By Rajiv Banerjee & Shuchi Vyas
BRAND EQUITY, THE ECONOMIC TIMES
9 May 2007

At the MTV head office in Mumbai, the channel’s seven CEOs troop in every month to report their observations. And just like their Mumbai counterparts, CEOs from six other Indian cities too mail in their reports diligently every month. Meet the campus executive officers — the eyes and ears of the music channel, which sweep colleges across India looking for what’s hot or cool.

It’s the kind of information which enables MTV to get deep into its target audience’s minds. “The insights may not lead to a radical overhaul in our offerings, but we do incorporate elements into our shows — in the style and packaging — to make it contemporary and in tune with our target audience,” says Aditya Swamy, vice-president – marketing, MTV Networks India.

While MTV keeps its antennae tuned to the latest fads, Sanjay Luthra, MD, Mattel, bemoans a missed opportunity. The Pixar ‘Cars’ phenomenon isn’t even a whimper in India, even though Mattel factories across Europe and America are falling behind on orders. “In India, it didn’t work as well as expected,” admits Luthra.

The reason, in all probability, could be traced to the fact that Cars (the movie) wasn’t as big a hit in India. “A fad has to be identified and supported by more than one party. Today, when a fad emerges, it has a high-intensity, high-velocity impact, whereas earlier it was a gradual build up. The potential return is high, but there are risks as well,” Luthra adds.

It’s a conundrum which marketers today are grappling with. A fad today has a faster build-up and a shorter lifespan than ever before. He-Man moved from a fad to a trend with a life long enough for marketers of every stripe to ride on it.

Today, it’s Pokemon to Yu-Gi-Oh to Pixar, re-mixes to Brit-Asian to hip-hop — all flashing by on fast forward. While some do last long enough to become more durable phenomena, others have a very short shelf life. Time it and you ride the wave; miss it and you come crashing down.

The question that begs an answer: are fads worth all the effort? BS Nagesh, MD of Shoppers’ Stop, says that the fashion and lifestyle format no longer counts on short-term spikes. “We learnt this lesson during the days when Valentine’s Day was a hit. We used to work towards giving the occasion a spike. Now it’s just faded away. So unless it’s a product which creates a fad, which still has to be well planned, we don’t look at short-term waves,” he says.

Some of the fads that Titan’s FastTrack has seen are the neon collection in the watches category, and the amber-coloured and mirror effect range in sunglasses. “We see that when a campaign is taken off air, the demand drops. When put on air the second time, it revives interest only for a small segment,” says Simeran Bhasin, marketing manger, FastTrack, referring to the interchangable range launched for women, which did not pick up after the first few months.

But Bhasin also sees comebacks after a three-to-four year lull — in sunglasses, ‘avaitors’ and ‘bug eyes’. Trendspotter Robyn Waters, who’s written a best-seller called The Hummer and the Mini: The Contradictions of the New Trend Landscape, believes that today, as soon as something becomes commonplace, the early adopters move on to the next thing. “That makes it even trickier for marketers to capitalise on fickle fads.

It’s easier to identify because it’s so ubiquitous, but harder to capitalise on because the product lifecycle is so compressed,” she says. Dharen Chadha, MD, Momentum Strategy Consultants, says that fads are an example of downstream marketing. “They have their importance in certain categories like children-oriented ones in which you need to keep the stimulus fresh.

Brands should be about the eternal rather than the ephemeral,” he warns. And even in a kids’ category like toys, for players like Mattel, knowing what fad will catch children’s fancy in the future is crucial. For instance, Luthra has to be ready when kids go on holidays in April 2008.

“Even as children are more globalised today, they are ‘getting older younger’ (GOY), which means a move away from interest in sustained medium-intensity activity to short-term high-intensity fads,” he explains.

The shortened time line for fads owes to the faster dissemination of information through media like the internet and mobiles. Social networking sites and blogs allow anyone to propagate what he or she thinks is cool. “Earlier, a customer was exposed to a fad through a marketer.

Today, as the exposure is so large, sustaining a fad is becoming very difficult,” says Nagesh. Adds Santosh Desai, CEO of Future Brands: “Today, we are able to forget very easily. It’s a hallmark of media-based society. We grew up at a time where everything was given and stable. Today, it is based on change. What’s changing is growing.”

One outcome of the global information exchange is that Indian customers now see hardly any lag before a fad that takes shape in another country reaches India. Devangshu Dutta, chief executive, Third Eyesight, a Delhi-based consultancy, points out that this market is still very different from Japan and the US, where the electronic media is more dominant and specific market segments are smaller.

“There is still a significant ripple creating power in India. Fashion has more of a pan-India effect, while fads trickle up, down and sometimes across,” he says. Citing the example of an international retailer that he worked with, Dutta says two years ago, the retailer noticed there was an increase in demand for ‘ponchos’ and so they made 25 varieties of ‘ponchos’ for the UK market.

“They sold large volumes, but when other companies tried it just six weeks down the line, no one really bought them, and within two-and-a-half months, almost no customers picked them up,” he says. Even when it comes to fashion, Bina Mirchandani, head – category management, Future Group, believes time spans are coming down, even in India.

Two years ago, Pantaloons introduced Seven Seasons, with each season lasting around two months, which according to Mirchandani, proves that the timeframe for trends is decreasing. “We see that silhouettes last for a longer period of time compared to colours.

Also, comfort level is a factor that determines whether a fad goes on to becoming a trend. For instance, kurtis started out as a fad, but because people found that it is a comfort outfit, its lifespan has increased.”

So marketers are looking increasingly at capturing trends, rather than going after short-term fads. Ashwin Rajgopal, GM – marketing, L’Oreal, explains: “We are in the business of science and technology. Fashion is just a part of the entire spectrum.” Explaining the emphasis on creating trends rather than riding fads, Rajgopal says that considering the size of the country, if it’s just a fad, it may get restricted to major metros like Mumbai.

This also explains why the company does not indulge in limited editions — barring the recent Aishwarya Rai lipstick shade — dismissing it as a short-term game. “The challenge for us is to appeal to a large cross-section of people, especially when others join the bandwagon soon after we’ve introduced something in the market,” explains Rajgopal.

Most marketers believe that identifying fads is part scientific and part gut feel. While enormous amounts of time is spent researching consumer behaviour, preferences, media habits and language, whether tapping a fad will rake in the moolah for marketers is a matter of chance — and timing. To know what the target audience would be interested in the future, Mattel depends on Play Plus, a research which combines both internal and external sources.

“The idea is to service the play needs of a child, whether he wants a toy or internet or games. The list we have seen is getting more and more crowded,” Luthra says. One insight which came from the Play Plus research was children spending more time with mobile cameras.

So Mattel came out with a digital camera which, according to Luthra, is gaining popularity all over the world. Mattel has launched this in India too, but it remains to be seen whether kids here will latch onto what is a rage in other markets. “At the end, Play Plus will identify five properties — three may do well and two won’t. But it’s a continuous bet,” he says.

Ashish Patil, VP – creative & content, MTV Networks, admits that it’s a combination of research and going by the gut. “But what we bank on is our experience of what’s worked in the past, and whether something will work or not. That understanding gives us the confidence of saying this will work the minute we see it or hear it,” he says, adding that there are some broader trends like Bollywood.

But even within that there are fads like a ‘John Abraham’ from Dhoom 1 to a ‘Hrithik Roshan’ in Dhoom 2. “Today humour is big, but the kind of humour where you have fun at someone else’s expense is a fad.”

It’s not always easy predicting fads — they can be sparked by just about anything. Take, for example, the Motorola Pink Razr, which the company launched in a market dominated by black and grey coloured handsets. Lloyd Mathias, head – marketing, Motorola, says the initial reaction to the idea was met with skepticism.

“People thought it was bizarre. But we decided to go ahead with it and see the reaction,” he says. Within a fortnight, the company was inundated with calls from all over India with youngsters, particularly girls, asking for the Pink Razr. “We thought it would be temporary, but it went on to become a trend.

We took a gut call and decided to break the clutter. It worked for us,” says Mathias.

Interestingly, Dutta of Third Eyesight points out that mobile caller tunes have moved from being a fad to a permanent feature. “When the application was first introduced, youngsters used to change the caller tunes almost everyday,” says Dutta.

Marketing is rife with examples of trends that were mistaken for fads and vice versa. And while fad creators almost always gain disproportionately, cashing in is invariably a function of knowing when the end is nigh.

By RASUL BAILEY
MINT (Exclusive Partner The Wall Street Journal)
DELHI, 20 February 2007

Bharti Enterprises, the parent of India’s best selling wireless service provider Airtel, confirmed that it will invest up to $2.5 billion (Rs. 11,026 crores) in the next eight years to roll out convenience stores and hypermarkets nationwide, joining a raft of companies looking to profit from an expected boom in organised retailing.

As reported on Monday by Mint, Rajan Mittal, the youngest of the three founders of Bharti, will head the retail foray, dubbed Bharti Retail Pvt. Ltd. Bharti’s Investment will be financed by a mix of debt, internal accruals and equity. The investment excludes the cost of real estate.

The company is targeting Rs. 20,000 crore of revenues by 2015 but didn’t say how many stores it plans to put up and where. The company will need 10 million square feet of space for its stores and did not say whether the company would go the leasing or purchase route, or a combination of the two. The first stores are likely to start a year from now.

Bharti is also partnering with Wal-Mart Stores Inc. for managing the back-end supply chain and logistics for its new retail foray. There were very few details on that front from Bharti pending a visit by Michael Duke, vice-chairman of the Bentonville, Arkansas-based retailer later this week.

“I think putting the supply chain in place will be the critical element for Bharti,” said Devangshu Dutta of retail research firm, Third Eyesight. “It makes sense for them to open early next year as an investment of this nature and magnitude needs a year or so for the supply chain and real estate to be put in place.”

Retail has become the latest target of Indian corporate giants trying to diversify and rush into emerging opportunities. As organized retail takes roots in India, as much as $25 billion is expected to be invested in the sector in the next five years, compared with $2 billion in the last decade.

France’s Carrefour SA and Britain’s Tesco PLC are also looking at ways to enter India’s $300 billion annual market. But analysts say Bhartis major competition is expected to come from other home-grown retailers including India’s largest listed retailer, Pantaloon Retail (India) Ltd. and Reliance’s retail arm as both companies separately plan to open thousands of stores in th enext five years. Much of the criticism about organized stores hurting mom-and-pop stores has pointed the finger at the likes of Wal-Mart, even though Bharti’s retail investment is significantly lower than what the likes of Reliance have said they will spend in more ambitious roll-outs of stores.

Mittal said Bharti Retail will create 60,000 direct jobs but would also “provide linkages to farmers and small artisans”, to its stores selling everything from food to furniture.

By RASUL BAILEY
MINT (Exclusive Partner The Wall Street Journal)

DELHI, 2 February 2007

Targeting an emerging segment of night shoppers, New Delhi-based round-the-clock convenience chain Twenty Four Seven Retail Stores Pvt. Ltd plans to invest Rs 880 crore (US$200 million) in opening 1,000 outlets in the next five years., in a country where even late markets shut by midnight.

The company plans to open 178 stores in Delhi and its suburbs before expanding to the country’s commercial capital, Mumbai, next year and thereon to other major cities.

Last year, the K.K. Modi Group forayed into organized retail by opening India’s first 24-hour convenience store in New Delhi. So far, it has opened four such outlets in the city. The fifth store will open in April.

Round-the-clock stores are virtually unknown in India’s retail market, which is growing by 7% each year. Almost half the country’s 1 billion population is below 25 years and more than a million of them work in call centres and other offshoring firms that keep Western hours.

Samir Modi, president, Twenty Four Seven Retail, said Rs 440 crore of its expansion capital would be funded by internal accruals, the rest from private investors. Modi wants to franchise 80% of the new stores. He said there was potential for 1,00,000 such stores in India in the next 20 years.

“There is an emerging consumer segment that works longer hours,” especially among the workforce in the country’s outsourcing and technology industry, said Devangshu Dutta, head of retail research group, Third Eyesight. “There has to be something catering to them.”

Twenty Four Seven studied various global 24/7 store formats for two years before rolling out its first outlet.

By MOLSHREE VAID, CNBC-TV18
31 January 2007

Business Standard, MUMBAI, 30 November 2006

The growth of financial sector was to a large extent responsible for the current consumption boom in the country and that there ought to be further collaboration between financial service providers and retailers to keep this going, said Suman Bery, director general, NCAER, at the National Retail Summit 2006.

“Sentiment is a big driver behind consumer behaviour and retailers should get ready for a bumpy ride ahead,” he added. Commenting on other factors that will boost growth, Roopa Purushothaman, chief economist and strategist, Future Group, pointed out how increase in the number of women in the consuming class would give a boost to retail.

“Increased participation of women on the professional front will result in an increased demand of 10 per cent over the next five years while per capita income will be boosted by five per cent by 2015, 12 per cent by 2025 and 25 per cent by 2050,” she said adding that at present, the country was at a ‘sweet spot’, where it could improve its demographic ratios.

Ireena Vittal, partner, McKinsey & Co, clarified a few myths surrounding the sector saying that changing demographic patterns and not changing incomes would determine the consumption patterns in India.

“Increasingly, as women and younger people enter the consuming class, the product mix will undergo a tremendous change,” she said adding that because of that reason, it wasn’t possible to compare the consumption mix in India at present to the kind of consumption mix seen in other countries, when they were at a similar stage in retail.

Devangshu Dutta, CEO, Third Eyesight, pointed out that it was important to look at an Indian model of retail development given the kind of disparities that existed in the Indian market.

“It is as important to share the growth downwards as much as we are pulling it upwards in terms of aspirations,” he said.

Though the retail sector in India is expected to grow rapidly over the next few years, analysts point out that this will definitely not be a smooth ride.

As the market develops, it will see its share of ups and downs, and just because it’s at a nascent stage does not mean that the going will necessarily be good.