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Consumers against toxic products (or just a fear bubble?)

There’s been a lively debate on Retailwire.com initiated by Tom Ryan (Managing Editor), and prompted by an article in the Washington Post about how consumers are literally taking matters in their own hands and testing toys and domestic items for the presence of toxic substances.

Some of the commentators feel that this is going too far and could create waves of unnecessary panic, that consumers and consumer advocacy groups do not have the necessary expertise nor a balanced judgement, that it is a job for the government agencies. Others support the move and say that such moves are absolutely in order.

In my opinion, despite good intentions on the retailer’s part and the humongous bureaucracy in the supply chain, if product safety compliance is incomplete and if consumers feel insecure, then they will provide the wake-up call any which way they can.

We may decry the paranoia, but let’s also consider the increase and concentration of risk in recent years due to factors such as:

  1. Vague responsibility for unsafe products due to the nature of the current supply chain
  2. Extreme focus on factory costs leading to corners being cut in the supply base
  3. Long lead-times between the buying decision and actual delivery, with multiple hand-offs (and sometimes, meanwhile, people changing jobs and responsibility)
  4. Significantly larger consumption and disposal volumes than earlier generations
  5. “Strategic sourcing relationships” leading to concentration of sourcing volumes–if one product line has been produced with unsafe toxins by a vendor, the likelihood of others being handled the same way are higher as well. While we all hope that more business gets concentrated to a vendor with better practices, such is not always the case.

However the industry may feel about it, I think consumer advocates have the steering wheel on this one. Unless government outlaws ‘unapproved’ testing…but I wonder how palatable that would be, politically speaking.

Here’s the original article from the Washington Post.

And the discussion on Retailwire.com is here (needs a free sign-up).

Golden Geese, Steel Safes

(Contributed to the BusinessWorld cover story – “What 2 Expect in 2010”, issue of January 4, 2010)

Everything that can be said and assumed about the Indian market is true at some level of granularity. Very simply, in India there is a segment for every product, an opportunity for every service, be it ever so small. But when bubbles are bursting all over, as the Noughties Decade comes to a close, the puzzle that is Indian consumer market also warrants a fresh look.

For most of the Noughties Decade India has seen Generation-C, the “Choice” generation, coming of age. They have moved over from being “secondary customers” consuming off their parents’ incomes, to entering the work-force and becoming customers in their own right.

It may sound trite, but Gen-C customers have grown up with many models of 2-wheelers and 4-wheelers and colour television with multiple channels. They have many more career options and many more opportunities in each career. Not only have they grown up on a diet of choice, they have also grown up with much higher confidence about the future, about their place in the world and what they can expect. And they have infected the outlook of generations older than them as well with a similar confidence.

Therefore, for most of the decade, it has been a distinctly rosy picture for consumer goods marketers and retailers. Business plans routinely expected 20-50% annualised growth, and businesses even delivered those figures on some basis or the other. Organizations as diverse as retailers and management consultants were inspired by India’s age-old image as the Bird of Gold. Supermarket chains mushroomed like never before, department stores and speciality retailers grew their footprints, quick-service and casual dining expanded covers, while electronics, durables, leisure companies, and car brands all counted India among their hottest markets.

Product off-take reflected this outlook. Amongst the FMCG sector, while basic items such as the bath and shower segment demonstrated a steady annualised growth of about 7%, premium cosmetics galloped at almost 20% a year. While the relatively mature 2-wheeler market grew at just over 7.5% annually between 2002-03 and 2008-09, the 4-wheeler passenger vehicle market demonstrated growth of almost 14% a year in the same period.

All this was before the recent rude interruption.

A speed-breaker began showing up in the consumer market in late-2007 and grew larger through 2008. Once the global financial markets melted down in late-2008, media sentiment turned acutely negative about the Indian market as well. And, eventually, with uncertainty prevailing around the world, consumer spending in India did take a hit. Consumers cut back on the frequency of purchases or traded down.

On the trade side, retail businesses began acknowledging that stores were performing below plan and went into rationalisation mode. For branded suppliers, where some of the growth had come from stuffing the pipeline and filling new shelves, wholesale order books became thinner.

Yet, as painful as the economic scenario might have appeared, the Indian consumer market has shown remarkable resilience. Demand in smaller cities and towns has remained robust. Regional brands, especially, found plenty of opportunity to grow in markets and geographical regions where they were under-penetrated or absent.

And as the mood lifted through the latter half of 2009, consumer demand clearly moved back up. The speed at which the demand rebounded would suggest that the Indian market was relatively sheltered from the global economic storm.

However, there are some critical differences to understand.

On the one hand, Gen-C’s confidence shook for the first time – a generation that has only seen upward mobility, witnessed job cuts and salary freezes or declines even if only second-hand. Comparisons with the Great Depression may be exaggerated but it is a scenario they can now imagine as a possibility. At least three new professional academic batches have or will have moved into the job market under these sober conditions. On the other hand, tremendous inflation in basic costs supports some amount of uncertainty about the future. The fact that many of the Gen-C would have just begun or would be about to begin families serves to only heighten such anxiety.

So, let’s recognise two immutable facts about the Indian consumer market in the current environment.

First: that the ancestral “steel safes” are back, at least figuratively if not literally. Customers do want to save more for now. And if they are spending, they want to feel that they are extracting far more value than the price they are exchanging across the counter, value that will last long after the transaction at the store. In recent years, this inherent ‘value orientation’ of the Indian consumer was neglected by many. Now every product, service or brand must aim to deliver this sustainable value, and demonstrate the value repeatedly.

Secondly, each business needs to look at the lifetime value of a customer if it can. Rather than cutting the golden bird open and trying to extract all the golden eggs at once, one needs need to keep the bird well-fed, happy and healthy, and enjoy its rewards over several years. Rather than creaming the market, pricing, branding and distribution need to be structured for a sustainable relationship with the customer.

Some businesses will work better than others in this market, and strategies will need to be adapted. A lifecycle approach may handy in identifying the business segments which might meet the steel safe criterion, or the golden goose criterion, or both.

The first segment that comes to mind is weddings. Wedding expenditure is seen as a “social investment” for both the families, and the actual items bought are an investment into the couple’s future together. So, bridal trousseaux and wedding wardrobes, wedding arrangers and catering, and household goods provide significantly more tangible and intangible value than the money spent.

Similarly, “first child” isn’t usually a segment in any marketing handbook, but should be. The couple’s first born, especially if the baby is the first in its generation will usually get a disproportionate amount of attention and spending on clothing and utilities. A baby’s growth into a child, of course, can provide a relationship and marketing opportunity that can last for years, but the first 2-3 years are specifically valuable. What’s more, given India’s demographic dividend in the form of a sustained under-30 age group, baby products have a sustained and growing value as a market.

As the child grows, there are clear indicators of current and future value that can drive purchases. While base schooling is an essential expenditure, extra-classes and tuitions are a high-value discretionary investment that parents are choosing to make. Sports, on the other hand, however essential they may be to a child’s development are often seen as a distraction. That is, unless the child is attending sports coaching and the parents have an eye on helping the child create a career from it – in which case, a coach who is apparently good, branded equipment and kit are definitely worth investing in. So a cricket coaching franchise might just be the ticket to fortune, while a toy company may struggle. Some may decry the decline in art, craft, philosophy and fundamental sciences, but these are not on the list of priority of most parents. In the short to medium term, parents would continue to disproportionately push their wards into academic disciplines that are seen to develop marketable skills and pay well. Expect continued growth in the engineering, medical and management education market, but also in other vocational disciplines.

On the other hand, everything is not an investment for the future. Present comforts may also provide extra value, through convenience.

Some of these comforts may be as small as enjoying out-of-home exotic meals (pizza and pasta still qualify as exotic for the bulk of the population). Or if eating out looks out of budget, ready-to-eat and ready-to-cook meals are an easy substitute. Jubilant, Yum, McDonald’s, Haldiram, Sarvana’s, Nirula’s and the thousands of other casual dining and snack food chains have a long clear highway of growth ahead, as do snacks and packaged food companies such as Nestle, Britannia and ITC.

Brown goods and white goods that offer comfort and convenience – coolers, water heaters, convectors, air-conditioners and kitchen gadgets – continue their onward march, despite the huge shortfall in electricity. Even if the big brands struggle with their price points and overheads, regional brands and private labels will continue growing strongly in these segments.

Health is another area for significant investment. With prevalence of lifestyle-ailments, from stiff necks to high blood pressure, basic pharmacists to cardiovascular specialists are all in demand. Anticipate significant growth to continue in over-the-counter medication, medical devices, as well as clinical and hospital care.

At the other end of the scale, with decent and adequate public transport lacking in most cities, we can expect personal vehicles to increase multi-fold, despite the small blip in 2008-09. About 60 million 2-wheelers and over 10 million passenger vehicles have already been added during the decade, and the growth trend looks set to resume from 2010, unless there are significant oil price or vehicle taxation shocks delivered by the government.

And as consumer confidence resurges, more overt displays or personal spends will return as well, including apparel, footwear, home products, accessories, vacations, fitness and recreation, but we would expect them to follow behind the higher priority “safe” or “geese” segments.

Finally, the one thing that marketers in any product need not be really concerned about whether there is a future in this market. Even, Hindustan Unilever, a mature FMCG company with very high distribution penetration built over decades, still counts less than 60% Indians as its customers.

Surely most companies have a much longer road ahead before they need to be worried about their markets becoming saturated.

Reactions to ‘Numbers and Stories’

Following on our article (“Numbers and Stories”, 23 November 2009), our friends at Retailwire.com thought it would be interesting to run a poll to ask the Retailwire community what they thought about retailers using research. The original discussion is here on Retailwire, but we’ve reproduced the comments and the poll results as they stand today (16 December 2009).

As evident from the graph below, the short answer is “no, companies don’t use research well”; only 15% of the respondents felt that companies are “good” in using research, at their best. Should we blame the companies or the researchers? The comments seem to suggest that the blame needs to be shared equally.

Comments below:

This sounds a lot like a chapter we wrote for ESOMAR’s Best Practices book. We have devalued research in favor of insights, which can rely much more on a good narrative and much less on good data. A management team that expects insights from research all the time is asking for trouble down the road. A research team that doesn’t focus on quality first and insights second is doomed to failure when management makes the wrong moves. Research needs to give management the best information possible in a way that management can understand it. Management needs to understand that research is providing the best information it can within budget constraints. The two need to work together. [Stephen Needel, Managing Partner, Advanced Simulations]

One of the concerns I have at present is how SKU rationalization research is viewed, so quickly judged, and acted upon. Many retailers are looking only through a narrow interpretation based on shear numbers and not taking into consideration other more visionary factors about specialty brands, niche items, and growth brands. If this keeps up, consumers will have very few choices and most of the stores will all look the same with exact assortments. Only price will differentiate one from the other. The results will be rather ironic. [David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates]

I agree that there is a lot of bad “research” out there in the world. Any analytical study has to be right, applicable, and actionable. If a study doesn’t meet these criteria, it is worse than useless–it can actually pollute the minds of decision makers by letting them think they know something they don’t. Before spending any valuable share of mind on numbers, executives should ensure:

1) Is it right? If I only had a buck for every time I’ve seen a big name consulting firm presentation with numerical “findings” using a flawed methodology or with no statistical significance…. I’d be retired in Paris right now.

2) Is it applicable? So, some other retailer says their TV spend has a 150% return (or some consultant claims that). So what? Your business is different. Consumers react differently to every retail concept. You do need to know for you.

3) Is it actionable? Oh, we all know about the study designed to validate the CEOs hunch. Want to guess what the consultant’s findings will say? If you are going to do research, you’d better be prepared to act on the findings–either way.

This is why in-market testing is such a powerful technique in retail. While it does take commitment to do it right, it is one of few techniques that almost always meets these criteria. [Jonathan Marek, Senior Vice President, APT]

It is absolutely true that marketers do not often take the time to understand the basis of the research that they are presented with. Understanding how the research is developed and the analysis approach used to develop recommendations is an important, if misunderstood, part of the job description for a data-driven marketer.

I do find, however, that marketers more often do not carry out sufficient research to draw conclusions, even when that research is relatively easy and low-cost to execute. If you have access to email addresses, you can execute basic research surveys to customers and gain valuable insights in less than a week, at a very low cost. Those opportunities to “fill in the gaps” are often overlooked. Sometimes those insights can make the difference between success and an indifferent failure of a key initiative.

Marketers must understand the opportunities that research affords them, even when timelines are tight. Obtaining the Voice of the Customer, particularly the Best Customer, is a practice that should be followed religiously. Only then will marketers be able to gain insight and make truly data-driven decisions.  [Mark Price, Managing Partner, M Squared Group, Inc.]

We have to keep in mind that corporations are run by human beings that often make decisions on emotion rather than logic. I have many clients who have been very successful making decisions by shooting from the hip, yet they always prefer to see my research, just to be sure. Most of my clients are very bright people and my research generally confirms their own instinctive thoughts. There have been times when I have been brought in to do an autopsy on a project to find out why a store failed. Typical reasons are:

Researchers did not want to offend management so they candy-coated the results.

Key decision makers are suffering from some kind of physical or emotional impairment which affects their ability.

Corrupt middle managers that change the research results.

Researchers leaving out a key piece of data (i.e. not telling management that the Mexican format store they have planned is in a Puerto Rican neighborhood).

Overall, I don’t think retailers have a narrow view of research. Researchers can do a better job in communication by simplifying the results, being blunt, and putting their integrity ahead of their paycheck. [David Livingston, Principal, DJL Research]

I think there are two elements at play here:

First and perhaps foremost, retail is an emotional business. We can have reams of data and still use the words “It feels like….” and make significant decisions based on those gut feel moments. Certainly this has long been true in the world of merchandising. Something “feels like” it’s going to be a home run or a dog, and it “feels like” we’d better take a markdown or run a promotion to goose traffic. And actions are taken accordingly.

Now, can I tell a retailer in all honesty to ignore those gut feels? I really can’t. I can encourage them to use data to support actions taken based on those feelings and obviously that’s what I do…every day. But I can’t ask them to ignore their gut completely.

This brings me to the second issue: we don’t always present data in an easily distilled and understandable format. Our retail survey respondents repeatedly ask to have their Business Intelligence delivered in simpler ways. While “red light, yellow light, green light” might be a little too simple for some decisions, the data just has to be usable and quickly actionable.

Finally…if a retailer (or any company really) is going to make such a dramatic shift, it has to be driven from the top. And the C-level exec driving the initiative also has to LISTEN to what he/she is being told in response. Otherwise you get a company similar to Home Depot under Nardelli.  [Paula Rosenblum, Managing Partner, RSR Research]

Decisions are always made without perfect information to support them. But sometimes, decisions are made that ignore the available information or decline the implications.

Research is clearly most valuable when it can be turned into actionable recommendations. We are all too aware that research can be used as a fishing expedition without a clear objective. However, there is also a danger in using research designed just to prove a point rather than develop real, new learning.

On balance, I believe that research, properly done, interpreted, and acted upon, can vastly improve the decision making process. [Ray Jones, Managing Director, Dechert-Hampe & Co.]

I’m reminded of the Samuel Taylor Coleridge quote “Water, water, everywhere, nor any drop to drink.” Research/knowledge is the raison d’ tre for The Luxury Marketing Council www.floridaluxurycouncil.com; it’s what I do. The highest level executives or those who will someday sit in the corner office recognize the value of research. They’re able to sift through the myriad of information to find what’s relevant and actionable.

There are a couple trends re: research. Some executives don’t want facts to get in the way of their vision. Historically, these individuals’ careers stall. Also, there are many companies that have pared down their employees to the point that executives don’t have time for the facts–they’re too busy keeping the ball moving. The third group often doesn’t understand how to read the research, how it affects them and/or how they can use it for their benefit.

Relevant research is an imperative for retailers. Having a 360 on your targeted customer and understanding their collective experiences is the key to personal and business success. [Chris Ramey, President, Affluent Insights]

Devangshu Dutta mentions many of my personal concerns regarding research. But before I go any further I have to add, my name is Joan and I am a researcher. I’ve spent many years working in the industry to help alleviate some of the barriers Mr. Dutta listed. There is still much to be done of course.

In this world of easy access to numbers/statistics, upper management demands and gets “stuff” by which they make decisions. Trying to explain the difference between good research and everything else often falls on deaf ears. Management expects those who supply the data, whether they are staff or outside consultants, to bring the quality, validity and relevance required. And in turn they do not question the underlying premise of what they are buying, or what they are buying into.

And when forecasts don’t work out as expected, new products fail and marketing strategies are ineffective, it’s all about how research failed to deliver. Researchers preach to the choir when they have meetings about quality standards.

CASRO (Council of American Survey Research Organizations) has a Code of Standards and Ethics. Companies who belong to CASRO must adhere to them. And this is one way in which clients can insure research results are reliable.

CASRO is initiating an ISO certification program. I believe more client companies and executives will relate to and understand ISO (because their own companies go through similar ISO certification processes), perhaps choosing vendors and staff accordingly. In my opinion, this could be a turning point for the acceptance and recognition of true quality marketing research. I hope so.

As for the story telling aspect of research…well that’s another “story” entirely. I’ve mentored many researchers and advised them to always answer three basic questions, What? So what? And Now what? These questions get to the heart of why research is conducted in the first place. Good reporting and presentation requires training. If you believe that anyone can be a researcher and choose vendors or staff based on that assumption, you get what you get and it may fall below the standards Mr. Dutta advocates. [Joan Treistman, President, The Treistman Group LLC]

During my 11 years with Kenosia I used a phrase with clients “One truth.” By combining disparate data sources, a retailer or a brand manager can get to the “one truth” and then make a business decision regarding direction. Far too often, decisions are made using one source of data which can lead to less than effective results.

Example, if a retailer only views their loyalty data to make business decisions about advertising, are they understanding all the trends happening in their market? Probably not. Combining their loyalty data with demographic data makes it better and adding additional information from a syndicated data provider makes it even better yet.

The great news is, there are a dozen technology solutions to help both retailers and brand managers combine data and the data to combine is available and affordable. It boils down to first understanding the questions and then going out and combining all the best data sets to create the answers. [John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC]

The use and misuse of research, data and “insights” varies widely across retailers and brands. Typically, the larger the company, the more primary research they have and the more reliant on primary research they are.

Unfortunately, great research and insights are, as many here are illustrating above, not nearly as commonplace as they should be. There are many reasons for this:

– Flawed and biased methodologies (e.g., let’s “Focus Group” this”);

– Vendors who specialize in one research/data collection area over another;

– The research goals and objectives themselves: pure answers to hard marketing questions rarely come directly from research but rather from what is done with it, i.e., what is the data needed to create information to support or disallow a hypothesis?

Budgets, which have mostly seen cuts for the past two years; though the cost of collecting data has come way down in many cases.

All these challenges with research underscore the importance of knowing who your customers are, having an ongoing dialogue and relationship with them, and gleaning insights from them. There is nothing better than customer (transactional) data to gain an objective perspective and insights for your business.

Unfortunately, many companies are data rich and insight poor. Even worse, many companies, retailers included, don’t know their customers or how they behave. This is continuing to change for the better, however, and those who are focused in this area are the ones who will make better decisions and be more successful in the long run. [Phil Rubin, CEO, rDialogue]

One simple question expresses the confusion around statistics: “Why do we have Democratic and Republican Pollsters?” I think it was Harry Truman who when confronted by economists telling him “Well on one hand the statistics are saying this, but on the other they could mean this” said “Someone get me a one armed economist.”

The thing with retail is that we don’t need answers to thousands of different questions. We ask the same questions a thousand times: how does this product sell, what is its net profit, how important is it to my customers, does it fit my brand objective, how does it relate to other products, are there viable substitutes, etc? Instead of poring over tons of numbers, the POS data should be used to construct answers to questions.

So the fundamental reason retailers (and anyone, really) make bad decisions from raw data is because they don’t know what questions they’re trying to answer. Start there.  [Bill Bittner, President, BWH Consulting]

The fact that information is available and is being used effectively are two separate things! Usually a company uses too much information, regardless of correct or incorrect, or it does not use information. Very few companies strike and maintain a balance between insight, gut feeling/intuition and relevant, timely information in decision making. [Pradip Mehta, Principal, Mehta Consulting, LLC]

I’ve found that the overall views of research within companies goes in cycles. Of course, leadership changes come into play with the research points of view as well. Some executives understand how to use it better. Some have used it so much they can go by gut.

In any case, a research cycle may start when a huge mistake is made by using strictly gut instinct (Tropicana?), then more and more insights will come from research and less from gut until, one day, it is determined that there is too much science and not enough art, and the cycle starts all over again.

I do believe though, that research is one of the faults with our nation’s fashion business today. Too much science, not enough art. The talent and guts it takes to take a big chance on new, fun fashion seems to have been relegated to trend reports, focus groups, ethnography and best seller lists. The rare exception to that rule is Forever21…instincts still survive there. Perhaps they can teach the industry a lesson. [Lee Peterson, EVP Creative Services, WD Partners]

Where would Disney be without fairy tales? SMWeiss’

The problem, dear Brutus, is in ourselves. Retailers and brands have created vast action machines with thought paradigms behind. Anyone doing research is likely to be looking to fit information into the existing machine. And for each individual, when they formulate a research query, they bring their own current thinking into it–obviously! This means that the results they get back reflect, in far too great a way, their own predispositions. This, coupled with the fact that lots of research is “ask” type research–interviews–guarantees a sluggish and distorted view of reality, what I call the Picasso business view; shared distortions, unperceived as such by both researchers and respondents.

The partial antidote to this is “observational” type research, and the hierarchy of truth. And observation here must be of the real world, not some laboratory simulation, which typically just further cements the existing distorted paradigm. The hierarchy of truth means distinguishing between what is most rock solid and least likely to be distorted, and that which may be as changeable as the weather. (That’s right, Maude. It used to be just common sense that the weather changes. ; )

One example near and dear to my heart is OBSERVING how many items people buy in a store. The most common number, whether in a convenience store or a supercenter is ONE. But the “world” absolutely refuses to believe this, because it does not match their own conceptions/perceptions. An observation like this is at the pinnacle of retail truth, and must be allowed to shatter any part of the paradigm that does not conform to it. THAT’S “revolutionary,” but it is also the route to racing past the competition that is spending their time dancing on peanut butter.

No one should reproach themselves for participating in a social Picasso view of their business. (Although I may insult you from time to time. ; ) All of us are afflicted with the phenomenon noticed many years ago, about historians and their “research” of the past. Looking into the past, for a historian, is much like looking at a reflecting pool at the bottom of a very deep well. The image the historian tends to come away with is a reflection of himself. Business people are no different. [Herb Sorensen, ScientificAdvisor, TNS Global Retail & Shopper Practice]

There are plenty of great tools to make sense of all of the information. The challenge is balancing it with the human side. Take, for example, the stores. Are all corporate employees required to walk the stores and report what they see? View the stores in the evening when store management has left for the day. These age-old problems are still far too common, yet they are the source of some of the most valuable information available anywhere. Sales will be increased, labor decreased and earnings improved if this information is acted upon. [Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM]

This sounds a lot like a chapter we wrote for ESOMAR’s Best Practices book. We have devalued research in favor of insights, which can rely much more on a good narrative and much less on good data. A management team that expects insights from research all the time is asking for trouble down the road. A research team that doesn’t focus on quality first and insights second is doomed to failure when management makes the wrong moves.
Research needs to give management the best information possible in a way that management can understand it. Management needs to understand that research is providing the best information it can within budget constraints. The two need to work together.
Stephen Needel, Managing Partner, Advanced Simulations
One of the concerns I have at present is how SKU rationalization research is viewed, so quickly judged, and acted upon. Many retailers are looking only through a narrow interpretation based on shear numbers and not taking into consideration other more visionary factors about specialty brands, niche items, and growth brands. If this keeps up, consumers will have very few choices and most of the stores will all look the same with exact assortments. Only price will differentiate one from the other. The results will be rather ironic.
David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates
I agree that there is a lot of bad “research” out there in the world. Any analytical study has to be right, applicable, and actionable. If a study doesn’t meet these criteria, it is worse than useless–it can actually pollute the minds of decision makers by letting them think they know something they don’t.
Before spending any valuable share of mind on numbers, executives should ensure:
1) Is it right? If I only had a buck for every time I’ve seen a big name consulting firm presentation with numerical “findings” using a flawed methodology or with no statistical significance…. I’d be retired in Paris right now.
2) Is it applicable? So, some other retailer says their TV spend has a 150% return (or some consultant claims that). So what? Your business is different. Consumers react differently to every retail concept. You do need to know for you.
3) Is it actionable? Oh, we all know about the study designed to validate the CEOs hunch. Want to guess what the consultant’s findings will say? If you are going to do research, you’d better be prepared to act on the findings–either way.
This is why in-market testing is such a powerful technique in retail. While it does take commitment to do it right, it is one of few techniques that almost always meets these criteria.
Jonathan Marek, Senior Vice President, APT
It is absolutely true that marketers do not often take the time to understand the basis of the research that they are presented with. Understanding how the research is developed and the analysis approach used to develop recommendations is an important, if misunderstood, part of the job description for a data-driven marketer.
I do find, however, that marketers more often do not carry out sufficient research to draw conclusions, even when that research is relatively easy and low-cost to execute. If you have access to email addresses, you can execute basic research surveys to customers and gain valuable insights in less than a week, at a very low cost. Those opportunities to “fill in the gaps” are often overlooked. Sometimes those insights can make the difference between success and an indifferent failure of a key initiative.
Marketers must understand the opportunities that research affords them, even when timelines are tight. Obtaining the Voice of the Customer, particularly the Best Customer, is a practice that should be followed religiously. Only then will marketers be able to gain insight and make truly data-driven decisions.
Mark Price, Managing Partner, M Squared Group, Inc.
We have to keep in mind that corporations are run by human beings that often make decisions on emotion rather than logic. I have many clients who have been very successful making decisions by shooting from the hip, yet they always prefer to see my research, just to be sure. Most of my clients are very bright people and my research generally confirms their own instinctive thoughts. There have been times when I have been brought in to do an autopsy on a project to find out why a store failed. Typical reasons are:
Researchers did not want to offend management so they candy-coated the results.
Key decision makers are suffering from some kind of physical or emotional impairment which affects their ability.
Corrupt middle managers that change the research results.
Researchers leaving out a key piece of data (i.e. not telling management that the Mexican format store they have planned is in a Puerto Rican neighborhood).
Overall, I don’t think retailers have a narrow view of research. Researchers can do a better job in communication by simplifying the results, being blunt, and putting their integrity ahead of their paycheck.
David Livingston, Principal, DJL Research
I think there are two elements at play here:
First and perhaps foremost, retail is an emotional business. We can have reams of data and still use the words “It feels like….” and make significant decisions based on those gut feel moments. Certainly this has long been true in the world of merchandising. Something “feels like” it’s going to be a home run or a dog, and it “feels like” we’d better take a markdown or run a promotion to goose traffic. And actions are taken accordingly.
Now, can I tell a retailer in all honesty to ignore those gut feels? I really can’t. I can encourage them to use data to support actions taken based on those feelings and obviously that’s what I do…every day. But I can’t ask them to ignore their gut completely.
This brings me to the second issue: we don’t always present data in an easily distilled and understandable format. Our retail survey respondents repeatedly ask to have their Business Intelligence delivered in simpler ways. While “red light, yellow light, green light” might be a little too simple for some decisions, the data just has to be usable and quickly actionable.
Finally…if a retailer (or any company really) is going to make such a dramatic shift, it has to be driven from the top. And the C-level exec driving the initiative also has to LISTEN to what he/she is being told in response. Otherwise you get a company similar to Home Depot under Nardelli.
Paula Rosenblum, Managing Partner, RSR Research
Decisions are always made without perfect information to support them. But sometimes, decisions are made that ignore the available information or decline the implications.
Research is clearly most valuable when it can be turned into actionable recommendations. We are all too aware that research can be used as a fishing expedition without a clear objective. However, there is also a danger in using research designed just to prove a point rather than develop real, new learning.
On balance, I believe that research, properly done, interpreted, and acted upon, can vastly improve the decision making process.
Ray Jones, Managing Director, Dechert-Hampe & Co.
I’m reminded of the Samuel Taylor Coleridge quote “Water, water, everywhere, nor any drop to drink.” Research/knowledge is the raison d’ tre for The Luxury Marketing Council www.floridaluxurycouncil.com; it’s what I do. The highest level executives or those who will someday sit in the corner office recognize the value of research. They’re able to sift through the myriad of information to find what’s relevant and actionable.
There are a couple trends re: research. Some executives don’t want facts to get in the way of their vision. Historically, these individuals’ careers stall. Also, there are many companies that have pared down their employees to the point that executives don’t have time for the facts–they’re too busy keeping the ball moving. The third group often doesn’t understand how to read the research, how it affects them and/or how they can use it for their benefit.
Relevant research is an imperative for retailers. Having a 360 on your targeted customer and understanding their collective experiences is the key to personal and business success.
Chris Ramey, President, Affluent Insights
Devangshu Dutta mentions many of my personal concerns regarding research. But before I go any further I have to add, my name is Joan and I am a researcher. I’ve spent many years working in the industry to help alleviate some of the barriers Mr. Dutta listed. There is still much to be done of course.
In this world of easy access to numbers/statistics, upper management demands and gets “stuff” by which they make decisions. Trying to explain the difference between good research and everything else often falls on deaf ears. Management expects those who supply the data, whether they are staff or outside consultants, to bring the quality, validity and relevance required. And in turn they do not question the underlying premise of what they are buying, or what they are buying into.
And when forecasts don’t work out as expected, new products fail and marketing strategies are ineffective, it’s all about how research failed to deliver. Researchers preach to the choir when they have meetings about quality standards.
CASRO (Council of American Survey Research Organizations) has a Code of Standards and Ethics. Companies who belong to CASRO must adhere to them. And this is one way in which clients can insure research results are reliable.
CASRO is initiating an ISO certification program. I believe more client companies and executives will relate to and understand ISO (because their own companies go through similar ISO certification processes), perhaps choosing vendors and staff accordingly. In my opinion, this could be a turning point for the acceptance and recognition of true quality marketing research. I hope so.
As for the story telling aspect of research…well that’s another “story” entirely. I’ve mentored many researchers and advised them to always answer three basic questions, What? So what? And Now what? These questions get to the heart of why research is conducted in the first place. Good reporting and presentation requires training. If you believe that anyone can be a researcher and choose vendors or staff based on that assumption, you get what you get and it may fall below the standards Mr. Gutta advocates.
Joan Treistman, President, The Treistman Group LLC
During my 11 years with Kenosia I used a phrase with clients “One truth.” By combining disparate data sources, a retailer or a brand manager can get to the “one truth” and then make a business decision regarding direction. Far too often, decisions are made using one source of data which can lead to less than effective results.
Example, if a retailer only views their loyalty data to make business decisions about advertising, are they understanding all the trends happening in their market? Probably not. Combining their loyalty data with demographic data makes it better and adding additional information from a syndicated data provider makes it even better yet.
The great news is, there are a dozen technology solutions to help both retailers and brand managers combine data and the data to combine is available and affordable. It boils down to first understanding the questions and then going out and combining all the best data sets to create the answers.
John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC
The use and misuse of research, data and “insights” varies widely across retailers and brands. Typically, the larger the company, the more primary research they have and the more reliant on primary research they are.
Unfortunately, great research and insights are, as many here are illustrating above, not nearly as commonplace as they should be. There are many reasons for this:
– Flawed and biased methodologies (e.g., let’s “Focus Group” this”);
– Vendors who specialize in one research/data collection area over another;
– The research goals and objectives themselves: pure answers to hard marketing questions rarely come directly from research but rather from what is done with it, i.e., what is the data needed to create information to support or disallow a hypothesis?
Budgets, which have mostly seen cuts for the past two years; though the cost of collecting data has come way down in many cases.
All these challenges with research underscore the importance of knowing who your customers are, having an ongoing dialogue and relationship with them, and gleaning insights from them. There is nothing better than customer (transactional) data to gain an objective perspective and insights for your business.
Unfortunately, many companies are data rich and insight poor. Even worse, many companies, retailers included, don’t know their customers or how they behave. This is continuing to change for the better, however, and those who are focused in this area are the ones who will make better decisions and be more successful in the long run.
Phil Rubin, CEO, rDialogue
One simple question expresses the confusion around statistics: “Why do we have Democratic and Republican Pollsters?” I think it was Harry Truman who when confronted by economists telling him “Well on one hand the statistics are saying this, but on the other they could mean this” said “Someone get me a one armed economist.”
The thing with retail is that we don’t need answers to thousands of different questions. We ask the same questions a thousand times: how does this product sell, what is its net profit, how important is it to my customers, does it fit my brand objective, how does it relate to other products, are there viable substitutes, etc? Instead of poring over tons of numbers, the POS data should be used to construct answers to questions.
So the fundamental reason retailers (and anyone, really) make bad decisions from raw data is because they don’t know what questions they’re trying to answer. Start there.
Bill Bittner, President, BWH Consulting
The fact that information is available and is being used effectively are two separate things! Usually a company uses too much information, regardless of correct or incorrect, or it does not use information. Very few companies strike and maintain a balance between insight, gut feeling/intuition and relevant, timely information in decision making.
Pradip Mehta, Principal, Mehta Consulting, LLC
I’ve found that the overall views of research within companies goes in cycles. Of course, leadership changes come into play with the research points of view as well. Some executives understand how to use it better. Some have used it so much they can go by gut.
In any case, a research cycle may start when a huge mistake is made by using strictly gut instinct (Tropicana?), then more and more insights will come from research and less from gut until, one day, it is determined that there is too much science and not enough art, and the cycle starts all over again.
I do believe though, that research is one of the faults with our nation’s fashion business today. Too much science, not enough art. The talent and guts it takes to take a big chance on new, fun fashion seems to have been relegated to trend reports, focus groups, ethnography and best seller lists. The rare exception to that rule is Forever21…instincts still survive there. Perhaps they can teach the industry a lesson.
Lee Peterson, EVP Creative Services, WD Partners
Where would Disney be without fairy tales?
SMWeiss’
The problem, dear Brutus, is in ourselves. Retailers and brands have created vast action machines with thought paradigms behind. Anyone doing research is likely to be looking to fit information into the existing machine. And for each individual, when they formulate a research query, they bring their own current thinking into it–obviously! This means that the results they get back reflect, in far too great a way, their own predispositions. This, coupled with the fact that lots of research is “ask” type research–interviews–guarantees a sluggish and distorted view of reality, what I call the Picasso business view; shared distortions, unperceived as such by both researchers and respondents.
The partial antidote to this is “observational” type research, and the hierarchy of truth. And observation here must be of the real world, not some laboratory simulation, which typically just further cements the existing distorted paradigm. The hierarchy of truth means distinguishing between what is most rock solid and least likely to be distorted, and that which may be as changeable as the weather. (That’s right, Maude. It used to be just common sense that the weather changes. ; )
One example near and dear to my heart is OBSERVING how many items people buy in a store. The most common number, whether in a convenience store or a supercenter is ONE. But the “world” absolutely refuses to believe this, because it does not match their own conceptions/perceptions. An observation like this is at the pinnacle of retail truth, and must be allowed to shatter any part of the paradigm that does not conform to it. THAT’S “revolutionary,” but it is also the route to racing past the competition that is spending their time dancing on peanut butter.
No one should reproach themselves for participating in a social Picasso view of their business. (Although I may insult you from time to time. ; ) All of us are afflicted with the phenomenon noticed many years ago, about historians and their “research” of the past. Looking into the past, for a historian, is much like looking at a reflecting pool at the bottom of a very deep well. The image the historian tends to come away with is a reflection of himself. Business people are no different.
Herb Sorensen, ScientificAdvisor, TNS Global Retail & Shopper Practice
There are plenty of great tools to make sense of all of the information. The challenge is balancing it with the human side. Take, for example, the stores. Are all corporate employees required to walk the stores and report what they see? View the stores in the evening when store management has left for the day. These age-old problems are still far too common, yet they are the source of some of the most valuable information available anywhere. Sales will be increased, labor decreased and earnings improved if this information is acted upon.
Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Nutrition trust: No child’s play

By Diwakar Kumar

Imagesfood.com, December 2009

Parents continuously strive to do better for their children. They play an indelible role in shaping up the eating habits of their kids beginning at infancy. So when it comes the matter of feeding their toddlers, urban Indians (parents) typically are willing to go the extra mile in enhancing the nutrition quotient.

Once within a supermarket, however, an ambiguity pops up – that of making a choice between a Private Label (PL) and a Brand Label. A PL product undoubtedly offers opportunities for savings as compared to manufacturers` labels, but what of product quality?

When it comes to their offsprings` health, therefore, do modern Indian patterns feel open to experimentation with PL breakfast cereals, for instance? The fact that Private Label merchandise costs less because of a supply chain economy – and not because of significant loss of quality – is known to industry professionals, but do lay consumers equate a lower price with a lower standard?

What do visitors to ImagesFood feel? We posted an open question – When it comes to food products for their children, consumers are likely to favour brand names over private labels. About 91.67 per cent of the respondents supported the poll question where as 8.33 per cent voted in favour of private labels.

In response to the same question, Viney Singh, MD, Max Hypermarket India Private Limited, says, “The global experience on this is that brands are preferred for infant foods and not necessarily for children/adult food ranges. Private labels in these segments do exceedingly well as they offer excellent value; it is only those brands that have assiduously built their franchise through innovation and proprietary technologies /recipes that are preferred.”

Commenting on the same note, Mini Yadav, MD, Le Marche, says, “Today children are exposed to so much more via television and international travel. Advertisers specifically target children through their advertising. They are aware of all the food brands available internationally, whether chocolates, candy, breakfast cereals, cookies or snack foods.”

Yadav further says, “Branded food items are beautifully packaged and attract the child instantly; to the extent that they no longer want just cornflakes for breakfast… they now want Franken Berry, Fruit Loops and Pop Tarts. And as more and more parents now have a greater buying power, they willingly indulge their children. They are also willing to pay that little extra for variety and assured quality.”

Eventually, Devangshu Dutta, chief executive, Third Eyesight, says, “Food is possibly the most sensitive area, and even more so when it comes to children’s products. To the consumer, the corporate ownership of a food brand is not as important as the sense of confidence and safety that he or she feels.”

“If a retailer is trusted to provide the required quality that is equivalent to that of a well-established national supplier brand, consumers would have no problem in buying the product. On the other hand, if the consumer doesn’t have confidence in the retailer, then no matter what standards are met by the retailer in the laboratory, the consumer will not buy the private label food product,” he concludes.

High cotton prices sour demand rebound for Indian mills

By Aniruddha Basu and Nandita Bose
REUTERS
MUMBAI, 9 December 2009

* Cotton prices up 20 pct in six weeks

* Rising input costs to bite into profits

* Domestic players can raise prices, exporters constrained

MUMBAI, Dec 9 – An unforeseen drop in global cotton output has seen prices flare, putting at risk the fragile recovery of India’s textile industry that was battered by the global recession earlier in the year.

The rising demand the industry was hoping to cash on, bolstered by 25.5 billion rupees in government subsidies to upgrade technology, has started to look less promising as a sharp spike in input prices threaten margins in the coming quarters.

"Our textile exports have increased and so has our domestic consumption, and just when recovery was in sight cotton prices have started shooting up," said D.K. Nair, secretary general of trade body Confederation of Indian Textile Industry.

"Companies will continue to lose margins. Just when margins were recovering, the prices rose. The industry will then have to reduce production as that is the only way out," said R.K. Dalmia, senior president at Century Textiles & Industries .

Cotton prices have shot up over 20 percent in the last six weeks. The benchmark Shanker-6 variety is at 26,500 rupees per candy of 170 kg from 23,500 rupees in October, data showed.

The global shortfall means the crop in India, despite being on expected lines, is being exported at a higher price, crimping supply at home.

About 6 million bales of cotton have already arrived in the first two months of the cotton marketing year and 4 million bales have been booked by exporters, Century Textiles’ Dalmia said.

PRICING DIVIDE

A cornered industry has few options. Raising prices would seem one, but analysts say that too is geography specific.

"Price increases are easier to implement domestically rather than internationally," said Devangshu Dutta, chief executive, Third Eyesight, a textile consultancy.

"If we look at exporters, they are driven by a more dynamic mix and trade across currencies, and in the current scenario the flexibility for price rise is not that high," he added.

Alok Industries with over 60 percent of sales in India, has raised prices, but Gokaldas Exports , which gets nearly all its revenues from exports, will not.

Customers the world over are able to source cotton products at competitive prices from Asian countries, making it difficult for Indian exporters to raise prices of finished products, said Rajendra Hinduja, managing director of the Bangalore-based Gokaldas.

"Domestic players will pass on whatever can be passed on…so there may be some possibility of recovering costs. But in exports you can’t even do that as there is a lot of choice for the importing countries," CITI’s Nair added.

Customer-centric retailers roll the dice

Reported by Diwakar Kumar
4 December 2009

"Rather than trying to fit the world to our business model, we need to fit the business model to the real world that exists," comments Devangshu Dutta, chief executive of Third Eyesight. At present, in the midst of a tough (but recovering) economic climate, when shoppers appear to have become even more conscious of value for their money, retailers need to re-engineer marketing strategies to trigger growth. Some analysts believe that the focus should be directed on retention of existing shoppers rather than tapping new shoppers who may or may not stay with them in these fickle times.

All retailers spend a significant percentage of their business outlays in engaging shoppers (consumer engagement programs in support of sales promotions, discount schemes, contests and raffles, product bundling and promo items and such). So the adoption of a strategy to repose on existing shoppers – during a slowdown – reduces the risk of drop in revenues in case a plan to attract new shoppers fails.

Additionally, existing customers don’t need to be educated for product offerings and the cost of marketing to them (existing shoppers) is even lower. Hence, at least on paper, it looks less burdensome for a retailer to rest on its existing shoppers until such time the market looks up.

However, depending entirely on existing shoppers does also reek of complacence. While customer retention is critical to any business, all retailers and brands constantly look for ways to appeal to a wider demographic and broaden a potential consumption base. But, where should energies – and monies — be directed during a crunch?

We found some answers through an open poll question we threw out some weeks ago on the website.The question: It’s easier — and cheaper — for a retailer to build on existing customer relationships than to attract new shoppers; The answer: 80.95 per cent of the respondents supported – while 19.05 per cent of them negated – the question.

Responding to the question, S. Sivakumar, chief executive, Agri Businesses, ITC Limited, says, "Insights on existing customers are deeper, leading to superior and personalised offers that deliver greater value to those customers, in turn bringing higher margins. Cost of engagement with the existing customers is also lower than connecting with new consumers. Any retailer`s portfolio, however, has to be a mix of existing and new customers."

Echoing this view, Ravi Pahuja, VP – Operations, Odyssey India Ltd. says, "It`s certainly easier and cheaper for a retailer to build on existing customer relationships than to attract new shoppers. For new customers a retailer has to first attract them to come to the store and then build on the relationship. Having said that, it is important to build relationships with old as well as new customers to run the show."

"Retailers who work on their existing customer relationships also draw in new customers because of the positive word-of-mouth publicity by these customers, so it’s building relationships with old and new customers at single cost," he adds.

"In this era of high customer churn, what is essential is brand loyalty. Once a brand has cemented its relationship with its customers, there is immense opportunity to communicate with this loyal base – allowing for value-adds like customisation and on a one-to-one dialogue basis, which makes the experience much more personal and interactive," comments Manjula Tiwari, chief operating officer, Esprit.

She further opines, "It stands to reason that this method is also cost-friendly as it involves direct communication as opposed to mass media. That being said, one cannot dismiss the signifance of attracting a newer customer base, without which the brand begins to stagnate."

"It is of paramount importance for retailers to build on existing customer relationships (though it is not necessarily easier or cheaper). A positive word from one customer can get you 10 new customers while a negative word can cost you an even larger number of customers," concludes Viney Singh, MD, Max Hypermarket India Private Limited.

Numbers and Stories

Just after noon, on a weekday, I bumped into a family acquaintance at one of the more successful shopping malls in the city.

The question, “What are you doing here?” was underlined by a mildly accusatory look and the subtext, “Why are you spending a week-day shopping?”

My response that I was “working” wasn’t enough; the further explanation that I was doing “research” received a dismissive smirk and ended the conversation. The fact is that I was repeating the time-honoured ritual of RBWA (research by walking around), with its seemingly aimless strolling, sidelong glances, and possibly turning over a hundred items in a dozen shops without reaching for the wallet even once. This is a ritual that is not taught in our temples of management learning. In fact, it is one of the many tens of methodologies that seem to be missed out during the course of our formal education. And very often, what we do get taught is so remote and opaque to most people that they will promptly forget it the moment they walk out of the examination hall.

I was reminded of this walk-about incident during a conversation with two members of the faculty of a professional institute on the subject of research. Most of their students, I had observed, had a narrow interpretation of research – focussed only on consumers being interrogated through a questionnaire. The students were working from the guidance they had received during the previous semesters at the institute.

Unfortunately, the students are not alone – this is also how too many people identify research, including many executives in decision-making positions. I have been frequently puzzled by the confident (brash?) statement I have heard many times: “We don’t need research.” It is only when I probe further do I, and they, discover that while they perhaps don’t need consumer surveys, there are large gaps in their decision making toolkit which can only be filled by inputs from various other kinds of research.

Sometimes the roots of that statement lie in the perception of research as an impenetrable jungle in which it is easy to get lost but difficult to find something immediately useful. Researchers, like all other vocations, have their own professional shorthand (also known as “jargon”) which they sometimes use to identify their own kind, and perhaps sometimes to exclude people who are not from the trade. Very often this jungle is created by “research-as-a-foreign-language”, which many executives are just too apprehensive or too busy to tackle.

But before you pick up the axe and start cutting away at the creepers of bi-variate analysis, quota samples, correlation and projective techniques, let me give you my very simple definition of research which I like to keep in mind when I am asked the question: “Do we need research?”

To me, research is the discovery and collation of diverse pieces of information from various sources, so that it can be analysed using multiple tools, to discover relationships, patterns and directions that can be used to draw conclusions and take decisions.

There is a purpose for which we would discover or collate that information. There may be a set of questions that we need to answer. We need to understand what are the various places where that information may lie, the different forms it might take or the different ways in which we might need to look at the information before anything useful emerges.

And, in the business context (as in many other situations), research is meant to come up with something that is applicable and directly beneficial to the business. So once we’ve got most of the answers we were looking for, it is certainly useful to stop and apply the newly gained knowledge rather than try to refine and perfect it to the infinite degree.

If this definition of research frames the context well enough for you, then you’re on the way to doing and using research well.

Despite the wealth of information available today, far too many bad business decisions are being made in the absence of good information, either because the executives have not bothered to carry out research, or have not had the capability or the time to question the research which is being presented to them.

Worse – perhaps because of the abundant data and the ease of access to it – today many business decisions that turn bad are taken on the basis of information that is presented by someone else (“secondary research” in research language), without questioning the validity of the conclusions, the structure of the study, the context in which the data was analysed. It’s almost as if we couldn’t be bothered to think, because someone has apparently already done the thinking for us – especially if it comes from a “reputable source”. (Ok, that might be smart sometimes. So let me give you a more graphic analogy – could you think of an adult bird regurgitating pre-digested food to feed the chicks? Hmm, not so pleasant an image after all, is it?)

Also, research (especially the number-oriented kind) seems too dry for most people to take in. And I think that is one place market researchers could do themselves a huge benefit if they could tell the story – especially a story with a moral at the end. That is, create the picture for the user as to what all of that information means in simple language, and also show the user how to use the information in the context of his situation or problem. Bedtime stories during childhood and good movies in adulthood work well because there is a coherent narrative, a start, a middle that is interesting and an ending that stays in the mind. You can see the relationships between the characters, and the consequences of those relationships. A good research project report could be seen as something very similar.

Having said that, of course, there are also some researchers go far beyond, who would never let boring facts get in the way of a good story! Apparently a letter to the editor of the National Observer (London) as far back as 1891 complained: “there are three kinds of falsehood: the first is a ‘fib,’ the second is a downright lie, and the third and most aggravated is statistics.” (Mark Twain famously paraphrased this in his autobiography as “lies, damned lies and statistics”.)

How many stores can you think of which are located at sites where their chances of success are exactly the same as that of a snowball in hell? How many products or brand launches come to mind, where you wondered, “what is this company thinking?!” Of course, there would have been pre-launch studies which would have showed just how successful these would be, where the stories were possibly based more on imagination than on facts.

For a decision-maker, the only way to tell the difference between bad statistics (lies) and the true story of the market is to make sure that he or she is equipped with multiple sources of information, and various tools with which to analyse them. Also, if you recall my earlier definition of research, the starting point was the definition of the objectives which a research is supposed to fulfil – if the objectives are vague or undefined, so will the research outputs be.

Numbers (quantitative research) and narrative (qualitative research) can tell us many wonderful stories about the market. Some of those stories are highly imaginative “fairy tales” because of a bad study – that shouldn’t lead us to ignore all the others which can direct us to our objectives.

10 Books for Start-ups and Small Businesses

For someone who loves books and dislikes naming favourites, it’s tough to quickly make a list of only 10 must-read books. There are so many valuable books an entrepreneur can learn from that this list is only a starting point, rather than “the Top-10”. But, then, one of the most important things an entrepreneur can do is to overcome his or her own resistance at some of the most inconvenient times. So here goes!

  1. Good to Great (Jim Collins) – this book delves into some fundamental strengths that entrepreneurs need to seed into their business fairly early. Interestingly some of the companies listed in the book may no longer be called great (a weakness with most management books quoting specific examples), but I believe the principles stand the test of time.
  2. The Tipping Point (Malcolm Gladwell) – some small things do become big. Every entrepreneur and start-up would love to know how and why; Gladwell’s book offers a different perspective – from epidemics to better governance. Much learning for the start-up and the small business owner.
  3. Losing My VirginityScrew It, Let’s Do It (Richard Branson) – one autobiography is usually enough for most people – trust Richard Branson to not fit into that mould. I’ll count them as one. As an entrepreneur who went from selling records to creating one of the most diverse brands covering airlines to telephone services, Branson will certainly have something for everyone. The books offer a view into his struggles as much as his successes.
  4. The High Performance Entrepreneur: Golden Rules for Success in Today’s World (Subroto Bagchi) – if for nothing else, read it for the first chapter: “How Do I Know if I Am Ready”. Of course, once you’ve gone through that chapter, it is remarkably easy to go through the rest of the book, which offers guidance from Bagchi’s own deep experience as an entrepreneurial manager and as an entrepreneur.
  5. Fortune at the Bottom of the Pyramid (C. K. Prahlad) – who says you have to have millions in the bank and service only rich customers to be a successful entrepreneur? I must admit I came very late to this book, and am yet to complete it, but it is an excellent reference source for case studies of innovative and very large businesses being grown in markets that are typically treated as poor or low value, environments that many Indian entrepreneurs can relate to.
  6. Made to Stick: Why Some Ideas Survive and Others Die (Chip Heath, Dan Heath) – Inspired by the Tipping Point, the Heath brothers describe what it takes to get your ideas across, and make a lasting impact. A must for entrepreneurs looking for funding, to hire great people and keep them motivated, and to capture lasting customer relationships.
  7. It Happened in India: The Story of Pantaloons, Big Bazaar, Central and the Great Indian Consumer (Kishore Biyani) – there are too few books about or by Indian entrepreneurs, so this is one growth story in desi style that many start-ups would be able to relate to. It is not as polished as most other entrepreneurial autobiographies, but valuable nevertheless.
  8. The New Business Road Test: What Entrepreneurs And Executives Should Do Before Writing A Business Plan (John Mullins) – an someone who turned from corporate life to academics and further to being involved with entrepreneurs, Mullins provides a great framework to help the entrepreneur filter and refine his concept of the “next big thing” into a real business.
  9. Venture Capital Funding: A Practical Guide to Raising Finance (Stephen Bloomfield) – while written from a UK and European perspective, it is a valuable reference for anyone looking for external funding. A practical guide to the whys and the wherefores, the jargon and the structures of venture funding written for an entrepreneur.
  10. And last but not the least – pick your favourite philosopher or guide. No matter whether we are overtly spiritual or completely agnostic, there are times, many times in an entrepreneur’s life, when we need to step beyond the intellectual construct of business, look beyond plans and strategies, and next year’s targets. Depending on how you are feeling and what you need at that particular time, this book (or these books) can be versatile in offering you guidance for your next steps, direction to correct your course, or simply a platform to stabilise yourself.

The thing about lists is that even if you find one item on the list that makes a substantial difference to you, the list has been useful. Among the above, I believe you will find more than one that will create such an impact. Happy reading!

[Column written for The Economic Times, 13 November 2009]

Sustainable Fashion Forum

27/10/2009
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http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_8KJ520091027031700_201_300.jpg
Mr Bruce E Bergstrom
VP, Vendor Compliance,Li & Fung

 

"Sustainability is a great concept like liberty. We are in a world with many problems and sustainability is the solution. This is the answer given by Bruce Bergstrom, VP vendor compliance of sourcing giant Li & Fung, who tackled the difficult question of What is Sustainable Fashion? at the first-ever Sustainable Fashion Forum held earlier this month.

 "It is of utmost importance that we meet the needs of the present without compromising the needs of the future. Sustainability needs to be aligned and be woven into the corporate fabric," he added.

Indeed, Sustainability is a global movement that involves economics, environment and social issues. With its rising global concern and its implications in the fashion industry, APLF Ltd – organisers of the renowned Prime Source Forum – rolled out this new forum held alongside Fashion Access.

In three sessions, the panel of speakers tackled three key issues: What is Sustainable Fashion? Is Sustainable Fashion Profitable? Who Wants Sustainable Fashion?


Session One:

Moderating the first session, Michael Lavergne, director-Asia, Worldwide Responsible Accredited Production (WRAP), posed to the panel "What does it really mean to be sustainable and what is best practice?"

Adding to his big-picture view of sustainable fashion, Mr. Bergstrom says economics play a strong role in the current approaches to sustainability, while solutions taken from social and environmental perspectives are sure to come.  

"Sustainability is now a retailer and brand-driven initiative, but we need to convince the manufacturers to see the benefits of sustainable operation starting with raw materials,’" said Hong Lee, manager of Asia Pacific, Control Union. 

But when widespread consumerism drives disposable fashion, is there really a place for sustainable fashion? The answer is yes, according to Janvier Serrano, creative director and founder of The 091/091’s Eco Couture brand, which features bags made from recycled scraps.

http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_8KJ520091027032907_201_300.jpgModerator: Mr Michael Lavergne
Director-Asia, WRAP

 

http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_YRX020091027032936_450_301.jpgSession 1 Panel: Mr Javier Serrano, Ms Mary Yan Yan Chan, Mr Bruce E Bergstrom, Mr Hong Lee

"Although it is difficult to achieve sustainability right now and it is a big challenge, we must do it. We must be open, we must be proactive. We must educate the consumers to go for quality and not quantity," advised Serrano. 

Agreed Amy Small, Creative Director at Green2greener, a b2b trade platform for eco-fashion: "Sustainability is a continuous goal, it is to put back the same amount as what you take out". In her opinion, small companies, successful in sustainable production, can inspire big companies to follow. 

"Fashion is not only in clothing but it is a lifestyle and attitude of life. We have to be vigilant on sustainability in day to day operation and living. It is important to impress upon the students of today the concept of sustainable living so that it can be passed down to the next generations", said Mary Yan Yan Chan, director of Style Central Ltd, the exclusive agent of Perclers Paris. 

Taking questions and opinions from the floor, the panel and audience agreed that a paradigm shift is needed for the fashion industry to tackle sustainability effectively. There is a need to drive innovation. Governments can also play a part, through education and green policies.  


Session Two:

Devangshu Dutta, chief executive of Third Eyesight led the 2nd session panelists to discuss "Is Sustainable Fashion Profitable?"  He commented that sustainability is not viable in the long term without financial returns and a good business sense.

"Sustainable fashion can be profitable because shoppers today are looking for something more meaningful. Consumers are accepting the concept of reuse and recycle in a creative way", said Olivier Grammont, founder of eco fashion brand Francs-Bourgeois. He described how his company uses second hand materials for handbags and the finished products are selling well in boutiques.

Concurred James Ockenden, director of publishing house Media Karma which specializes in the environmental technology, energy and finance industries. Ockenden citied the case of an olive oil company that used olive pits to generate energy for the plant. The company has now expanded to processing palm oil waste to produce a power supply to 400 households. Ockenden strongly believes that green legislation is the way forward but subsidy for new technology is necessary. He proposed adding ‘government’ to the three pillars of sustainability, that being economics, environment and social. 


http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_Z4HU20091027033302_600_402.jpg
Session 2 Panel: Mr Olivier Grammont, Mr James Ockenden, 
Ms Cassandra Postema, Ms Dong Shing Chiu

 

http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_X95R20091027033315_134_200.jpgModerator: Mr Devangshu Dutta 
Chief Executive, Third Eyesight


Meanwhile Carolina Rubiasih, VP sourcing & product development of the SAK questioned whether today’s consumers, who want value-for-money products, are indeed ready to for sustainable options that generally incur greater costs.  The younger generation, however, is adopting healthier lifestyles that will likely encompass sustainable fashion. As time goes by, sustainability will be the norm and a way of life and perspective.

Offering ideas on how to be profitable with sustainable products, Ms Rubiasih advises to produce only what you can sell, improve on the design to reduce wastage, use less packaging layers, increase efficiency in logistics and study the tariff code to tap lower tariff categories with minor adjustments to the material & design. Her privately owned company took such steps and yielded good results, outperforming their previous year’s revenue.  

Echoing Rubiasih’s emphasis on the importance of design, Cassandra Postema, director of fair trade fashion brand Dialog said "As designers, we have to design a product that can sell and sustain and compete with the regular products. It took People Tree, an eco-friendly company, 10 years to breakeven." 

Some audience members felt that sustainability must be price neutral if not cheaper to sell to consumers and noted that supply chain efficiently is critical to profitability, while innovation and good management can bring costs down. It was also suggested that designers should place attention towards engineering so as to produce more efficiency. 


Session Three:

In Session 3 Mr Ockenden facilitated the panel to probe into the question of "Who Wants Sustainable Fashion?" People buy fashion for various reasons, but experts often agree is linked to an emotional element. Companies can encourage sustainable fashion purchases by strengthening its ‘feel-good’ factor. 

Sustainable fashion is in-demand among fashion brands, but under the financially low-risk terms of cost and time-efficient production, says Mr. Lavergne. NGOs are nudging the concept of sustainability onto the brands and retailers and the social climate is ripe for them to take such a stand. 

Meanwhile Mr. Dutta says that general perception of fast fashion is quite wrong; it is actually not about throw away clothing but a management system that can improve the efficiency of the supply chain. Fashion is by nature not a sustainable concept but how can we make it sustainable? He hopes that in 10-20 years time we will truly have sustainable fashion.


http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_YRX020091027033925_201_300.jpg
Moderator: Mr James Ockenden, Direct, Media Karma

 

http://products.fashionnetasia.com/Upload/News/Photo/300x300/thumb_Z4HU20091027033951_400_268.jpgOverview of the forum


Summary: 

The panelists recognise that sustainable business is still in its infancy, and urge the brands, retailers, buyers and suppliers to take small steps towards sustainability. There is no one answer to the complex and multi-faceted issue and finding solutions will require a collaborative effort. Improvements in education, innovation, technology and government policies will make sustainable fashion possible – and profitable. 

Retail dream fades for many FMCG, telecom executives

By Ranju Sarkar

New Delhi October 24, 2009

With retailers downsizing operations, many senior executives from fast-moving consumer goods (FMCG) and telecom who had jumped on the retail bandwagon a couple of years ago are making a quiet comeback.

These include some high-profile names who were in the limelight when the going was good.

Former banker Murlidhara Kadaba, who was head of financial services at Reliance Retail, has moved back to his old industry as senior managing director, Altamount Capital Management, a Mumbai-based wealth management firm. Kadaba, who has worked with Citibank and American Express, continues to be associated with Reliance Retail as advisor.

Amit Bedi, who was the business head for Reliance Retail, has moved back to telecom as CEO for Tata Teleservices, Bihar. Bedi earlier led the marketing operations for Hutchison (now Vodafone) in Punjab.

Then again, Rohit Malhotra, who headed Future Group’s operations in the south, has moved back to Bharti Airtel. So has Harvardhan Soin, a senior HR executive, after a stint with Aditya Birla Retail.

“The slowdown brought in a reality check in retail. Companies today want to pay for a role,” says the CEO of a Delhi-based retailer, who didn’t wish to be named. The slowdown left retailers with excess people.

Devangshu Dutta, CEO, Third Eyesight, a retail consultant, believes that retailers had built a pipeline of people anticipating certain growth, which has toned down in the last one-and-a-half years. For instance, retailers were growing at 50 per cent in square footage (adding new stores) before, a rate that has fallen to roughly 30 per cent in the last 18 months.

In the absence of retail-specific talent in the country, retailers were forced to hire from consumer-facing sectors like FMCG and telecom — that is, “anyone remotely related to consumer”. It worked when retailers were expanding and the only thing that mattered was how many stores they added. The slowdown exposed the weaknesses of this hiring strategy.

Anand Raghuraman, consultant with Boston Consulting Group, says functions that many people were handling were not aligned to their previous jobs. Retailers admit there were problems. Take the marketing function. In an FMCG firm, a marketing head’s job is to create brands and run campaigns. “In retail, brand is what you deliver in the store; the marketing operations are on-ground promotion and, most importantly, your speed of response,” said a CEO.

The sector differs from FMCG in pace and focus. ‘‘It is 5 per cent strategy, and 95 per cent implementation. In retail, the speed of response has to be much faster. In FMCG, you can sit and plan, and implement it in six months. In retail, people have to take calls all the time. In retail, it is about yesterday, today and tomorrow. In FMCG, you can classify customers into Sec A, B, and C but in retail, customers within a city can be different across catchments. When it comes to nuances, it is different,’’ adds an expert.

Besides, many of these executives came from well-established organisations like Hindustan Unilever, which was different from working for a start-up where the processes were not well-defined. ‘‘Some of these executives were disenchanted and struggling,’’ adds Raghuraman.

‘‘You need a different mindset to work in an unstructured environment. The variables won’t be known to you. Sometimes, the stock doesn’t come and you have to go with cash and buy from a distributor, or sometimes even from a competitor,’’ says an executive.

The executives have a different take on their exits. Nitin Tipnis, who moved from Reliance to head Hover Automotive that is developing a sales and service network for Nissan, says he changed from one industry to another because it gave him an opportunity to do something different.

Tipnis, however, says retail is here to stay since there’s no dearth of spending — people are buying more than what they want. “What I am doing is also a retail operation, I am developing an independent marketing, sales and service organisation and deliver customer satisfaction,” he says.