining green marketing is not a simple task where several meanings intersect and contradict each other; an example of this will be the existence of varying social, environmental and retail definitions attached to this term. Other similar terms used are Environmental Marketing and Ecological Marketing.
Jacquelyn Ottman, (author of Green Marketing: Opportunity for Innovation) states that from an organizational standpoint, environmental considerations should be integrated into all aspects of marketing — new product development and communications and all points in between. Green Marketing in practice connects many dots including traditional entities like suppliers, manufacturers, retailers & new stakeholders, including educators, members of the community, regulators, and NGOs and makes the whole process beautifully sustainable.

Green or Sustainable Marketing has found its way as a popular Marketing lexicon where very many Marketers pay lip service to it. However how much of it has actually translated into actual initiatives undertaken by corporate sector is yet unclear. Many customers are joining the so-called "green consumer" bandwagon however such movements in the U.S. and other countries have struggled to reach critical mass and to remain in the forefront of shoppers' minds.
Sustainable brands and sustainable marketing are often seen as synonymous with ecological responsibility and being green. But there are three key pillars to a sustainable strategy; ecology, economy and culture.

The ecological dimension

This is perhaps the best known and best understood dimension, and many brands are already working hard in this area.

The economic dimension

Is the economic and financial model sustainable? What effect will this have on the other two dimensions - will the pricing model unavoidably lead to offshore manufacturing, social exploitation or long distance transportation? How will the brand’s business plan impact upon increasingly globalised markets?

The cultural/social dimension

Brands operate in human societies: everything that happens is an interaction between people and the brand. And those interactions cause impacts and changes on both. We must weigh the effects of the brand upon the societies in which it operates - its employees, suppliers, customers and the world at large.
Consideration of these dimensions is not only socially responsible, but makes sound business sense as it can be seen as a differentiator of corporate social responsibility.

IMPORTANCE OF GREEN MARKETING

Man has limited resources on the earth, with which she/he must attempt to provide for the worlds' unlimited wants. There is extensive debate as to whether the earth is a resource at man's disposal.. In market societies where there is "freedom of choice", it has generally been accepted that individuals and organizations have the right to attempt to have their wants satisfied. As firms face limited natural resources, they must develop new or alternative ways of satisfying these unlimited wants. Ultimately green marketing looks at how marketing activities utilize these limited resources, while satisfying consumers wants, both of individuals and industry, as well as achieving the selling organization's objectives.
When looking through the literature there are several suggested reasons for firms increased use of Green Marketing. Five possible reasons are as follows:

1.)Organizations perceives environmental marketing to be an opportunity that can be used to achieve its objectives.
All types of consumers, both individual and industrial are becoming more concerned and aware about the natural environment. In a 1992 study of 16 countries, more than 50% of consumers in each country, other than Singapore, indicated they were concerned about the environment. A 1994 study in Australia found that 84.6% of the sample believed all individuals had a responsibility to care for the environment. A further 80% of this sample indicated that they had modified their behaviour, including their purchasing behaviour, due to environmental reasons. As demands change, many firms see these changes as an opportunity to be exploited. It can be assumed that firms marketing goods with environmental characteristics will have a competitive advantage over firms marketing non-environmentally responsible alternatives. There are numerous examples of firms who have strived to become more environmentally responsible, in an attempt to better satisfy their consumer need. McDonald's replaced its clam shell packaging with waxed paper because of increased consumer concern relating to polystyrene production and Ozone depletion. Xerox introduced a "high quality" recycled photocopier paper in an attempt to satisfy the demands of firms for less environmentally harmful products.

2.) Organizations believe they have a moral obligation to be more socially responsible.
Many firms are beginning to realize that they are members of the wider community and therefore must behave in an environmentally responsible fashion. This translates into firms that believe they must achieve environmental objectives as well as profit related objectives. This results in environmental issues being integrated into the firm's corporate culture. Firms in this situation can take two perspectives; (1) they can use the fact that they are environmentally responsible as a marketing tool; or (2) they can become responsible without promoting this fact. There are examples of firms adopting both strategies. Organizations like the Body Shop heavily promote the fact that they are environmentally responsible. While this behaviour is a competitive advantage, the firm was established specifically to offer consumers environmentally responsible alternatives to conventional cosmetic products. This philosophy is directly tied to the overall corporate culture, rather than simply being a competitive tool. An example of a firm that does not promote its environmental initiatives is Coca-Cola. They have invested large sums of money in various recycling activities, as well as having modified their packaging to minimize its environmental impact. While being concerned about the environment, Coke has not used this concern as a marketing tool. Thus many consumers may not realize that Coke is a very environmentally committed organization. Another firm who is very environmentally responsible but does not promote this fact, at least outside the organization, is Walt Disney World (WDW). WDW has an extensive waste management program and infrastructure in place, yet these facilities are not highlighted in their general tourist promotional activities.

3.) Governmental bodies are forcing firms to become more responsible.
As with all marketing related activities, governments want to "protect" consumers and society; this protection has significant green marketing implications. Governmental regulations relating to environmental marketing are designed to protect consumers in several ways, 1) reduce production of harmful goods or by-products; 2) modify consumer and industry's use and/or consumption of harmful goods; or 3) ensure that all types of consumers have the ability to evaluate the environmental composition of goods.
Governments establish regulations designed to control the amount of hazardous wastes produced by firms. Many by-products of production are controlled through the issuing of various environmental licenses, thus modifying organizational behaviour. In some cases governments try to "induce" final consumers to become more responsible. For example, some governments have introduced voluntary curb-side recycling programs, making it easier for consumers to act responsibly. In other cases governments tax individuals who act in an irresponsible fashion. For example in Australia there is a higher gas tax associated with leaded petrol.

4.) Competitors' environmental activities pressure firms to change their environmental marketing activities.
Another major force in the environmental marketing area has been firms' desire to maintain their competitive position. In many cases firms observe competitors promoting their environmental behaviours and attempt to emulate this behaviour. In some instances this competitive pressure has caused an entire industry to modify and thus reduce its detrimental environmental behaviour. For example, it could be argued that Xerox's "Revive 100% Recycled paper" was introduced a few years ago in an attempt to address the introduction of recycled photocopier paper by other manufacturers. In another example when one tuna manufacture stopped using driftnets the others followed suit.

5.) Cost factors associated with waste disposal, or reductions in material usage forces firms to modify their behaviour.
Firms may also use green marketing in an attempt to address cost or profit related issues. Disposing of environmentally harmful by-products, such as polychlorinated biphenyl (PCB) contaminated oil are becoming increasingly costly and in some cases difficult. Therefore firms that can reduce harmful wastes may incur substantial cost savings. When attempting to minimize waste, firms are often forced to re-examine their production processes. In these cases they often develop more effective production processes that not only reduce waste, but reduce the need for some raw materials. This serves as a double cost savings, since both waste and raw material are reduced. In other cases firms attempt to find end-of-pipe solutions, instead of minimizing waste. In these situations firms try to find markets or uses for their waste materials, where one firm's waste becomes another firm's input of production. One Australian example of this is a firm who produces acidic waste water as a by-product of production and sells it to a firm involved in neutralizing base materials. The last way in which cost or profit issues may affect firms' environmental marketing activities is that new industries may be developed. This can occur in two ways:
1) a firm develops a technology for reducing waste and sells it to other firms; or 2) a waste recycling or removal industry develops. For example, firms that clean the oil in large industrial condensers increase the life of those condensers, removing the need for replacing the oil, as well as the need to dispose of the waste oil. This reduces operating costs for those owning the condensers and generates revenue for those firms cleaning the oil.

SOME PROBLEMS WITH GREEN MARKETING

There are a number of potential problems that must overcome. One of the main problems is that firms using green marketing must ensure that their activities are not misleading to consumers or industry, and do not breach any of the regulations or laws dealing with environmental marketing. Green marketing claims must clearly state environmental benefits. A problem of the firms face is that those who modify their products due to increased consumer concern must contend with the fact that consumers' perceptions are sometimes not correct. For example the McDonald's case where it has replaced its clam shells with plastic coated paper. There is ongoing scientific debate which is more environmentally friendly. Some scientific evidence suggests that when taking a cradle to grave approach, polystyrene is less environmentally harmful if this is the case McDonald's bowed to consumer pressure, yet has chosen the more environmentally harmful option. When firms attempt to become socially responsible, they may face the risk that the environmentally responsible action of today will be found to be harmful in the future. Take for example the aerosol industry which has switched from CFCs (chlorofluorocarbons) to HFCs (hydro fluorocarbons) only to be told HFCs are also a greenhouse gas. Some firms now use DME (di-methyl ether) as an aerosol propellant, which may also harm the ozone layer. Given the limited scientific knowledge at any point, it may be impossible for a firm to have made the correct environmental decision. This may explain why some firms, like Coca-Cola and Walt Disney World, are becoming socially responsible without publicizing the point. They may be protecting themselves from potential future negative backlash; if it is determined they made the wrong decision in the past. While governmental regulation is designed to give consumers the opportunity to make better decisions or to motivate them to be more environmentally responsible, there is difficulty in establishing policies that will address all environmental issues. For example, guidelines developed to control environmental marketing address only a very narrow set of issues, i.e., the truthfulness of environmental marketing claims. If governments want to modify consumer behaviour they need to establish a different set of regulations. Thus governmental attempts to protect the environment may result in a proliferation of regulations and guidelines, with no one central controlling body. Reacting to competitive pressures can cause all "followers" to make the same mistake as the "leader." Mobil Corporation who has followed the competition and introduced "biodegradable" plastic garbage bags, as because technically these bags were biodegradable, the conditions under which they were disposed did not allow biodegradation to occur. Mobil was sued by several US states for using misleading advertising claims. Thus blindly following the competition can have costly ramifications.

The push to reduce costs or increase profits may not force firms to address the important issue of environmental degradation. End-of-pipe solutions may not actually reduce the waste but rather shift it around. While this may be beneficial, it does not necessarily address the larger environmental problem, though it may minimize its short term affects. Ultimately most waste produced will enter the waste stream, therefore to be environmentally responsible organizations should attempt to minimize their waste, rather than find "appropriate" uses for it.

OTHER CHALLENGES FACED BY GREEN MARKETING:


1.) Lack of Standards- No public consensus about what constitutes "green"- How good is good enough?
2.) Healthy consumer skepticism - People doubt the "Green Claims" made by many companies.
3.) Green Washing- Taking advantage of confusion and exaggerating your green marketing efforts.
4.) Corporate Lethargy - Complacency on part of companies to encourage more sustainable strategies.

CASE STUDIES ON GREEN MARKETING:

1.) Kyoto Protocol’s Clean Development Mechanism (CDM)

The emerging greenhouse gas reduction market can potentially catalyze projects with important local environmental, economic, and quality-of-life benefits. The Kyoto Protocol’s Clean Development Mechanism (CDM), for example, enables trading between industrial and developing nations, providing a framework that can result in capital flows to environmentally beneficial development activities. Although the United States is not participating in the Kyoto Protocol, several US programs enable similar transactions on a voluntary and regulatory basis.
While international trade in greenhouse gas reductions holds substantial promise as a source of new funding for sustainable development, this market can be largely inaccessible to many smaller-scale projects, remote communities, and least developed localities. To facilitate participation and broaden the benefits, several barriers must be overcome, including: a lack of market awareness among stakeholders and prospective participants; specialized, somewhat complicated participation rules; and the need for simplified participation mechanisms for small projects, without which transaction costs can overwhelm the financial benefits of participation. If the barriers are adequately addressed, greenhouse gas trading can play an important role supporting activities that benefit people’s lives and the environment.

2.) Philips Light's CFL

Philips Lighting's first shot at marketing a standalone compact fluorescent light (CFL) bulb was Earth Light, at $15 each versus 75 cents for incandescent bulbs. The product had difficulty climbing out of its deep green niche. The company re-launched the product as "Marathon," underscoring its new "super long life" positioning and promise of saving $26 in energy costs over its five-year lifetime. Finally, with the U.S. EPA's Energy Star label to add credibility as well as new sensitivity to rising utility costs and electricity shortages, sales climbed 12 percent in an otherwise flat market.

3.) Introduction of CNG in Delhi

New Delhi, was being polluted at a very fast pace until Supreme Court of India forced a change to alternative fuels. In 2002, a directive was issued to completely adopt CNG in all public transport systems to curb pollution. This is an example which can be followed by metros across the world to reduce their carbon emissions.

4.) Lush Cosmetics

The case is about Lush Fresh Handmade Cosmetics (Lush), a UK-based manufacturer and marketer of ethical beauty products with nearly 500 stores worldwide. The case focuses on the sustainable business practices of Lush, with a special emphasis on its sustainable packaging practices.

At a time when the world was experiencing an explosion in packaging due to the increasing importance of packaging as a marketing tool, 65 percent of Lush's products were sold ‘naked'(i.e. without packaging). The rest of the products came with minimal packaging. The retail chain used just enough packaging so that the products reached the residence of its customers safely.
It used grease proof paper, reusable tins; paper bags made from recycled materials and rewarded its customers for bringing back their containers and shopping bags. In 2007, it started using popcorn as loose fill instead of shredded paper (many other companies use polystyrene chips) in its shipping package. The same year, Lush also started a worldwide campaign ‘Get Naked' against excessive packaging by the industry. The much-publicized campaign strove to educate consumers regarding the adverse affect of packaging waste on the environment and urged them to shun excessively packaged products in favor of minimally packaged or ‘naked' products.

Lush, which marketed fresh and natural handmade products, had leveraged on its new product development to come up with ‘category defying’ products such as solid shampoos, solid conditioners, deodorants, massage bars, and solid bubble bath, which required no packaging. Moreover, these products were designed in the form of eatables such as cakes, cheese, ice-creams, and other desserts, and were displayed in the store in the form of an old-fashioned delicatessen. Experts felt that Lush through all aspects of its business – packaging practices, natural products, against-animal-testing stance, support for fair trade, decision to not use mass-media advertising and not go public to sustain its ethical practices – displayed a strong commitment to sustainable development issues and also successfully differentiated itself from its competitors. They felt that a key reason for the success of Lush was its corporate culture with everyone from the directors to the people working in the stores sharing the values of the brand.

5.) Body Shop

This case is about the issue of sustainability rhetoric and greenwashing. In March 2006, The Body Shop International Plc. (Body Shop), a retailer of natural-based and ethically-sourced beauty products, announced that it had agreed to an acquisition by the beauty care giant L'Oréal SA (L'Oréal) in a cash deal worth £652 million (US$ 1.14 billion).
The announcement brought in its wake a spate of criticism against Body Shop and its founder, Dame Anita Roddick (Roddick). Body Shop was regarded as a pioneer in modern corporate social responsibility (CSR) practices. The company was also strongly associated with Roddick's social activism.
Since its inception, it had endorsed and championed various social issues such as opposition to animal testing, developing community trade, building self-esteem, campaigning for human rights, and protection of the planet. Through these initiatives, the company had cultivated a loyal base of customers who shared these values.
L'Oréal, on the other hand, had been severely criticized by activists for allegedly testing its cosmetics on animals, exploiting the sexuality of women, and selling its products by making women feel insecure. Moreover, Nestlé owned 26 percent of L'Oréal and Nestlé was one of the most boycotted companies in the world for its alleged unethical business practices and aggressive promotion of baby milk in developing countries.
Some of Body Shop's critics and customers said that they felt betrayed by the deal as Roddick had previously been vocal in her criticism of companies like L'Oréal. They called for a boycott of Body Shop's products. However, Body Shop and Roddick defended the deal by saying that the acquisition by L'Oréal would not compromise Body Shop's ethics; the merger would, in fact, give Body Shop a chance to spread its values to L'Oréal. L'Oréal also announced that Body Shop's values would not be compromised and that it would continue to operate as an independent unit.

This case showcases the reactions of consumers, activists, and CSR experts to the acquisition of Body Shop by L'Oréal. The acquisition throws up some questions such as: Is Body Shop guilty of greenwashing? Does it have the influence to extend its values to L'Oréal? The case also looks into the issue of whether L'Oréal was trying to improve its own image and to buy CSR through this deal.

CONCLUSION

Green marketing covers more than a firm's marketing claims. While firms must bear much of the responsibility for environmental degradation, ultimately it is consumers who demand goods, and thus create environmental problems. One example of this is where McDonald's is often blamed for polluting the environment because much of their packaging finishes up as roadside waste. It must be remembered that it is the uncaring consumer who chooses to disposes of their waste in an inappropriate fashion. While firms can have a great impact on the natural environment, the responsibility should not be theirs alone. It appears that consumers are not overly committed to improving their environment and may be looking to lay too much responsibility on industry and government. Ultimately green marketing requires that consumers want a cleaner environment and are willing to "pay" for it, possibly through higher priced goods, modified individual lifestyles, or even governmental intervention. Until this occurs it will be difficult for firms alone to lead the green marketing revolution. It must not be forgotten that the industrial buyer also has the ability to pressure suppliers to modify their activities. Thus an environmental committed organization may not only produce goods that have reduced their detrimental impact on the environment, they may also be able to pressure their suppliers to behave in a more environmentally "responsible" fashion. Final consumers and industrial buyers also have the ability to pressure organizations to integrate the environment into their corporate culture and thus ensure all organizations minimize the detrimental environmental impact of their activities.

TEXT REFERENCES:

Crane, A. (2000), "Facing the backlash: green marketing and strategic re-orientation in the 1990s", Journal of Strategic Marketing, Vol.8, No.3
Elkington, J. (1994), "Towards the sustainable corporation: win win business strategies for sustainable development", California Management Review, Vol. 36 No.2
Mintel (1991). London, The green consumer report.
Ottman, J.A. (1993), Green Marketing: Challenges and opportunities, NTC Business Books, Chicago, IL.
Porter, M.E., Van der Linde (1995), "Green and competitive: ending the stalemate", Harvard Business Review, Vol.73, No.5
Shelton, R.D. (1994), "Hitting the green wall: why corporate programs get stalled", Corporate Environmental Strategy, Vol.2, No.2
Smithe, T. (1998), "The Green Marketing Myth: Tending out Goats at the Edge of Apocalypse, university of Toronto press, Toronto.
Wong, V., Turner, W., Stoneman, P.(1996), "Marketing strategies and market prospects for environmentally-friendly consumer products", British Journal of Management, Vol.7, No.3

ONLINE REFERENCES:

wikipedia.com & miscellaneous blogs on Green Marketing.