Internet Usage in Rural India

According to a survey conducted jointly by IMRB International and IAMAI, the number of active internet users (those who have used internet at least once in the last one month) in rural India increased by 27 per cent to 4.2 million in 2009 from 3.3 million in 2008 and is expected to further grow by 28 per cent to 5.4 million by the end of 2010.

The survey reveals that the internet was used for the following purposes by rural population in 2009:

85% used it for emails
67% accessed music and videos
48% used it for educational research
42% used it for general information search.
13% for knowing more about latest farming techniques
8% to find more about fertilizers and pesticides.

Internet related initiatives with farming as a focus would certainly trigger internet literacy to rise faster (in rural India). Schemes like Common Service Centres (CSC) and State Wide Area Network (SWAN)

The same survey stated that 84% of people in rural India don’t know what Internet is all about:

84% are unaware of internet
31% do not have internet access point
25% has no internet connection.
38% do not feel the need for internet.

“On your marks, Get set, BUY!!!”

This article was written by me & published in International Point of Purchase Magazine, January 2010 issue and is copy right protected.

To understand the self-service industry in India and determine the demand of multi-channel self-service technologies, NCR commissioned BuzzBack Market Research to conduct a shopper study. The research reveals that time pressed shoppers are game for quick and convenient shopping trips where they increasingly handle number of transactions on their own through self-service devices and thus in-store self-service technologies play a vital role in meeting their service needs. Such on-the-go consumers prefer to do business with companies that make things easier for them.

People want more control of their interaction with businesses and would not prefer waiting for assistance with transactions when they can more quickly and easily do it themselves at guaranteed quality! Consumers increasingly expect to be served where and when they choose, and are putting pressure on businesses and government agencies to deliver seamless service through the integration of self-serve devices, including the Internet, mobile devices and multipurpose kiosks.


The survey covered 505 Indian respondents. We bring you the insights!

Background on survey methodology

A total of 505 Indian respondents, participated in this study which consisted of 54% females and 46% Males. The age profile of respondents ranged from 18 years to 65 years.

Findings:
The survey reveals how self-service is playing a key role in providing consumers with more flexibility and choice as they change their purchase decisions and behavior in order to beat recessionary pressures. Cyclic economic conditions, not only change people’s perception of value but also influence their decision making with regards to the brands bought. In the Indian retail context, the recent spate of economic conditions has thrown up some unique challenges for marketers which, if handled well, can be successfully leveraged to build a long lasting relationship with the customer or cause an irreversible damage of losing them. The research throws light on the economic conditions and how consumers weigh their decisions based on them.

Effect of economic climate on shopping and purchase decisions

The existing economic environment resulted into interesting findings about people’s shopping patterns. When asked about how the economic climate was affecting their shopping habits, 63% shoppers said that they would use internet to research about various products and prices and 60% shoppers stated that they would want to receive price comparisons, product reviews, coupons, promotion and store sales information online or via email from retailers, which shows that online medium is gaining immense importance with respect to finding definitive answers to customer’s queries and making sure that they are not only buying the right product, but at best possible deals. Also because of the slowdown, customers have become more value conscious, 57% people stated that they are ready to change loyalties by switching on to another retailer for the sake of better value. Bargain hunting or ‘shop hopping’ between their favorite retailers in search of the best deal and choosing store brand or generic products over brand name options will be a norm.
So, value proposition is one of themes that can be exploited by brand marketers. Tangible value is what will increase your customers opportunity cost, making him stay with a brand. Self service technology such as automated coupon dispensers, or information kiosks within the store can be effectively used for value communication purpose and influence purchase decisions
Price promotions, discounted merchandise offered by marketers to make up for their short term sales goals, and are successful in enticing consumers. However, investing in your brand communication and building your brands is what will reap the benefits. 68% of the respondents said that they would want to buy discounted goods and 59% said that they were interested in limited period offers. Such price wars are bound to challenge Brand allegiance compounded with changing shopping patterns of consumers.

Rush Hour:

Time spent by consumers within a retail outlet is one of the important metrics used to gauge store profitability. Time spent & conveniences inside the store are other major trends that were tracked in the survey. 72% shoppers said that they would desire to pay for their shopping more quickly so they do not need to increase the overall time spent shopping & 64% of the respondents felt that other customers spent considerably more time shopping which made the stores busier adding to their discomfort. This calls for better optimization of billing counters or deploying self service check-out and billing facilities which would not only make the process quick and convenient for the consumers but also make the stores less crowded and more experiential.

“May I Help You?” -Staff allocation in retail stores:

The research also examined the extent to which consumers would prefer to wait for personal assistance when banking, shopping, dining, etc. Results showed that while respondents prefer to manage the majority of activities on their own, a significant number still prefer person-to-person encounter, which is typical in Indian retail context. Even though there is a growing trend of retailers deploying self service apparatus, shoppers at the same time would also prefer sales personnel in the retail outlet. When asked about the importance of staff in retail stores, 79% shoppers stated that they preferred to ask sales staff about the product locations and 75% shoppers felt that sales staff made their purchase process faster. Although convenient and user friendly, it would be difficult for retailers to solely depend upon self service technologies. The presence of human element to explain the process or just provide required information will continue to be imperative.

Proper deployment of self-service will allow businesses to focus personal assistance where consumers find it most valuable. Companies that want to remain competitive in the future will need to understand how to deploy self-service to maximize convenience and provide the flexibility required by consumers.


Convenient non-retail self-service solutions in stores

Self-service non retail solutions are not yet common in the Indian context but due to introduction of advanced technology and its fast adoption, people are slowly getting to know the utility aspect of self service tools. When shoppers were asked that what according to them would be convenient to use in a store to obtain non retail services, 74% of shoppers said that receiving discount offerings and product information on large screens in store is what they would prefer and 62% people said that they would like kiosks that shows you where to find products and product sections in the store. This largely highlights the importance that shoppers lay on seeking relevant information and convenient product placements within the stores.

Convenient self-service solutions in stores to help with purchases

As consumers adapt their behavior to cope with the slow down, they are also looking for more advice and help from companies with decisions. On account of emergence of ‘mall culture’ and different organized retail formats coming out in the markets, many in store self service tools have a potential to grow and generate sizable demands. On the convenience platform, when shoppers were asked to select self-service solutions in a store which would help them in their purchases, 73% customers preferred getting information about discount vouchers via their mobile phones to redeem in store. Taking into consideration the high mobile penetration in India, it is not surprising that this is the most sought after self service tool. Second on the preference list was getting confirmation of the time slot for a home delivery on their mobile phone which 64% of the shoppers preferred. This re emphasizes the importance of mobile phones as a means to connect with Indian audiences and give out information.

Affinity towards retailers who adopt self-service solutions

When asked about their likelihood to shop with a retailer that gives them the flexibility to interact easily via online, mobile and kiosk self-service channels versus a retailer that doesn’t offer such facilities, a staggering 93% shoppers preferred the former laying down an encouraging scope of innovative work in multi channel self serve industry. Also 81% shoppers showed increased likelihood to use self service since past one year. Ensuring a consistent and predictable customer experience is a challenge for even the best companies in the world, however self service can streamline many processes followed by retailers thus enabling consistency.

Brand Building

Smart companies are implementing ways to take the in-store experience beyond the lease line to extend brand affinity, drive consumer behavior and provide relevant lifestyle content to the consumer. All these advancements aim to enhance the shopping experience, lifting it to more than just a trip to a store, but rather a theatrical experience where purchasing merchandise is only part of the journey. Implementing self service technologies in the retail environment enhances positive perception of the deployer’s brand. 80% of the shoppers perceived the brand positively because of adoption of self service technologies.
Not only are these solutions successful at engaging consumers, but they have also been proven to extend dwell time and increase brand awareness – key factors in ongoing loyalty and long-term buying relationships.
In addition to the traditional touch points used for decades and the ubiquity of the Web in our daily lives, companies should strive to reach their customer base in new and innovative ways that are meaningful engaging and enriching. The ultimate goal is to take advantage of channels that the public is already tapping into in a meaningful way and integrate company’s brand into those various touchpoints, including but not limited to e-mailers, info kiosks etc.

Multi channel self services which continue to give you information, anytime, anywhere are most preferred by consumers. 58% shoppers are more likely to do business with companies that offer these services. Content delivery , information sharing, ease of transaction, interactive interfaces etc are some of the most powerful tools in dynamically delivering a company’s products and services easily, effectively and immersively while at the same time, engaging the customer with the overall brand. Whether in a store or at a non-retail point, the engagement must deliver an instant “A-ha!” moment that connects the individual experience and on-screen/self service content to everything else the organization is doing in the marketplace.

Research shows consumers are seeking out those companies that can offer both value and service by adapting quickly to their changing needs in these uncertain times.
Multi-channel self-service is a smart capital investment. It provides the choice that consumers are demanding while being cost-effective to companies that allows them to redeploy employees to improve service and sales. As consumers experience these benefits of self-service across multiple industries, they will come to expect the same levels of interaction in more aspects of their lives.

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.

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!

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:

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.

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)