admin
November 17, 2006
Reported by Nikita Rana
For Brand Equity, on ET Now (a TV channel run by the Economic Times, Bennett Coleman Group)
17 November 2009
They’re egg-headed, have squeaky voices and formless pale bodies, but the viewers seemingly can’t get enough of them. Vodafone’s Zoozoos have now ventured into merchandise. The reason: public demand.
“Everyone loves the commercials. It’s almost like public demand, where people wanted some part of Zoozoos which they could own,” said Rajiv Rao, National Creative Director of Ogilvy and Mather.
For the moment it’s just Zoozoo T-shirts, but one can look forward to the soon-to-launched Zoozoo mugs, linen and bathwear. They’re all set to shine at Shopper’s Stop. But are the takers queuing up?
Vinay Bhatia, Vice President, Marketing & Loyalty (Shopper’s Stop) states, “There are millions of Zoozoo fans in this country. There are more than 300,000 people who are members of the Zoozoo fan-page. Given those kind of numbers you can imagine the kind of market potential for merchandise of a brand like Zoozoos.”
The Rs. 1,500 crores merchandise market in India is dominated by Disney, which has a share of Rs. 500 crores. Bollywood commands a share of Rs. 50 crores. The sector is small and competition is tough. So will the Zoozoos be able to carve a niche for themselves?
Kumar Ramanathan, Chief Marketing Officer of Vodafone Essar, clarifies, “We’re not interested in the size of the business. See, if it is business which we’re after then we would define the demand, size of market and all that. We thought this would be a decisive way to keep the connect in a much more visible, tangible manner, and bring the character to some kind of life.”
In that case, what’s in it for Shopper’s Stop?
Vinay Bhatia explains, “When we’d done movie merchandising, in the case of Om Shanti Om, a movie which we merchandised for exclusively, we did about Rs. 6 crores of turnover. In recent times we’ve done a hit movie called Love Aaj Kal, where we did about Rs. 1.5 crores of turnover. A movie is typically restricted to about 6-8 weeks of key selling. I think in the case of an advertising character it is a number of years where the whole thing plays out.”
Vodafone is a dynamic brand and its ad campaigns change quickly. Ogilvy is, in fact, working on a brand new campaign for the telecom major. So what happens to the merchandise when the ads go off air, and the Zoozoos aren’t top of mind anymore?
Devangshu Dutta, chief executive of Third Eyesight, says, “When the merchandise is on the market, and the character is on air, clearly it’s going to help the merchandise and vice-versa. If the two are delinked, if the ads are not running then there is bound to be some kind of an impact because the awareness levels would dip, or maybe even the bond that you have with the merchandise would get a little weaker.”
While loyal Zoozoo lovers would queue up to pick a T-shirt worth Rs. 299, it is clear that even an optimistic estimated initial sale worth Rs. 6 crores will barely make a dent in the merchandise market. And leaving aside the actual sales of T-shirts and mugs, the real question is whether the merchandise will enable more loyalty and subscribers for Vodafone.
admin
November 7, 2006
(Based on a presentation at the CII National Retail Summit, Mumbai, November 2006)
View the PDF of the handout by clicking on the link at the bottom of the page.
Some years ago, a very lively and friendly conversation that I was having came to a dead stop when the other person got to know that I worked with the retail sector.
Her attitude towards me immediately underwent a dramatic change. From a normal human being, I suddenly became comparable to the “lowest of the low” on the planet. I was instantly accused of being “one of those who promote others to consume more and more, endlessly” (obviously to their and others’ detriment).
That incident seemed to typify for me the mind-set that we in India had fallen into – “dukandari” (shopkeeping) is bad, because it promotes ill-afforded consumption. We have reached that mind-set due to centuries of living a poor life pre-independence and, after independence, decades of good intent but poor practice.
Contrast that with the American philosophy that not only is consumption ‘good’ and necessary for economic prosperity – it is akin to God. In fact, from my point of view, much more to the other extreme…but that is another story.
However, the Indian attitude is certainly a strange contrast, since consumption, commerce, change are well-established and accepted in the traditional Indian schools of thought. Let me offer the two following examples, from millennia-old Indian philosophy:
Clearly, there is a role for commerce and consumption-led economic development in the overall re-development of India. And I believe retailing as a sector has a very large role to play in this.
Retail’s Role as an Economic Engine
If we consider the hierarchy of economic development and subsequent impact, progressively we see:
In this evolution tangible (touch-feel) values give way to intangible (imagined / perceived) values that are much greater in magnitude. In fact, the inflexion point really comes when the transition to modern retail happens. While the previous steps are essential for the growth of modern retail, the reverse impact of modern retail on those very steps – manufacturing, agriculture and urban development – is huge. At this stage, the economic development starts spiralling through this feedback loop.
Why is there such a wide and deep impact of modern retail on the other sectors? The prime factors are mainly three, and all have an impact on agricultural supply, manufacturing and other SME suppliers, town planning, services infrastructure, as well as having an impact on the socio-cultural environment.
Firstly, as retailers grow larger, into chains, the need for efficiency grows. Process and system-led planning and execution become the norm. Wastages or inefficient processes which may only be quirks in a small business, may be fatal in a larger one in a more competitive market. Second, a related factor, is the need for consistency across the chain since any modern retailer would wish to communicate certain core brand messages from each and every store. Both of these factors push the need for more structure into the supply base, whether farm or factory.
All this, of course, looks like the development path followed by the western economies over the last 150-years. And from the looks of it, this seems to be the development path being pushed by a lot of people in India, presumably aiming for the same result.
However, let’s pause for thought.
Need for An Indian Model
Economic growth or prosperity can be looked at in two ways – on average how prosperous a country is (in comparison with other countries), and what is the relative position of people within the country. Economists measure the second factor using the Gini Coefficient, which essentially measures the level of income inequality in a population. (A Gini Coefficient of 100% would theoretically be completely unequal with one person holding all the income in the country, and the lower the Gini indicates that incomes are more equal within the country. The more overall prosperous countries (such as the Scandinavian countries) have also more equal distribution of income within the country, while relatively poorer countries (such as in Africa and Latin America) tend to have higher Gini figures.)
The biggest problem that I see in the current push for consumption-led growth (retail-led growth) is that the focus is totally on the first measure (per capita GDP, average income etc.), rather than on the second. After decades of almost monastic self-denial, India seems now to be swinging to another extreme – an orgy of consumption.
Let me describe what I believe the problem is.
In this focus, there is a single minded focus on earning and spending “More” – if you want to fit in you need to acquire more, if you want to stand-out acquire something different (more), if you do not have something you need to acquire it (more), and if you do have something it is always good to have (what else!) more.
In itself is there a problem? After all, inequality is a fact of life, and can be good because it creates ambition and brings forth creative energy. But does that mean that more inequality must be better?
If we imagine the population of India to be a cylinder or a cone, we can visualise how aspirations to a better life are pulling everyone upwards. The problem arises when the aspirations that are raised cannot be fulfilled with the income available – that vacuum creates stress in the society. This is not a problem for the future; we already have ample evidence of it in our cities with the dramatically higher rates of crime related to money and aspirational wealth / spending.
Referring back to the Gini Coefficient, economists have also defined a certain optimal range – if incomes are too equal, then there is little incentive for self-driven growth, but if incomes are too unequal beyond that range then social injustice and dysfunction is more widespread.
India at the moment is actually rated to be almost in the middle of the optimal range. However, the business, economic and urban models being followed are more from the UK, the USA and China. And if we see where these countries are on the Gini Index, we find them outside the optimal range – on the more unequal side.
Can we even imagine the upheaval that moving along this path could cause in a country like India?!
So what is the solution? What should the Indian model be? And what role can retailers, especially modern retailers play in this?
I believe that it is high time we start creating economic growth where the maximum people are – in India’s case that is still the villages rather than the cities. Secondly, the small scale sector is the largest sector. The government needs to look more actively at policies that encourage agricultural development and the growth of small scale sector companies. If we need buzzwords to create a wave, let’s use “Agricultural Product Outsourcing” (APO) as a buzzword; let’s drive India’s strengths in “Small Production Outsourcing” (SPO)!
Similarly, retailers need not get cowed down by the mega plans announced by the likes of Reliance and Bharti – India can accommodate hundreds, maybe thousands, of farm-to-fork initiatives.
Retailers need to shift their attention from the assumed middle class (who are actually quite rich) to the true middle class. (I’ve written elsewhere about that issue.)
Development of domestic brands is another area where retailers can have a huge impact – as we mentioned, the emergence of strong domestic brands has a huge impact on the economic profile of the country. And in most cases, the most successful brands actually grow out of small scale businesses that are commonly dismissed as mom-and-pop or pop-and-son! Modern retail can have an enormous impact in supporting the emergence and growth of these in India.
I do believe that successful retailing is not about throwing mega-bucks at real estate and advertising, or paying humongous salaries. Apologies if this sounds completely contrary to the “gung-ho” feeling that most people have about the retail sector. But the sooner we face this issue and tackle it wilfully, the better it is – for all of us, including the retailers.
We need to start looking at retailing from a completely different angle, and look at its role in creating a new economic profile of India. Retailers need to critically look at how they interact with the rest of the economy in a totally new way.
Once we are able to do that, we will also be able to make the shifts that are necessary to create a more sustainable economic environment and more widespread prosperity. And that is most definitely in the interest of the retailers. “Inclusive growth” should be more than a buzzword for retailers – it is the way for them to create sustainable growth for their own businesses.
So – in this context – if you are a retail entrepreneur, or a retail employee,
what’s your resolution for 2007?
(c) Devangshu Dutta, November 2006
Devangshu Dutta is chief
executive of Third Eyesight, a consulting firm focused on the retail and consumer
products sectors. This article expresses his personal opinions and is based on
a presentation made at the CII National Retail Summit, November 2006 (open
PDF). The speaker panel also featured Ireena Vittal (McKinsey &
Co.), Roopa Purushottaman (Future Group / Pantaloon Retail), Suman Bery (Director
General of the National Council for Applied Economic Research – NCAER).
admin
November 7, 2006
If we consider the hierarchy of economic development and subsequent
impact, progressively we see:
• Subsistence farming giving way to modern farming
• Cottage industry developing into larger scale manufacturing
• Small towns and poor villages transforming into a vibrant
and balanced urban and rural Mix
• Fragmented retail businesses growing into modern retailing,
and
• Generic merchandise paving the path for brand development
In this evolution tangible values give way to intangible values that are much greater in magnitude with the inflexion point coming when the transition to modern retail happens. The reverse impact of modern retail on those very steps – manufacturing, agriculture and urban development – is huge. At this stage, the economic development starts spiraling through this feedback loop.
The prime factors for such a wide and deep impact of modern retail are mainly three, and all have an impact on agricultural supply, manufacturing and other SME suppliers, town planning, services infrastructure, as well as having an impact on the socio-cultural environment.
Firstly, as retailers grow larger, into chains, the need for efficiency grows. Process and system-led planning and execution become the norm. Second, a related factor, is the need for consistency across the chain since any modern retailer would wish to communicate certain core brand messages from each and every store. Both of these factors push the need for more structure into the supply base, whether farm or factory. The third major factor is the need for differentiation from competitors. The successful players start pushing more product development, private label growth etc.
All this, of course, looks like the development path followed by the Western economies over the last 150-years. Unfortunately, this seems to be the development path being pushed by a lot of people in India.
Economic growth or prosperity can be looked at in two ways – on average how prosperous a country is (in comparison with other countries), and what is the relative position of people within the country. Economists measure the second factor using the Gini Coefficient, which essentially measures the level of income inequality in a population. A Gini Coefficient of 100% would theoretically be completely unequal with one person holding all the income in the country, and the lower the Gini indicates that incomes are more equal within the country. The more overall prosperous countries (such as the Scandinavian countries) have also more equal distribution of income within the country, while relatively poorer countries (such as in Africa and Latin America) tend to have higher Gini figures.
The biggest problem that I see in the current push for consumption-led growth (retail-led growth) is that the focus is totally on the first measure (per capita GDP, average income etc.), rather than on the second.
In this focus, there is a single minded focus on earning and spending “More” – if you want to fit in you need to acquire more, if you want to stand-out acquire something different (more), if you do not have something you need to acquire it (more), and if you do have something it is always good to have (what else!) more.
admin
October 31, 2006
From: www.just-style.com, 31 October 2006
Benetton brand Sisley has entered the Indian market with a store in capital New Delhi.
The store, which is almost 400-sq-m big, contains Sisley women’s and men’s clothing collections plus accessories ranges.
Speaking at the official opening of the store, Benetton Group chairman Luciano Benetton said: “The launch of our trendsetting label in India strengthens Benetton’s presence on a market that is strategic for us, and with which relations are becoming increasingly strong and profitable.
“The expansion plan includes not only the opening of new stores
in Delhi, but also the exporting of this experience to other
major Indian cities. I am certain that Sisley will gather the
same success and the same admiration which sophisticated
Indian customers have shown United Colors of Benetton.”
Top fashion brands have been increasingly investing in the Indian market recently as its retail sector, helped by an increasingly affluent consumer class, continues to accelerate its pace of growth.
As Devangshu Dutta, chief executive of advisory and business services firm Third Eyesight, said earlier this year: “With growing urbanisation, we see a sustained growth in the (Indian) consumer market. Credit and debit spending is rising by 30%-40% a year.”
1968-established Sisley has 850 retail outlets globally. Benetton’s other brands include United Colors of Benetton, Playlife, and Killer Loop.
Benetton India said in June it plans to open 100 stores in India by the end of the year, adding to its existing chain of 80 stores.
The company is also developing India as a sourcing hub for its Asian market, which it has identified as the growth engine of the future.
admin
October 31, 2006
By Devangshu Dutta (Column from The Economic Times – 31 October 2006)
Normal human tendency is to label what one doesn’t understand. And so we call the younger members of society by various names – youth, teens etc. By putting them into categories of age, we claim complete understanding of what they are, what moves them, and what they want, in effect adopting convenient disguise for the fact that we actually don’t have a clue.
My personal favourite term is “tweens”. In my dictionary, tweens are that magical, difficult, weird age somewhere in the region of 10-16 years, give or take a couple of years, when one is not quite an adult to be allowed an opinion, and not quite young enough to be indulged one. I believe that is why rebellion is the hallmark of the tweens and the teens.
Let’s look at the broad segment of the young (under 20) population – about 450 million individuals in India are estimated to be below 20 years of age. 105 million individuals are in the age group of 15-19 years, already in their early years of discretionary consumption. About 112 million individuals are in the 10-14 years segment – within 5 years many of these will be making career choices, and in another 5 years most would have already begun earning and spending. Imagine the power of the tweens and the teens.
However, this is not one homogenous mass of youngsters who think in the same way. Some, of course, will be a typical marketer’s delight – gulping heavily-advertised colas and wolfing down pizzas and burgers at a birthday party with their pals, while demolishing each other on the latest game console. Others may only be aspiring to acquiring a fraction of such a lifestyle in their later years. Many – too many – will not only not have these things, but may not even be able to dream of a lifestyle that looks much different from their parents.
Some are motivated by firang lifestyles, and may look at the earliest opportunity to apply for a student visa in the west. Others are surprisingly loyal to the idea of staying within the country, and actually contributing to progressing it. An increasing number find their “Indian skin” very comfortable to wear, even while moving in rhythm with a semi-westernized lifestyle.
They’ve got a whole bunch of different ideas about relationships. To many, career options are always wide open and whoever works for life in one job may have no other options. Yet, when it comes to personal friends, the buddies from pre-school may still be the ones they hang around with.
Clearly age, then, is not the key differentiating or grouping factor. Neither, it would seem, is income or education. SEC segmentation more or less breaks down when dealing with the youth. There are many, possibly hundreds of segments for a marketer to deal with.
“What’s hot” may change every week – if it’s really hot, it may stay around 3-4 months. RDB ( Rang De Basanti ) was a protest against the society the young are inheriting, and its candle-light march was emulated for many a cause. But Munnabhai is cool today, and Gandhigiri is now the road to follow. On the other hand – are these really two sides of the same coin?
Some very global trends catch on very fast, while others are uniquely Indian.
So how does one make sense of this kaleidoscope? How is a marketer to predict what will appeal to the most consumers? How can we lead the consumers into our store, to our brand counter, to the product that we want to promote?
If I were to pick one learning for the youth market that made – and still makes – youth markers successful, it is the fact that they do not predict fashion and trend. They do not attempt to lead the consumer but follow diligently. They identify the opinion leaders, identify with them, and understand what’s hot with them. Then they place their bets – a lot of them, well-spread out. Sure, not all of them are right, but it’s a whole lot better than trying to predict fashion 8-12 months in advance.
An equally critical step is to let go of the trend even as it is being picked up by others. After all, if you’re really with it, by now you ought to have identified the next hot trend rather than flogging the same horse that everyone else is on.
Here a newsflash, the youth are bright, for all the appearance of vacuity; extremely opinionated, despite the apparent boredom they display; fully-charged up with the current domestic social concerns and a clear view – well-informed or not – of what’s happening around the world.
We’ve seen some successes in the Indian market, with a few companies being at the forefront of trying to understand and cater to the youth with offerings that are innovative and promotions that talk to them in their language. And yet, most companies are still working at them in the same mould as they were a decade ago, while others are simply trying to transplant strategies that worked in another country.
The largest market opportunity in decades is going a-begging. What’s going to be your platform to make the connection? What’s the relevance of your message? Unless you’re listening to the youth, they’re unlikely to be listening to you.
The author is CEO of Third Eyesight (More articles on www.thirdeyesight.in )
