Strat 15final

>
www.business-standard.com.
C O N T E N T S
MANAGING EMPLOYEE REDEPLOYMENT
PREPARING THE BIG SALE
80
THE ROAD TO THE TOP
DEMERGER BLUES
84
JUST A MISSED CALL AWAY
A BUMPY RIDE
87
INDIA CALLING
13
THA BIG LEAP
91
RIGHT TO PROPERTY
16
RECREATING THE MAGIC
94
PLAYING CIO TO MILLENNIALS
19
THE RIGHT FIT
97
RE-IMAGINING SEGMENTS
22
THE GREAT ONLINE WAR
100
THE IKEA WAY
24
LOOKING BEYOND THE STATISTICS
103
LEAVING ON A JET PLANE
27
IT IS DIFFICULT TO TALK OF VALUE
OVERHAUL THAT PERFORMANCE REVIEW
30
WHEN YOU CANNOT MEASURE THE
METHOD IN THE MADNESS
33
VALUE YOU ARE DELIVERING
106
DOING MORE WITH LESS
36
BACK TO BASICS
110
MAKING DOWNTIME COUNT
39
WINNING IN A SLOW-GROWTH ECONOMY
113
LONG WAY TO GO
41
MAKING CSR WORK
116
GETTING OFF ON THE RIGHT FOOT
44
CHASING THE LONG TAIL
119
KEEPING IT SIMPLE
47
MAKING A DIFFERENCE
122
ONLINE ONLY
50
WINNING IN THE AFTERMARKET
125
INFOYSIS NEW APP
53
MOVING UP THE VALUE CHAIN
128
CREATING A CULTURE OF INNOVATION
57
THE DEMISE OF A STAR BRAND
131
RETHINKING THE MEDIA PLAN
61
NOT JUST A QUICK FIX
134
LEARNING FROM THE MASTERS
64
MAKING THE MOST OF DATA
137
DEALING WITH THE PROMISCUOUS SHOPPER
67
WINNING THE PEOPLE WARS
140
BEST OF BOTH WORDLS
70
COST CUTTING IN ACTION
143
BIG DATA IN HR
74
PLAYING CATCH-UP
146
AN IN-STORE AFFAIR
77
WIN BACK LOST CUSTOMERS
150
>
MANAGING
ROHIT NAUTIYAL
EMPLOYEE
REDEPLOYMENT
Heres how corporations are redeploying
talented employees impacted by change to
new roles and productive businesses
iting changing market scenario

and customer needs both HCL
Infosystems and Wipro shut down
their PC manufacturing businesses last
year. While the announcement to this
effect was made at the fag end of 2013,
insiders say the companies were preparing the ground for well over a year. One
may argue that their concern was not misplaced since both the companies are listed entities and would have had to deal
with the aftermath of such an announcement on their share prices. But it is equally possible that the two companies identified a new opportunity in the imminent
closure of a certain division: The opportunity to re-evaluate workforce needs and
redeploy talented employees impacted
by the change to new roles within the
company.
And that is precisely what the two
companies seem to have done. Instead of
letting go of employees who were rendered jobless because of the closure of
the PC division, the two have cobbled
together a redeployment plan, investing
time and training dollars on people to
help them take on new roles. But why
take the trouble? It is well documented
that a firms commitment to its employees continued success not only helps
them to effectively navigate change, it
also ensures high levels of engagement
and positions a firm to achieve its strategic goals while creating a powerful brand
image.
As the experiences of Wipro and HCL
and many other firms that we will document in this article will show, such investments help achieve at least two things
one, by holding on to talented and highpotential employees through the change,
firms can meet the challenges presented
by the growing shortage of high-skill
workers. Two, a new arrangement will
likely ensure there is better alignment of
business needs and talent needs, critical
to staying competitive, improving productivity and meeting strategic objectives.
It is no surprise that redeployment,
the systematic migration of talent from a
redundant role and business area to a
productive role and business area, is
>
REDEPLOYMENT CHECK LIST

> Redeployment policies should be carefully reviewed and
>
>
>
>
>
carried through by managers trained to implement them

Ensure employee appraisals are detailed and up to date so
they present an accurate picture of their skills and abilities
Short-listing should cover at-risk employees, giving priority
to those seeking redeployment
Ensure there is sufficient training and trial period and
suitable arrangements are in place for trial periods
Firms must have liaison arrangements with HR
experts/trainers to ensure at-risk employees are aware of the
resources available to them and of any benefits
they may be entitled to if they do not
seek redeployment
If there is a legal challenge at any stage in the process, the
employer must be able to demonstrate that it gave due
consideration to equal opportunity issues
Benefits
> Key skills are retained and additional costs to recruit lost skills
being seen as a strategic workforce management tool during a period of remarkable volatility in business environments
worldwide, wherein many organisations
are facing great pressures to rethink their
business models and to align their workforces accordingly. But however compelling the rationale for redeployment,
the actual process of redeploying talent
from one role to another requires
thoughtful planning and development in
order to succeed.
Take time to plan and train

While the need to redeploy the workforce
can arise in any company in any sector, it
is of great importance to the IT industry
where work is largely project-based and
layoffs are common. That apart, since the
IT landscape changes faster than anywhere else, the life cycle of businesses
and skills is also getting shorter.
Now, a key consideration in redeployment is whether senior managers believe
that the downturn in a particular business is temporary or permanent. If it is
seen as permanent, as in the case of HCL
and Wipro, the only alternative to largescale lay-offs is to retrain high-potential
employees to develop new lines of business.
Whenever an internal restructuring
similar to the one happening at HCL
are avoided
> Re-skilled staff displays
greater engagement
> Morale of existing employees
is raised
Pitfalls
> Too many changes in job
description may foster a
sense of instability and fear
> Not many at-risk
employees will opt for the
programme and even if
they opt they might
depart after receiving
training
> Investment in training
may not yield desired
results.
Infosystems takes place as a result of exiting a loss-making or a low margin business, employees in pre-sales, account
managers and function experts appear
first on the pink slip radar. Sales teams
will have better redeployment prospects
in other businesses because they have
established relationships with clients.
Selling laptops is not radically different
from selling PCs. At HCL, HCL Career
Development Centre, the training arm of
the company, is working to create new
opportunities for people in the erstwhile
PC division.
An IT expert explains the options
before HCL: If you are an IT company
that relies only on the hardware business,
get ready for a big shift. Clients now prefer working with vendors on the OPEX
model over the CAPEX model. If HCL is
genuinely interested in redeploying its
workforce, it should reskill people adequately in cloud services as thats where
new opportunities are likely to be created.
Other smaller players are already getting
cloud-ready.
The compulsions differ from industry
to industry. The Raymond Group came
face-to-face with a business challenge in
2009. Its manufacturing facility in Thane,
Maharashtra, was hit by productivity
issues ascribed largely to old and worn
out machinery. The company decided to
close the unit. The facility had a strength

of 3,000 employees comprising machine
operators and managers.
Needless to say, there was great disappointment when the announcement to
close down was made, especially among
the workmen.
Raymond decided to make the option
of redeployment available to all. A sizeable part of the workforce, around 2500
workmen, opted out of the redeployment
programme right at the start. Of the 500
supervisors and facility managers, 15 per
cent chose to be redeployed. Because of
its large manufacturing capacity,
Raymond was able to place these people
at its other facilities within Maharashtra.
Similar roles were offered to the employees in the companys Jalgaon and Vapi
facilities.
Since the job profiles were similar,
there was no immediate or big need for
training. The challenge for Raymond,
however, was to make the relocation of
employees as convenient as possible. The
HR department gave a relocation
allowance to employees who were redeployed. The expense incurred by employees while shifting homes was also borne
by the company. Employees got assistance while looking for accommodation
in their new job locations. Those who had
small children were given a hand in get-
>
ting school admission.
Today, Raymond has 22 manufacturing facilities across India and is well
equipped to move people around, if such
a situation was to arise all over again. In
fact, the company now has a documented redeployment policy in place.
Last year, when Philips India decided
to divest its Lifestyle Entertainment business (including home speakers, DVD
players and headphones), a large part of
the team of around 80 employees working
in that business was redeployed in Hong
Kong-based Woox Innovations. Some
were absorbed in other businesses across
the Philips group companies. The company is proud that the transition was
seamless and did not involve any forced
exits.
Globally, Philips has a strong focus on
training not only for the purpose of workforce redeployment, but also for future
preparedness. In a diverse organisation,
with businesses ranging from domestic
appliances to ultrasound equipment,
there is little chance for redundancy of
employees, especially if the organisation
promotes cross-sector, cross-functional
career movement as a regular practice.
So when Philips decided to upgrade from
traditional lamps to CFL, not only did it
upgrade the machinery and manufacturing set up, the entire workforce was
trained to meet the new needs as well.
The company has recently started a programme called Fit 2 Grow for its HR function with the objective of making Philips
India a more efficient and agile organisation. While the core teams became smaller, the company saw this as an opportunity to use the talent that had been freed
up to create Centres of Excellence within
HR. In doing so, not only was Philips able
to manage the redeployment cases well, it
was able to promote these Centres of
Excellence to work dedicatedly on areas
such as talent development and learning.
But the best of intentions are likely to
go haywire if there is no forward-looking
training programme in place. It is evident
that such a mammoth exercise as redeployment will take time to produce
results. Companies like Airtel claim they
would redeploy all their employees if a
Wipro- or HCL-like situation were to arise.
Airtel would put down a retraining win-
dow of two to three months to assign new

jobs to people. Having said that, 100 per
cent redeployment would mean that the
resources were not optimally utilised in
the first place. So it is alright for a company to let go of some of its people, if and
when the need arises, say experts. If a
company wants to avoid negative press at
all cost, it might also offer reduced working hours with concomitant reduction in
pay to some employees. Creative redeployment of employees by encouraging
them to take sabbaticals on reduced
salaries has also worked well in the past.
The article has been written with inputs from

Krish Shankar, head, HR, Philips India; Amit
Das, president & CHRO, Reliance
Communications; K Narayan, president, HR,
Raymond; Anil K Gupta, Michael D Dingman
Chair and professor of Strategy, Globalisation
& Entrepreneurship, Smith School of Business,
The University of Maryland; Chaitali
Mukherjee, country manager, Right
Management India; Sanchit Vir Gogia,
founder & CEO, Greyhound Knowledge Group;
Ajay Shah, general manager, Teamlease; and
Uday Salunkhe, group director, Welingkar
School of Management
>
THE ROAD
TO THE TOP
Big Bazaar and Tata Nano are
trying to climb the value
ladder, moving away
from a price-based
product proposition to
own a more upmarket
imagery. They have a
long road ahead
DEVINA JOSHI
n a country where cost has always been

a decisive factor, it is ironic that the
average buyer now seems to be looking
for something beyond price.
A case in point is Lifebuoy, which, due to
its attractive pricing, was a value soap
brand for the longest time until its relaunch a few years ago. But Lifebuoy had an
advantage: apart from the value offering, its
core credentials were rooted in health
through germ protection. The brand leveraged this credential effectively during its relaunch as a family health brand.
But what about brands that do not have
an additional benefit to leverage beyond
price/value, the way Lifebuoy did?
Examples are aplenty. Long focused on the
lower-end of the price spectrum, Wal-Mart
has been looking to gain a following among
wealthier customers. In 2009, it expanded

the presence of brands such as Dell and
Apple in its stores. It also remodelled most
of the chains stores in the US and Mexico.
As you read this, Wal-Marts efforts to reach
the crme de la crme are still on, globally.
Or take Marks & Spencer, which has
cracked the formula of mass-premium,
says Nabankur Gupta, founder CEO, Nobby
Brand Architects. The concept is also called
masstige, a mix of mass and prestige, an
area that brands catering to both ends wish
to excel in.
Closer home, Micromax successfully
moved away from the same space as its
cheap peers by latching onto the smartphone wave. It now jostles for shelf space
with the likes of Apples iPhone and
Samsung. Retailer Big Bazaar known for
its affordable products recently unveiled

its makeover to cater to an aspirational
India, while Tata Nano, better known as
the worlds cheapest car, has made efforts
to move on to an affluent avatar. FMCG
companies like Hindustan Unilever and
P&G have been at it for years, with several
of their personal care brands hopping on
from value to premium.
Just what does it take to make that leap?
How can a brand move up the value chain
without looking like a wannabe or a hasbeen?
The Big Bazaar story

Few know that Big Bazaar was launched 13
years ago modelled on a typical American
hypermarket, with huge shelves and ladders for consumers to climb up and reach
>
Expert take
Changing perception is
a humongous task
The Spring Drive and forayed into the high price segment. Seiko
is a premium watch today.
There are other approaches too. Why not launch a new
brand? Titan offers a range of watches from ~450 to ~2.65 lakh.
It has several brands for different customer segments like the
Nebula, which is its premium range. Mere quality and price
rands are built on two pillars: identity and
upgradation cannot do the trick. The brand has to
continuity. Therefore, once strong perceptions
undergo changes at every brand touchpoint. Also,
are formed, it is a humongous task to change
after all these changes, it has to cope with
them. Mulberry, a British brand for bags, in its
perceptions in consumer minds.
eagerness to go upmarket, began using more
Moving upmarket is really like reinventing the
expensive leather and increased its production
brand, the way Vaseline did. It was a
too. The price shot up. A bag that was sold earlier
performance/delivery driven product. It offered a
at 800 went up to 2000. Sales fell. This was
range of innovative, niche products for high order
surely not a desirable transition.
consumer needs. Along the way the brand
AG KRISHNAMURTHY
On the other hand, we have the Seiko watch
transformed itself. Packaging, pricing, advertising,
Chairman,
example. Seiko was strongly associated with the
product quality, retail ambience and finally
AGK Brand Consulting
Quartz revolution in the 1970s. Cheap imitation
branding the entire brand experience has changed
products had forced Seiko to do a double take.
and reached another level. This is an excellent case
The brand launched an innovative new watch movement called
study of a brand moving upmarket.
products. The model flopped in India. Big

Bazaar was quick to identify this failure
and changed itself to latch onto the lowcost premise: a winning formula in priceconscious India.
And this is how the price positioning
was deeply entrenched in consumer minds:
in the early years, it introduced trials for
steam irons at an entry price point of ~699
at a time when they cost a minimum of
~3,000. It also introduced DVD players
starting at ~1,299. Five lakh DVD players
flew off the shelf from a total of 50 stores at
that time.
We created magic in every category
and saw the average Indian change her
consumption habits, says Sandip Tarkas,
president, customer strategy, Future
Group. But there was this perception at
the back of their minds that Big Bazaar was
too crowded and spelt narrow alleys and
jostling. It is this experience that we hope
to change, even as the competitive pricing
remains the same, asserts Tarkas.
Two years ago, Big Bazaar started housing expensive brands alongside its private
labels. So consumers saw a ~1,299 Lee
Cooper jeans sit beside the ~499 Big Bazaar
one. The retailer found that while its own
labels were selling, the consumer didnt
bat an eyelid before purchasing the more
expensive brand either. Similarly, Big
Bazaar played around in other categories.
With 24 crore-plus footfalls that the retailer now gets every year, it found that there
were people looking for brands at both ends
of the spectrum.
Heres how the hypermarket is making
the transformation: Big Bazaar earlier had
black terracotta floor tiles to add to the commoditisation factor. Such tiles absorb light,
and hence, the merchandise didnt look premium. Big Bazaar also had white CFL tubes
for lighting, typical of value stores. The new
stores use yellow lights and white flooring,
with revamped mannequins and wider
alleys for easier navigation.
The goal is clear: to make customers
spend more time in the store, as opposed to
the less time and more efficiency based
navigation earlier. Big Bazaar now runs 230
stores versus 40-50 stores during its early
years, which also implies that its buying
volumes have gone up. So while pricing
will pretty much stay the same, Big Bazaar
plans to get higher margins from its suppliers, justified by higher bulk buying. We
are managing our inventory better, have
improved our margins, and even for our
private brands, the margins are higher
now, says Tarkas. About 15-17 per cent of
Big Bazaars total sales come from its private labels now, as opposed to 12-13 per
cent four years back.
The stores are being revamped catchment-wise: premium catchment stores are
being revamped first. Advertising isnt

spared: the retailers new campaign is
backed by media spends of ~100 crore.
From Isse sasta aur achha kahin nahin
(functional) to Naye India ka bazaar (physical) to finally Makes India beautiful (psychological), Big Bazaars transformation
has taken a completely new turn. And the
results are ringing in: Big Bazaars sales
have gone up by 35 per cent over the last
year and a half which is roughly since the
time it started introducing the upgraded
line-up.
A long, winding road

Brand makeovers are of two kinds. The
first is the slow and steady makeover without which a brand will die. The second is
the more dramatic makeover, which brands
like Olay have successfully done: from an
old mythical brand to a modern one,
known for fighting the signs of ageing,
says MG Parameswaran, advisor, FCB Ulka.
Lets face it. It is arduous to move from
popular to aspirational. A brand like
Micromax had it easier because, being a relatively new brand, it hadnt struck its roots
too deep. It introduced high-end phones
and set on a new path. This brings us to the
next thought: sometimes, such a change is
about the category where price is no longer
the differentiator, like in the case of lowcost airlines. IndiGo had to outgrow its price
>
benefit and flag its on-time performance.

Having said that, the transformation for
many brands may not be egged on by a
favourable environment in the category.
As the consumers economic health
improves, she wants better products, and if
a transformation has to be achieved, all the
6 Ps of marketing (product, place, price,
promotion, packaging and positioning)
need to be changed.
Consider this. Vaseline was just a petroleum jelly available at chemist stores till the
year 2000. It diversified its product portfolio to include winter moisturisers, fairness
creams, body lotions etc, with an upmarket,
holistic skincare brand imagery and
increased pricing. Ditto for Ponds: its extension into new segments like anti-ageing,
skin lightening and face-washes has transformed the brand, which was largely a cold
cream and talc brand till 2006. Today more
than half the business comes from these
extensions, as each of them is rooted in
strong consumer insight, says a Hindustan
Unilever spokesperson. In other words,
product diversification is one way of going
upmarket. It is important to flag off a different brand altogether, and not go with the
value-oriented mother brand equity, cautions Shripad Nadkarni, founder director,
MarketGate Consulting.
Heres how Tata Nano is doing it: realising the folly of positioning the product as a
cheap car for entry-level buyers,
it is now pushing the Nano as a second car

for the family. Based on customer feedback, it has unveiled new features such as
remote keyless entry, a four-speaker
AmphiStream music system with
Bluetooth, more cabin space etc. We have
recently started offering personalisation
kits, which enable consumers to customise
their Nanos, says Ankush Arora, senior
VP, passenger vehicles (commercial), Tata
Motors.
Besides launching new variants, Nanos
retail experience is also undergoing a sea
change, through technology-enabled dealerships and showrooms, where customers
can use the video-walls for configuring cars
on tablet PCs. While some of these showrooms have been rolled out in Delhi, Mumbai
and Pune, the plan is to rollout 100 such signature showrooms all over the country. The
Nano is also going all out on its advertising to
the youth: its Awesomeness TV commercial
hit 5 million views on YouTube within 30
days of release.
Many brands looking to improve the aspiration score through advertising have turned
to celebrity endorsement and interactive
social media campaigns. Whatever be the
route, ensure that the transformed product
has perceptible selling distinction, advises
brand consultant and author, Shombit
Sengupta.
When it comes to a change in packaging, a

common technique followed by premium
brands, or high-end brand extensions, is
offering products in unique shaped containers. Curves are commonly used to
highlight premiumness, says ISBs marketing professor Tanuka Ghoshal. Logos
lose their angles, as do brand name typefaces as well as product containers all
softening their harsh edges and angles to
take on more curvilinear avatars.
A distribution strategy overhaul is
equally important: a line of clothing looking to enhance its premium image would
rather be seen in a store like Shoppers Stop,
or possibly have a dedicated counter in
upper-end malls. Take Gurgaons value
mall SRS, for instance, says Gaurav Gupta,
senior director, Deloitte. The pasta available there would be of a lesser price point
than the same one available at Le Marche,
a more premium store. So distribution
depends on catchment really.
After all, there needs to be synergy
between the brand image and the image of
the store it is made available at. In some
cases, limiting supply creates an impression of scarcity, and can enhance the premium perception of the brand.
Another key way of making the transformation is to do it slowly, says brand
consultant Anand Halve, cofounder, chlorophyll. Metro Big
Cinemas did it by improving its
digital software, seats, introducing a food-court etc, while still
maintaining its old charm.
Clearly, trying to migrate value brands into the lifestyle/premium bracket is a task fraught
Skoda personnel
with challenges and would
worked closely
need considerable investment
with the
over a period of time. It also
suppliers to help
needs commitment of the
them improve
senior management to accept
their quality. The
this long-term vision, and
turnaround has been remarkable. Skoda topped
accept short-term set-backs.
the chart in the Driver Power 2013 survey by the
The top management has
UKs Auto Express magazine, conducted among
to stay committed for at
46,000 car owners. Based on factors such as
least three-four years,
reliability, running costs and performance,
which is the minimum
Skoda Yeti was number one, Skoda Superb was
time it takes to change
in the second place and Octavia stood at sixth
positions, says Pranesh
position.
Misra, CMD, Brandscapes
Shombit Sengupta, brand consultant
Worldwide.
Fine-tuning Skoda
Skoda is an extraordinary example of how a
low-profile brand went on to mesmerise highend customers. Skoda vehicles ruled the market
in the Soviet satellite countries till the end of
Communism. After the Czech Republic was
formed in 1989, Skoda faced the full rigour of
free market capitalism. Skoda cars were so basic
and of perceivably poor quality that the brand
was considered a joke in Europe. After
Volkswagen acquired Skoda, the top
management acknowledged the problem. In
1991, Skoda implemented changes in design, HR,
management training, production and
marketing. It marketed Skoda in countries
where the brand was not previously known in.
The other pieces of the puzzle
>
JUST AMISSED
CALLAWAY
Want to reach even more consumers without spending a bomb?
Leverage the missed call
ROHIT NAUTIYAL
t is a regular weekday afternoon for

Mumbai housewife Shilpi Lokhande.
She is browsing through the familys
favourite news daily for good deals. Two
adverts catch her attention. The first one
says customers are eligible for a 10 per
cent cash back on the purchase of a
Samsung Galaxy Grand 2 or Samsung
Galaxy Grand Neo. But to find a store
where the offer is available she has to drop
a message at 56886 and for that premium
SMS charges would apply. The next ad
urges her to place a missed call on a certain number to download Amazons
mobile application. Lokhande, a very
careful shopper, skims over the first one
and places the missed call to receive an
SMS with links to download
Amazons app.
Was that a big surprise?
Not really. As customers
tighten their fists amid a
slowdown that shows little
signs of letting up, marketers are
rediscovering the power of the
missed call to nudge them to make
that purchase, to gain insights into their
lives or simply to build one-on-one relationships with them. Todays mobile
interface is a mix of voice, text, WAP and
apps and no marketer can ignore this reality if he wants to target better and
improve engagement, says Valarie
Rozycki Wagonor, CEO of Bangalorebased mobile marketing and analytics
company, ZipDial.
In a value-led market, the
relentless spread of mobile telephony has meant missed calls are ubiquitous. They could be a signal to announce
ones arrival at a particular destination, a
signal for the receiver to initiate an action,
or anything else that can

be comprehended by the sender and the
receiver at any given point in time.
>
Now consider a few data points to get
a sense of its potential. The latest data
from Telecom Regulatory Authority of
India (Trai) indicates there are around
772 million active mobile connections in
India. Close to 96 per cent of this user
base is of the pre-paid variety that uses
missed calls the most, saving hundreds of
rupees in monthly pay-outs.
CASE ANALYSIS
THIS IS THE SORT OF INFORMATION

ZIPDIALS DASHBOARD OFFERS
Based on an ongoing referral activity for a brand (name undisclosed)
FLOW
METRICS
CAMPAIGN
METRICS
LOCATION
USER
CHARACTERISTICS
SOURCES
REFERRAL ACTIVITY
21,813
750
250
0
20:00
00:00
04:00
08:00
12:00
16:00
Total referrals
Engagement
500
The code conundrum
13,473
Unique referrals
5,241
Total Zipdials to
request FB post link
Each customised dashboard can provide data on location of consumers, language, OS used in the
mobile device and new versus repeat users
OPERATING SYSTEM
Windows
BROWSER
NA
NA
iOS
BlackBerry
Safari
Opera
Android
LANGUAGE
Tamil
Internet
Explorer
NEW VS REPEAT
English
Kannada
Source:Zipdial
10
If you are a brand owner, get this straight.

The consumers has no big reason to pay
for a call or an SMS just to initiate a conversation with your brand. Since smartphone penetration is still low in India
it is less than 20 per cent of the phoneusing public the starting point for any
brand is to use voice and SMS as simply as
possible.
Now come to the next decision:
which code?
Any brand which wants to run mobile
marketing campaigns needs to take a call
between short codes and long codes.
Short codes are five to six digit numbers
(56886, 56677 etc) and long codes are 10
digit numbers (1800267777). A company
can work with the different operators to
get short codes on a revenue share
arrangement. While the brand/company
pockets 10-30 per cent of the call/SMS
revenue generated by a short code, the
carrier walks away with the lions share. If
a company is working with a leading
operator such as an Airtel or a Vodafone,
the cost of acquiring a short code number
can be more than ~1 lakh per month.
Premium call and SMS charges (~3 to ~10)
apply for short code numbers. Trai gives
a free hand to operators to devise their
own plans for short code numbers.
On their part, long code numbers
(mobile or landline), for which standard
call/SMS charges apply, are way cheaper
to acquire and maintain. All one has to do
is purchase numbers from any one operator. There is no revenue share in long
codes. Another reason for the popularity
of long codes is that they are usually tollfree. Says Ankit Jain, founder of Delhibased
VoiceTree
Technologies,
Companies understood that it is not a
good idea to look at short codes as a revenue stream since their cut was less when
compared to what the operators earned.
>
Now see how mass brands are using

As part of a call-to-action campaign, conthe mobile to generate consumer
sumers were asked to place a missed call.
response for research and product develThe company followed up by seeking
opment, to track sales and to conduct
their participation for a survey through
opinion polls.
voice or SMS. This helped the company
Take PepsiCo, which is currently runestablish a huge sample base to conduct
ning a pan-India mobile-based on-pack
the survey. The survey asked around 30
activation for Slice. Consumers have to
questions on various aspects of the prodcall on a toll-free number and punch in
uct. Around 10,000 people across seven
the unique code on the pack to register
cities including Mumbai, Aurangabad,
their purchase. After this, the IVR (interEtawah, Hyderabad and Kolkata particiactive voice response) asks them to select
pated in the survey; almost 55 per cent of
a new flavour of Slice. The contest winner
the total number of participants
will get to meet brand ambassador
answered all the questions.
Katrina Kaif. A simple mobile campaign
All the participants were rewarded
like this will serve two purposes. First, it
with a mobile recharge of ~30 that
is a cost-effective way of building con- would more or less compensate the parsumer engagement. Second, the
brand will have access to some granular data on consumer preferences,
age and geography, which can be useful for innovation.
Cadbury Indias Bournvita
jumped to the missed-call bandwagon last year with its Mom Dont
Waste Milk campaign. The challenge
was to educate consumers about the
vital role played by vitamin D in aiding the absorption of calcium found
Voice and SMS
Todays mobile
in milk. The initiative was kick-startcampaigns
can
interface is a mix
ed with a teaser campaign via print,
work wonders for
of voice, text, WAP
outdoor, radio and social media
clients in
and apps. No
which read Mom dont waste milk.
measuring ROI on
To know more about how not to
marketer can
waste milk, consumers had to place a
media spends
ignore this reality
missed call on a long code toll-free
number. When a consumer placed
VENKAT MALLIK
VALARIE ROZYCKI
the missed call she received a call
WAGONOR
PRESIDENT & HEAD,
back from a call centre executive who
RAPP INDIA
CEO, ZIPDIAL
educated her on the nutritional benefits of Bournvita. The company
tweaked the model by switching to IVR
ticipant for the airtime she would use up
thereafter. The results from the first camduring the survey.
paign encouraged the company to invest
Many e-commerce companies are also
in another missed call campaign, titled
toying with the idea of leveraging missed
Miss cow, last month. Cadbury received
calls. Players like Flipkart and Snapdeal
1.25 lakh missed calls for this. Says
have already done a couple of missed call
Prashant Peres, director, beverages, gum campaigns. Eyewear portal Lenskart has
and candy & marketing services, Cadbury
weaved in missed calls into its CRM (cusIndia, We are in initial stages of plantomer relationship management) process.
ning a loyalty club using this mechaSays CEO and co-founder Peyush Bansal,
nism.
Initially voice did appear a great idea to
Heres one more. Last year right after
build one-on-one relationships with our
changing the packaging of its skincare
consumers and we started a call-back
brand Fair & Lovely, Hindustan Unilever
campaign for existing customers. As part
turned to consumers for feedback.
of this, Lenskart called back its existing
11
customers to offer a free home eye checkup. It soon realised that customers were
not very happy receiving the calls. In
India, an average mobile phone user gets
too many unsolicited calls. So we use
missed calls to get customer feedback, he
adds.
Shoppers on Lenskart can also send a
missed call on a long code number if they
are not able to complete a transaction for
some reason. Bansal says missed calls can
play a role in providing data on prospective and existing customers. The company aims to invest more in creating the
right mix of voice, text, and WAP to generate better consumer response.
When consumers set the call

rolling
So how do you decide your campaign
is doing its job? To quote Venkat
Mallik, president and head, RAPP
India, Mudra Groups data-driven
marketing communications agency,
Voice and SMS campaigns can work
wonders for clients in measuring ROI
on media spends. Heres how.
Technology company ZipDial,
which has also worked on projects
for P&G, HUL and Cadbury, provides
a dashboard with advanced analytics
to its clients for monitoring mobile
marketing campaigns. (See infographic on page 1). To begin with,
this dashboard can be customised
according to the key performance
indicators identified by the client
who can see all the information in
the overview section. In the campaign metrics section, one can see
the engagement level of target audiences with the campaign at different
points in time.
Clients can also access data on the
location of the target audience and the
operating system on their device. As part
of its pay-to-use model, ZipDial charges a
monthly subscription fee for its dashboard along with a fee per engagement for
a given period.
To make the campaigns viral, ZipDial
gives a unique number to callers who can
then ask their friends to call on that number. Points earned through referrals can
be redeemed later.
It is important to understand that Trai
>
allows a business to communicate with

customers for six months after one opt-in.
To avoid bombarding the consumers
mobile phone with messages, ZipDial has
a double opt-in policy. After acknowledging the consumers consent, the company sends another message to check the
interest level.
Besides ZipDial, other prominent platforms in cloud telephony and analytics
are offered by IMI Mobile, VoiceTree
Technologies and Mobilox Innovations.
The beauty of these platforms is that they
can handle a number of calls at any given
time. For instance, IMI Mobiles Da Vinci
service delivery platform can handle
60,000 calls per minute. Delhi-based
VoiceTree Technologies which has been
working on various missed call campaigns for political outfit the Aam Aadmi
party has a simpler dashboard. A missed
call campaign on the companys patented
dashboard, My Operator, captures basic
consumer data, such as, the name of the
caller, time of call and location. This service can be availed of on a small monthly subscription fee of ~1,000. The platform allows clients to export their data
onto a different server once their subscription expires.
It also allows for creative deployment
of your resources. Consider Forevermark,
the diamond brand from De Beers Group,
which has been doing real-time media

attribution for three years now. Let us
assume that the brand has given different
toll-free numbers for its missed call campaign on television, print, outdoor and
digital. With the data captured during the
campaign, the brand can track the volume of response that came from each
medium. This will further help the brand
in taking the call with regards to its media
spends. For instance, if one media channel is performing better than others, the
brand can take action immediately by
shifting spends to it. Indeed, ZipDial
Analytics can track actual conversions
and product trials. For example, a brand
may get more responses from television
than print; however print may drive higher conversion rates to purchase. All of this
is tracked at a unique user level across
millions of consumers.
There you have it. Today, mobile marketing campaigns, especially the ones
asking consumers to place a missed call,
are seen as the fastest and the most nonintrusive way of building one-on-one
relationship with consumers who are
exposed to a lot of deceptive advertising.
This could very well mean that the days of
businesses catching hold of subscriber
databases from telcos and chasing consumers down with unsolicited calls and
SMSes are numbered.
12
>
INDIACALLING
Heres how homegrown smartphone
players Micromax, Karbonn and Lava are
giving global heavyweights a run
for their money
ABHILASHA OJHA
ndia witnessed a remarkable migration from feature phones to smartphones in 2013. Overall phone shipments in the country rose 18 per
cent to about 257 million units in
2013 from 218 million units in the previous
year. On its part, smartphone sales in the
country grew almost three-fold to over 44
million in 2013, against 16.2 million in
2012.
Guess who were the biggest gainers of
this shift? Homegrown brands, led by
Micromax and Karbonn, with the likes of
Lava and Intex bringing up the rear. Data
from research firm IDC confirms the
trend. A prepared note from the company
says: India was one of the fastest-growing
countries in terms of smartphone adoption in 2013. This surge has been powered
by homegrown vendors, which have
shown consistent growth over the past four
quarters of 2013.
The combined share of all Indian
brands could be around 50 per cent in Q4
2013 given that there are many small
importers who sell under different labels
in select cities/states in India. In terms of
recognised Indian brands in our (IDC)
database, the share would be a shy more
than 40 per cent, adds Jaideep Mehta,
vice-president & general manager, IDC
South Asia.
These local players have fought the
global heavyweights on price, and have
also managed to outmanoeuvre them in
the speed of new launches. Korean manufacturer Samsung still maintains its stranglehold over the Indian smartphone market with 38 per cent share in Q4 2013,
according to IDC, but it is ably followed by
local players Micromax (16 per cent) and
Karbonn (10 per cent) at the second and
third positions. Sony is placed at No 4 with
5 per cent, followed by made-in-India Lava
(4.7 per cent).
What is interesting about the Indian
13
>
challengers is that all of them have successfully leveraged China either by
sourcing components from the country
or by assembling their devices in that
country at some point. In that sense, their
product or pricing strategy has not been
very different. Where these players have
differed markedly is in the way they have
managed their marketing and after-sales.
Micromax has sought to reinvent itself by
sprucing up its image and overhauling its
retail presence; distribution and communication have a key role in Lavas new
scheme of things and Karbonn has held on
to its position by setting a benchmark in
customer relationship management.
Before we proceed, here is a caveat.
Most handsets sold by these companies
continue to be made in China, say analysts. If the handset is indeed assembled
in India, a large chunk of the components
are sourced from China. While none of
these three players was willing to tell The
Strategist the percentage of Chinese
components that goes into their phones,
according to an industry insider, not
more that 10-12 per cent of the mobile
components that include the casing,
handset chargers, and batteries are
currently produced in India. All other
mobile phone parts, including chip sets
and processors, are imported. Most
Indian vendors have their own design studios. At the most they can consider setting up their assembling units in the
country. That is because Indian vendors
operate on low cost and they do not have
the R&D budgets or control over an
ecosystem like, say, an Apple, says an
executive with one of the firms mentioned above.
Manage expectations
Micromax knows that the game is as
much about creating a presence in the
market as about creating a strategic
absence. To understand this, we need to
step back a little. The game changer for
Micromax, which entered the Indian
mobile phone market in 2008, was the
brand Canvas 2 A110 launched in 2012,
priced around ~9,600. Packed with features, it quickly became a hot-seller.
Micromax followed up the good work
with another winner the Canvas HD
A116, launched in early 2013. Whether by
The pecking order
register profits. Helped by growing sales of

its affordable and entry-level smartphones, the handset maker expects to hit
$1 billion (over ~6,100 crore) in revenues in
2013-14. The Gurgaon-headquartered
companys revenues were ~3,168 crore for
the financial year 2012-13. To make its
intentions clear, Micromax has chosen
Hollywood superstar Hugh Jackman over
a Bollywood star as the brand ambassador.
Meanwhile, the company has
increased the number of its partner-managed service centres from 430 in 2012 to
roughly 1,250 in 2013 to oversee 6.5 lakh
walk-ins every month at its retail stores.
We are focusing on inventory and spare
parts management to cut complaint
redressal time, says Shubhodip Pal, chief
marketing officer, Micromax. To this end,
Micromax has begun tracking sales of its
phones at the retailer end on a daily basis
(through a proprietary SMS-based app)
instead of waiting for weeks for data to
flow in from the distributor network.
OVERALL MOBILE PHONE MARKET
8.7
4.4
10.0
47.4
13.7
15.8
OVERALL SMARTPHONE MARKET
5.1 4.8
10.9
27.2
17.7
34.3
Samsung Nokia
Micromax Karbonn
Lava Others
Year : 2013; Figures in %
Reinforce distribution
Sony
Source: IDC
design or because the company wasnt

able to anticipate the kind of demand it
will generate, analysts say, the company
introduced only 9,000 units of this model in the first phase. This ~13,990 phone
sold out in 24 hours flat.
When it saw the brand pull it had managed to create, Micromax shifted tack and
went for higher-value flagships. It
launched Canvas 4 and Canvas Turbo
with great fanfare in 2013. Since then, it
has launched premium smartphones
sporting tags of ~17,999 and ~19,999, handsets that have got good reviews for the
kind of features they offer but have failed
to recreate the buzz around the earlier
Canvas 2 and Canvas HD phones. In fact,
if you look closely, Micromaxs smartphone shares have actually fallen
between the first and the last quarter of
2013. If in Q1 2013, it stood at 18.8 per
cent and rose to 22 per cent in Q2, the
shares fell in Q3 to 17 per cent to rest at
16 per cent in Q4 (source: IDC report).
To give it credit, despite losing market
share in 2013, Micromax has been able to
14
At Lava, which currently has roughly

2,500 employees and will add another
1,000 in the next two months, the key
challenge is putting the right product in
the right market. That is one reason the
company has worked overtime over the
past few quarters to put in place a singlelayer distribution system (exclusive distributors who are managed directly by
Lava). So if Lava has 1,700 distributors, its
Indian counterparts have nothing more
than 50 to 60 each, says Hari Om Rai,
chairman and managing director, Lava
International. The reason: this model is
tougher to implement.
The companys renewed focus on distribution strategy has given it better control over the retail experience. The fiveyear-old company also has an in-house
R&D team of 300 experts not just in India
but also in China.
Lava, which calls itself a communication company, says it has created platforms
to capture voices from the ground.
Whether it is the consumer, the retailer or
a team member, the companys digital platform Empower captures the noise and
allows the company to bucketise information and store data. This process helps
Lava to identify the trouble spots in its
>
products and service and helps in reducing

the time taken to address complaints.
There is also an escalation matrix in the
company for distributors in particular.
Lava is slightly different from its
Indian counterparts in its desire to keep
a low profile. For Rai, the fundamentals
are important and image is the last thing
that needs to be addressed. But now that
Lavas product strategy is in place, it will
get aggressive in brand communication.
This year Lava will roll out a ~400-crore
brand building exercise, including tieups with big ticket television shows, infilm branding et al.
Go for the kill
smartphone player, which sells 2.9 million

devices every month to Indian consumers,
doesnt believe in a slow, step by step
approach. It says you need it all great
product, backed by impeccable marketing
and above all a strong customer relationship
management programme at the same
time.
Distribution, after-sales, brand communication we rolled out everything
simultaneously, says Shashin Devsare,
executive director, Karbonn Mobiles, who
has nearly two decades of experience with
various mobile phone companies.
Displaying a huge appetite for risk, the
company committed 20 per cent of its
sales turnover on brand
Karbonn, the second-largest Indian
From a product
perspective, design and
R&D capabilities must be
built to enable the
creation of differentiated
devices. Build quality,
including the materials used,
needs to keep evolving too.
Ranging from the simplistic to the
What will drive the next stage of
fully loaded, they need multiple
evolution for the local vendors in
models to straddle all categories of
the Indian smartphone market?
the market.
The industry
Most of the local players
must begin to
are owner-driven, with thin
develop an
management benches. As
international vision
they continue to scale,
to conquer
developing a strong and
significant overseas
professionally-oriented
markets. For this, a
management bench is
new and evolving
required. Preferably with
set of capabilities
people who have
are important and
international experience in
JAIDEEP MEHTA
this encompasses
target markets.
VP & General Manager,
almost every part of
Across different
IDC South Asia
the company.
industries, from
Continued investments in brand
automotive to electronics and from
building is a must; the local players
shipbuilding to power equipment
are fighting deep pocketed global
manufacturing, there are a
companies such as Microsoft/Nokia,
plethora of companies that have
Gionee and Samsung. Karbonns
emerged from developing markets
association with the IPL and
to take on global giants and defeat
Micromaxs engagement with Hugh
them in the marketplace. The
Jackman are two examples of high
Indian handset makers have the
profile advertising campaigns.
opportunity to do exactly this.
Expert take
INVESTMENT
WILL BE KEY
15
building in its first year of operations. The

company also invested heavily in beefing
up its customer relationship management
and after-sales teams. Today, we have a
network with over 870-plus centres, says
Devsare.
In 2012, when it launched its first
smartphone device (within three years of
the launch of the company), Karbonn
went for an image overhaul and opted for
a new logo and accompanying marketing
collateral. Our gamble paid off and we
found that the consumers who invested in
our brand (by buying a Karbonn feature
phone) also became our smartphone consumer, says Devsare.
Karbonns brand communication (conceptualised by ad agency Taproot) aimed
to position Karbonn as a quality brand
for the masses. This meant it had to
evolve from being the preferred brand
of SEC B and C customers to include SEC
A customers as well. Our brand communication has never been influenced
by what the international giants are
doing. We communicate how our products can help the consumers, explains
Devsare.
Granted, these brands are doing a
great job, but just remember in 2014
competition will be tougher. A slew
of new brands have made an entry in
the Indian smartphone market last
year alone. From Chinese companies such as Gionee and Oppo, to
American PC major HP and Japans
consumer
products
giant
Panasonic (which, incidentally, has
given up on the smartphone market back home), everyone wants a
piece of one of the fastest growing
smartphone markets in the world.
And we havent even spoken of
Nokias X series and the low-cost
Moto phones and other budget
smartphones that have upped
the ante.
How will Micromax, Lava and
Karbonn fight back? Watch this
space.
>
DEVINA JOSHI
he Limca Book of Records Indias

answer to the international Guinness
World Records was conceived way
back in 1986 with the first edition hitting
book stores more than two decades ago (in
1990). Brand Limca has seen a change of
hands since then (from Parle to Coca-Cola
in 1992), as well as some sharp swings of fortune, but its hard-bound property a 200page book celebrating record-breaking
milestones achieved by Indians, which
moved to the new owner along with the
mother brand has come to wield significant clout over the years. According to its
editorial team, the phone never stops ringing with aspirants hoping to make it to
the book with their triumph stories. By connecting the brands Indianness and its
refreshment positioning with the average
Indians penchant for refreshing feats, the
spin-off property offers mother brand
Limca a bigger play in the consumers

mind than its market share would accord.
Why does the Limca Book of Records
matter? Simply because marketing isnt getting any easier. In establishing brand associations, marketers face a fundamental challenge: while consumers appreciate the value
of brands, in reality they devote very little
time and mental effort to thinking about
them. So what does a marketer do when
faced with an explosion in the number of
brands as well as a proliferation of ways to
communicate them? How can he elevate
awareness of both the company and the
products or services it offers, especially if
the company operates in an impulse-driven
or a boring category in which customer loyalty cannot be taken for granted?
One answer is, build a branded property. Irrespective of the size of his business or
marketing budget, by developing unique
and memorable properties a marketer can
fully leverage the value of his brand build-
16
ing efforts. Brand properties and events are increasingly gaining

ground as a route to brand building.
However, there needs to be clarity on the
objectives of the association and a strong
strategic fit/synergy between the brand
values and the property is essential for success, says Atul Chand, divisional chief
executive, Lifestyle Retailing, ITC Ltd,
which has worked closely with the Fashion
Design Council of India (FDCI) to co-create
a property, Wills Lifestyle India Fashion
Week.
Granted, building properties is a highly
complex effort involving huge investments
in time and money, but if successful, they
help keep the conversation about the company going, even offer the brand the muchcoveted top of mind. A key ingredient is to
have a sustained engagement with the
branded property, adds Chand.
Think Kingfisher Calendar, Fevicol
>
Science Project Challenge, Tata Motors T1
Truck Racing Championship, Standard
Chartered Mumbai Marathon. None of
these are spin-offs of everyday products.
But they have all managed to create buzz
that has rubbed off on the respective mother brands. And that has been possible
because some key elements have fallen in
place namely, a genuine brand-property
fit, commitment by the brand owner and
painstaking marketing. That said, not every
brand that starts off with a flagship asset
can hope to gain traction. The task of creating and managing brand properties is
intricate and goes deeper than your average
sponsorship or co-branded events.
Ultimately, the success of a brand's association with any property is evaluated by
how successfully the brand has been able to
take the association to its core audiences.
And to remain relevant to your audiences,
one needs to adopt strategies that allow to
maximise reach and engagement with the
target audiences, says Chand.
Turn on the hype

In 2003, United Breweries Kingfisher
wanted to up the glamour and style quotients for not just the brand, but also the
beer category as a whole. It turned its efforts
up a notch with the launch of the
Kingfisher Calendar that year a property now known for its exclusivity, high fashion and exotic locations. Inspired by the
Pirelli and the Sports Illustrated Swimsuit
Calendar, the Kingfisher Calendar has
become famous for kick-starting the careers
of glamour world divas such as Katrina Kaif,
Deepika Padukone, Yana Gupta, Nargis
Fakhri, Lisa Haydon, among others.
How did the brand achieve this?
The key is exclusivity. The calendar bears
no price tag as it is never up for sale. It is circulated only to the limited lot on the chairman Vijay Mallyas mailing list.
Celebrity photographer Atul Kasbekar
has been associated with the calendar since
inception. The brief to him year after year is
to make the calendar more inspiring, aspiring and coveted. It should look sensual without being sleazy.
To make the calendar a hotter property,
a reality show on NDTV Good Times, Hunt
for the Kingfisher Calendar Supermodel,
was launched in 2010. Every month, a commercial on the making of that months cal-
ue, says Sheikhawat.
The Kingfisher
Calender has to be
bigger, better and
more premium every
year with exotic
locations and high
production value
Build on scale
SAMAR SINGH
SHEIKHAWAT
SENIOR VP, MARKETING,
UNITED BREWERIES
We needed concerted
efforts to grow the
Standard Chartered
Mumbai Marathon
into a movement for
social change
SUMEET SINGLA
REGIONAL HEAD,
CORPORATE AFFAIRS,
INDIA & SOUTH
ASIA, STANDARD
CHARTERED BANK
endar girl is aired on the channel. When

the winners of the hunt go on to work for
movies or gain fame in other arenas, the PR
about them holds up the brand property as
their claim to fame, says Samar Singh
Sheikhawat, senior vice-president, marketing, United Breweries.
The TV show isnt all. Pre-launch hype
is generated online through a countdown
for the calendar exercise. Kingfisher has a
tie-up with digital player Hungama to
unveil the calendar digitally before its physical launch. The digital marketing also
makes way for engagement activities like
make your own calendar, shoot your calendar, screen saver downloads etc. The
launch itself is a spectacular song and
dance show hosted every year on
Kingfisher Chairman Vijay Mallyas birthday (December 18).
All these elements need to work in tandem. It has to be bigger, better and more
premium every year with exotic locations,
great looking girls and high production val-
17
Can a company operating in commercial

vehicles hope to own Kingfisher-esque
oomph? Possible or thats what
Tata Motors is out to prove. The T1 Prima
Truck Racing Championship introduced by
the company to create buzz around the 2009launched Prima range of premium trucks
(priced at a 10 per cent premium over other
brands) has its roots in the strategic challenges that the medium and heavy commercial vehicle category faced two years back.
The company found that rattled by the
protracted economic downturn, secondgeneration big-fleet owners were looking to
de-risk their commercial vehicle (CV) businesses by stepping into other avenues.
There was also a lack of pride in being
associated with the CV category. With new
international brands entering the fray, the
company needed a breakthrough marketing initiative. T1 was born to create something exciting, to bring people from the
industry together to inspire the trucking
community, says UT Ramprasad, head,
marketing communications, commercial
vehicle business unit, Tata Motors.
The Buddh International F1 Circuit on
the outskirts of Delhi was selected as the
venue for the T1 Prima Truck Racing
Championship. Internationally acclaimed
drivers, with proven track-records in truck
racing (the British Truck Racing
Championship and European Truck Racing
Championship) were invited for the event.
The inaugural chapter of the event held earlier this year also included a Harley
Davidson show, truck stunts, a truck art
show by Manish Arora and even a fashion
show. While the branded property is new,
over the next few years, Tata Motors hopes
to work with its customers to shortlist
Indian drivers for the upcoming races to
make truck driving, as a profession, more
aspirational.
Leverage consumer loyalty

At times, building a brand property can be
all about hitting that sweet spot a brand
already shares with its consumers. Take
Fevicol, which unveiled the annual Fevicol
Science Project Challenge in 2010. The exercise has a three-fold objective: to make arts
and crafts more meaningful for students
>
and teachers, to impart modern education
in an interactive way, and to increase the
number of occasions for consumption of
Fevicol. The primary target audience is
students from class 5 to 10 in schools
across India, besides their art teachers.
Our field teams personally visit schools
and brief the principals, and science and
art teachers about the nationwide challenge, says Rahul Sinha, president, sales
and marketing, consumer products, art,
stationery and fabric, Pidilite Industries.
It works like this: Pidilites representatives (regional and city level) meet the
school administration and share what happened in the previous edition to gain their
interest. These teams are outsourced for
the activity, and each representative is given a month of education and training. A
window of three months is allotted to each
representative to reach a certain number of
schools. Fevicol has been in the educational product space for long and has existing relationships with a lot of schools,
which was leveraged in this exercise, apart
from building relationships with new
schools, says Sinha. About 4,000 schools
participated in the last edition.
Once a school agrees to participate, the
teacher chooses a topic from the brochure
provided by Pidilite and asks students to
work on the concept. Participating students are divided into two groups: juniors
and seniors. In the first leg, there is a
school level contest to shortlist candidates,
wherein they are asked to prepare models.
Pictures of the shortlisted models are taken along with details explaining the concept. These entries are then uploaded on
the Fevicol website for review.
Panelists from science and academics
backgrounds are chosen by Fevicol to sift
through all the entries. Four entries each
from the senior and junior groups respectively are shortlisted from a total of eight
schools, and the shortlisted teams (comprising three students and a teacher each)
are called to Mumbai for a final round.
Teams are then given an impromptu topic
with a deadline of two days to procure
material and execute the model. A panel
comprising curators from the Nehru
Science Centre in Mumbai judge the eight
entries, to identify a winner.
While the teacher in the winning team
is given a token gift, the students are award-
ed trophies, certificates and prizes, including trips to international destinations. In
the first edition of the Fevicol event in 2011,
56,000 children from 357 schools participated; in 2012, this number shot up to 1.8
lakh students from 700-plus schools. In
2013, this number stood at 7 lakh kids from
close to 2,000 schools. This initiative
strengthens the unconditional bond
between the brand and our target group,
says Sinha.
For the long haul

Now take the story behind the Standard
Chartered Mumbai Marathon. The bank,
which thrives on the philosophy Here for
Good, wanted to create a property that is a
race for the long haul, literally. So 11 years
ago it introduced its branded marathons
Standard Chartered has been organising
marathons in nine countries for over 16
years to Mumbai. It faced three challenges initially: convincing local authorities like municipalities, Mumbai Police and
the state government to allow for the logistics of the marathon; to get people to participate; and finally, to convince the companys internal stakeholders to put their
resources behind the project.
The problem was, the sport did not have
mass appeal in India. We needed concerted efforts to elicit participation and to grow
this event into a movement for social
change, says Sumeet Singla, regional head,
corporate affairs, India and South Asia,
Standard Chartered Bank. So in the early
days, teams were deployed to go to schools
and offices to urge people to register.
Registrations, done in-house, were chaotic.
18
Standard Chartered expected 30,000 people to apply in its first year. Only 8,000
applications were received.
A lot has changed since then.
Participation has increased manifold and
the event itself has become more sophisticated. Take the timing chips. Aspirants are
given timing chips to pace their run. There
are points on the course and once participants step on it, the timing chip embedded
in their running bibs give them the exact
duration they have taken to reach that location. Earlier, the brand advertised heavily
before the registrations for the marathon.
Today, it needs to advertise only two weeks
before the marathon, and the registrations
are announced through a press conference. Advertising now relies less on traditional media and more on digital media.
For instance, in 2013, Standard Chartered
created a social media initiative with 25
Instagramers from Mumbai shooting
Mumbaikars' reasons to run the
marathon. This was part of its Run for a
Reason campaign aimed at taking the
Mumbai Marathon beyond the streets and
into the hearts of avid runners. The event,
since inception, has been broadcast with a
live feed on Doordarshan and a private
sports channel (for the last few years, that
partner has been STAR Sports).
An event like the Standard Chartered
Mumbai Marathon also give other advertisers one more avidly watched property
to showcase their products. The company
says its brand awareness score is around
70 per cent, thanks to the marathon. The
bank also uses this event to promote its
banking products such as its credit and
debit cards. Company executives participate and help raise funds for the various
sustainability initiatives that the bank
supports.
The Standard Chartered Mumbai
Marathon has helped raise over ~109
crore since its inception for non-profit
organisations. In 2014, for instance, it
generated over ~20 crore for charity, benefitting 269 NGOs. The event could be
cited a classic example of the key properties of a branded property coming
together a solid idea, marketing scale
and use of technology all of
which have contributed to reinforcing
Standard Chartereds Here for Good
positioning.
>
PLAYING CIO TO
MILLENNIALS
Millennials are
bringing a new set of
expectations into the
work place,
challenging
traditional IT
support
systems
MASOOM GUPTE
he latest advertisement for mobile

telecom service brand MTS shows a
young woman in the labour room
with her husband recording the moment of
the babys arrival. The newborn is no regular wailing baby he is a tech savvy kid
who grabs the tablet the father was using to
look up information on how to severe the
umbilical cord, proceeding to apply the
newly-acquired knowledge without much
fuss. He stops to click a selfie with the nurse
assisting the doctor on the case, posts his
videos on the net, before finally walking
out to announce his arrival to the world.

The advertisement concludes with the
tagline, Born for the internet.
The core message of the commercial
finds resonance with a generation that is
indeed born for the internet. In fact, it is a
generation that was born with the internet
and has grown up with it. Experts define
the quintessential millennial as one born
anytime between early 1980s and early
2000s. The oldest of this lot, at this point,
would be a few years into their careers and
possibly, having circumvented the teething
problems faced by the newly-initiated-intothe-work-life-cult, settling down.
19
Mind you, this bunch is different. Mark

Goodburn, global head, advisory services,
KPMG, says: If you looked around a room
of successful 40-plus year olds and asked
them what attributes make them successful, theyd probably say its because they are
loyal to their company, customers and
peers or simply because they are smarter
than the rest. Ask the millennial the same
question and hell say, because am passionate, can adapt to change quickly, etc. All
these attributes are important but different.
As a group, millennials cant be ignored
any more. They are your customers and
>
Q&A
ANDY CHOW
I SENIOR DIRECTOR, APAC I ORACLE
IT policies must be formulated anticipating

changes and the pace of change
The consumerisation of IT as a trend is attributed
to millennials entering the workforce. To what
extent is this group influencing the framing of IT
policies?
Surveys show one out of three students (including
those fresh out of college) will choose the
workplace depending on the flexibility it offers in
terms of device usage, mobility offered, freedom to
use social networks over money. It is almost like
you can pay them less if you allow them to use
Facebook at work. The latest generation has
embraced a whole new set of social media
platforms. You have photo sharing apps like
Instagram and instant messaging apps like
Whatsapp. The lifespan of these platforms is
decreasing. The hype cycle around a particular
platform is constricting further. What this means for
IT policies is that there is a need for a quicker
turnaround time.
If one looks at IT on a piecemeal basis, it is possible that
current policies will become obsolete very fast. A policy framed
today may have to be scrapped tomorrow. IT policies must be
formulated anticipating changes and the pace of change. No one
expected iPhone or Android to scale popularity charts so
decisively only six years back. All we can do is keep our
infrastructure ready and in place to deliver.
The flexibility demand started with the device but is now extending to
the application...
It is what some people call BYOA bring your own application. Its not
technically an emerging trend. Even with the desktop, people did
install their preferred software, like say the internet browser of choice.
The difference was that any information on the device was locked and
secure. With cloud coming in and information getting stored not on
the device, there is a chance of sensitive, competitive information
leaking out. Policy must be framed around what information can or
cannot be uploaded to cloud. The freedom to use applications must
come with a rider and even restrictions on occasion. BYOD and BYOA
will soon be, if not already, the majority

group within the organisation. They will
bring to the table their own set of strengths
and challenges. The most important thing
they bring to the workplace is their bornfor-the-internet lineage. It is a strength
because they embrace and master new
technologies with alacrity. Challenge
work in tandem for users. Companies should

remember that the device for the user is an
everyday device used for personal consumption
too.
Even with noise levels around BYOD picking up,
one observes that companies are happier
providing the employee with a primary screen
(desktop or laptop). The employees device
remains a second screen. Why is it so?
There are two considerations to BYOD: one, where it
may be adopted simply for providing convenience to
employees. For instance, in cases where the
employee is constantly on the move and needs to
stay connected and execute functions on the go.
Two, whether the business model itself demands it.
For example, one of our Indian clients, a media
company, has empowered its ad sales team that
routinely goes on field and interacts with the
customers to use Oracle technology. The sales team can now take orders
on the spot and submit for approval. Earlier, they would meet a
customer and negotiate for an ad sale but wouldnt be able to close it if
there was a question mark over the discounted rate. In cases such as
this, you realise that mobility solutions dont just provide convenience
but also become a part of the business model.
How do you see the role of CIO evolve over the next couple of years?
The CIO and his team will be partners, guiding the business to take
decisions about processes and the very manner in which it undertakes
operations. IT will lead to fundamental changes in the way business is
conducted. Consider smart metering. Earlier, youd have to send
someone out to physically read the meter. Today, you get an updated
reading every 15 minutes. This has changed the business model for
utility companies. They can bill the customers as per the time of the
day. May be they could charge the customers more for usage during
peak hours, encouraging them to shift their usage patterns, in favour
of non-peak hours. IT is no longer a call centre in the organisation. It
must participate actively in strategic decisions and play its part in the
corner office.
because they show little tolerance for those

who cant keep pace with their expectations. That means organisations that
employ them have to be in step with the
demands of their millennial workforce,
adapting the information technology infrastructure with equal alacrity.
Indeed, the role of IT in the retention of
20
employees is far greater today than given

credit for. Goodburn gives the example of
the iPad launch. See the video of the
launch. On several occasions, Steve Jobs
just stops and says, You have to experience this. This is really cool! It is this cool
experience that we have to give our employees today.
>
The boss
A report by Isurus Market Research &

Consulting sums up the consequent IT
challenges for an organisation: Millennials
expect immediate responses, prefer a wider
variety of communication channels and,
when it comes to problem solving, often
turn to Google and outside resources before
contacting support.
How is this changing the equation
between the superior and the subordinate
in an enterprise and how can technology
iron out the creases?
The Prosumer
Today, technology, especially the hardware,
doesnt reach the organisation first. A distant
uncle or a friends friend flying in from
abroad is delivering the device/software in
the hands of your millennial employee even
before conversation about introducing it in
the organisation kicks off in the corner office.
Bring your own device or BYOD as a practice
was developed by organisations as a
response to this trend. BYOD not only helps
you minimise your costs (as the need to provide hardware to employees goes down) but
also lets you piggyback on the more sophisticated devices held by your employees.
Experts say this generation has moved
from BYOD to BYOA or bring your own application. BYOA doesnt pertain to the flexibility in enterprise solutions alone but also to
the fulfilment of social needs. This set of
professionals expect the organisation to
allow the same kind of interactivity at the
workplace that they enjoy outside. Rangu
Salgame, CEO, growth ventures, Tata
Communications, describes this phenomenon as the rise of the prosumer defined
as a consumer who becomes involved with
designing or customising products for her
own needs at the workplace. The rise of
the prosumer at the workplace has been dramatic. In the olden days, IT was driven top
down. The CIO decided which apps he
would roll out, which apps would sit on your
desktop and manage your email or trading or
interface with your suppliers. Now, all that is
being decided by the employees. He adds,
As consumers we are coming in and saying
that I use Facebook, LinkedIn and
other social networking websites in my personal time. I wish to communicate with my
colleagues in the same manner.
Social networking apps are becoming very
big in enterprises.
Tata Communications response to the

employees demand came in the form of
Chatter, a social networking platform.
The Chatter app, like its equivalents in a
more personal space, can work on a number of screens be it mobile, desktop,
tablet and so on. The organisation, according to Salgame, does a lot of business
through Chatter today.
Social networking apps, specific to enterprises bring in a personal touch to conversations. Coffee or pantry chats have moved
to social apps like Chatter, thus making it
easier for organisations to keep track of conversations. All the conversations between
supervisors and their subordinates in the
company that happened while walking
around have now moved online, not
because the CIO decided thats the way to
go. Employees wanted it, asked for it.
Nearly 8,000 of our employees actively use
Chatter, Salgame says.
Effectively, millennials demand that
even business processes be delivered in a
social environment. Therefore, IT department is no longer in the call and respond
mode. This means the CIO has to think differently about day-to-day processes and
collaborate with other departments to
deliver solutions.
Take the case of KPMG India: The firm
has installed apps for basic functions such
as filling time sheets and claiming out-ofpocket expenses. Even some bits of training
can actually be managed on the app.
Utkarsh Palnitkar, head, advisory and life
sciences, KPMG India, says, Thinking
technology in the context of our young
leaders expectations is crucial. We help
clients think differently and move towards
embracing change.
21
With a growing number of millennials

telecommuting, there are two new
demands on the technology department.
One, how does the boss know if and when
their telecommuting employees are actually working? Two, how does the boss offer
immediate feedback to millennials to produce better results more quickly?
In theory, these two things may not be
very difficult to achieve in the new resultsonly work environment (ROWE), where
employees are assessed on the basis of their
performance. The ROWE strategy, developed by former Best Buy human resources
managers Cali Ressler and Jody
Thompson, allows employees to work
whenever they want to and from wherever
they are based as long as the work gets
done. While a ROWE strategy may not be
feasible in all kinds of businesses (hospitality, retail etc), it is making social performance management platforms such as
Work.com (formerly Rypple) and
WorkSimple popular. Entire teams in an
organisation can see who the best performers are.
Some organisations are sweetening the
deal further. Pricewaterhouse Coopers,
according to its website, uses a system
called Acclaim Points. The firm allocates a
certain number of points to employees,
which they can then award to colleagues
and managers when they reach certain
milestones. Each point is worth about a
dollar and can be redeemed at an online
store for a range of things from iPads to
travel packages.
Needless to say, CIOs must be prepared
for all of this. While these may appear to be
internal challenges, soon similar demands
will start flowing from customers and partners, an overwhelming majority of whom
will be millennials.
>
RE-IMAGINING
SEGMENTS
What we are seeing in India is the birth of

horizontal segmentation. Brands that
manage to understand the spaces between
existing needs and segments are the ones
that are likely to win
Nothing tests a
marketers abilities
more than a new
launch. In a world
saturated with
information, the
ability to cut
through to the
audience and create
SANTOSH DESAI
room for a new idea
MD & CEO,
in their already
FUTURE BRANDS
cluttered lives is not
easy. Great launches
need not only to get all elements of their
mix right and today the idea of 360
degrees seems to have many more
degrees than in the past but also
connect with something real, often
visceral, deep within the consumers
mind. The meaning of the launch has
expanded significantly; now brands go
much beyond the traditional
launchconferencewithsmoke
machineandA/Vshowingathletich
eroessettotheChariotsofFiretrac
k. A list of the most successful launches
of the year tell us something not only
22
about the strategies used by different

brands to make a mark but also about
consumers at large and about what their
hopes, dreams and desires might be. In a
country where consumption is the
strongest signifier of progress at an
individual level, it is not surprising to
find the dominance enjoyed by the
categories of smartphones and
automobiles in this years list of the most
successful launches.
This years top three positions go to
smartphone brands while the
automobiles bring up the next three. The
next four places that complete the top 10
too are split between these two
categories. The dominance of these two
categories is so overwhelming that in the
top 20, only two places go to other
categories fast moving consumer
goods (FMCG) brands. In some ways,
these categories do enjoy an unfair
advantage when it comes to annual lists
of successful launches, given that in these
categories, product refreshment is an
imperative. In some cases, it is also true
that the launches are keenly anticipated
by consumers which makes the
marketers job that much easier. It also
helps that the success or failure of the
launch is often determined quite quickly,
unlike in the case of FMCG brands. On
the flip side, given the instantaneous
feedback that these launches receive, the
launch itself becomes doubly critical.
The brands that have emerged victors
have passed this crucial test well.
Samsung in particular has managed to
connect with the Indian consumer
remarkably well three of its launches
make it to the top 10 list, including
Galaxy Gear, its smartwatch. Samsungs
focus on understanding India, investing
in it and catering to the Indian consumer
specifically has been an on-going project.
In Samsungs case, while the launch
marketing strategies tick all the boxes,
the key to their success lies in aligning
their products with consumer
expectations. Today, Samsung is clearly a
>
brand that enjoys great momentum,
which means that it can expect
consumers to tune in for any new move
the company makes. This is both an
enormous advantage as well as a
potential pitfall, as other technology
companies have discovered. Apple,
which has faced this burden of
expectations for some time now,
however performed well with its iPhone
5c/5s launch. In the case of Apple, it is
really a case of the brand following the
consumer rather than the other way
around. For many years now, the Indian
consumer has borne the brunt of the
brands indifference to the Indian market
and it is only recently that things seem to
be changing.
Indeed, if there is one
theme that stands out from
among the list of successful
launches, it would have to be
the importance of getting the
product right. Most of these
launches have a a great
product strategy. This is very
striking, particularly when it
comes to the extremely
crowded automobile market. Ford
EcoSport delivered a great combination
of aesthetics, product features and price
to make a place for itself in the SUV
segment. Royal Enfields Continental GT
brought back the days of the Cafe Racer,
skilfully evoking nostalgia for a time
when motorcycling was at its purest,
along with more contemporary
engineering. Hyundai Grandi10
managed to create room between its own
i10 and i20 to open up a new segment for
itself. Honda Amaze marked the entry of
Honda into the diesel segment; it was a
late entry but again carried with it the
trademark Honda attention to detail. At
another level, the luxury brands strove to
create a new compact segment with
entries from Mercedes and BMW in the
sedan and Audi in the compact SUV
categories.
23
The other clear message that emerges

from this years list is that brands today
need to think of the launch not merely as
an announcement but as a platform to
create a new experience for consumers. It
is now virtually mandatory for brands to
launch with some promotional activity
that creates ripples on social media. We
saw examples of this in this years
winners, be it BMW or Mercedes, which
used promotions to go with the launch or
Honda and Royal Enfield that used
Twitter to good effect. Ford EcoSport
created an interesting property called
Urban Discoveries, which called upon
people in 12 cities to identify lesser known
cool places for a chance to win the vehicle.
Overall, what these
success stories underline is
that for Indian consumers
today, brands need to play
an increasingly sharper and
more specific role in their
lives. As their repertoire of
choices has expanded, we
are beginning to see more
nuanced segmentation take
shape. Opportunities are
opening up in all segments of the market
and rigid category and sub-category
definitions are being challenged. What
we are seeing in India is the birth of
horizontal segmentation, where price is
no longer the only way of slicing the
market. Brands that manage to
understand the spaces between existing
needs, mindsets and segments are the
ones that are likely to win.
The need is not only for differentiation
but for highly targeted differentiation.
The launch hoopla that surrounds
brands is important, but it is not enough
to merely tick the activation and social
media boxes. It is only when these
actions form a coherent whole and when
they help build a deeper and more
durable relationship with consumers
that they become truly meaningful.
>
The IKEA way

Here is what Indian e-retailers can learn from IKEA's
democratic designs and frugal business model
ANKITA RAI
urgaon-based online home furnishing

and
furniture
retailer
FabFurnish, which operates both
online and offline stores, has found its niche
in smart expandable and collapsible furniture. Translated, this means it creates flatpack products that are assembled at the customers home. Why is this insistence on
flat-pack and in-home assembly? Simple:
Cost reduction. DIY (do it yourself) products reduce logistics cost, damages and storage costs, ensuring phenomenal efficiencies
at the backend.
But hold the applause. The whole idea is
borrowed: the e-retailer has been inspired
by global furniture behemoth IKEA. Flatpack furniture can help reduce the total
cost by 20 per cent for smaller products
like wall shelves and in the case of heavy
furniture like of sofas or wardrobes, the
total cost can go down by 50 per cent. DIY
is also more scalable, says Vikram Chopra,
co-founder and CEO, FabFurnish.com.
Our focus is affordable yet inspirational
products. This is precisely what IKEA does.
FabFurnish isnt alone. Many organised
24
furniture e-retailers in India have followed

the success story of IKEA keenly, borrowing
and tweaking some of its strategies and
applying them in their own ventures to drive scale. Says Devangshu Dutta, chief executive, Third Eyesight, The IKEA model
presents significant learnings for Indias
online home and furnishing e-tailers in
terms of product standardisation.
Standardisation can bring credibility into
the online business given the lack of the
touch-and-feel factor.
Globally, IKEA derives its competitive
advantage from low cost and smart con-
>
cept-led design, in turn leading to low
prices a lethal combination that makes
IKEA a formidable brand. So what are those
inspirational moves of the Swedish furniture maker, and is it possible to replicate
them in India? More importantly, will the
Indian players following in IKEAs footsteps
be able to deliver equally enviable results?
Before we proceed, let us look at the
home decor and furnishing market in
India. The market is pegged at $20 billion
(~1.2 lakh crore), half of which is furniture.
About 90 per cent of the market is unorganised. Modern home furnishing and furniture retailers working offline have not
been able to scale up fast because the footprint and inventory requirement is quite
large. Such stores typically need at least
15,000-plus square feet of space. And if you
are hoping to set up shop on the high street
then the costs can really go through the
roof.
This makes online an interesting medium to go to. Compared to a physical retailer who has to spend about a third of his
revenues only on premises and manpower,
prices for online furniture can be 15 to 20
per cent less, says Paritosh Bindra, chief
operating officer, Home Needs Online.
The segment is still untapped unlike categories such as fashion, consumer electronics, books etc. There is scope for niche
and label businesses to organise this market using web/mobile technology.
That said the biggest challenge in the
online furniture market is the high logistics
cost. Says Bindra, While margins in the
business are in the range of 40 to 50 per
cent, logistics cost make up 10 per cent of
the overall cost. What can also make or
break is raw material, which is the single
biggest investment for a furniture manufacturer. Major e-retailers are working on
making their supply chain cost-efficient
with one common focus: make it lean like
IKEA.
Building a frugal supply chain

Broadly, two kinds of raw materials go into
two different kinds of furniture in India.
While the hardwood required for furniture
is sourced locally, particleboards or medium-density fibreboard (MDF) are sourced
from China, Malaysia, Taiwan etc. The price
difference between an MDF-made product
and a hardwood product can be as much as
EXPERT TAKE
IKEAmakes low prices

the high point of its strategy
ENLIGHTENED BUSINESSES usually avoid low
price strategies because they tend to
commoditise their offerings and squeeze
margins. But home furnishings retailer IKEA
uses low prices to fulfil its brand mission,
cultivate loyal customers, and sustain
profitable growth. The company is
designed and operated to offer a wide
range of well-designed, functional home
furnishing products at prices so low that as
many people as possible will be able to
afford them. Following are the key pillars
of IKEAs business model:
> While most retailers use
design to justify higher
prices, IKEA designers work
in exactly the opposite way.
They conceive each IKEA
product by starting with a
functional need and a
target price and use
innovative manufacturing
processes to create
functional products.
empowering customers to make most

purchase decisions themselves. It makes it
easy for customers to choose the right
products by displaying them in situ, with
all specifications. It packages them for
immediate self-service pickup and offers
a simple return policy.
> IKEA stresses the importance of product
quality and minimises the companys
impact on the environment. Reducing the
amount of packaging for its products
reduces carbon emissions,
energy usage, and waste. Even
its store design reflects this. For
example, newer stores make
more use of skylights, which
reduce energy costs, improve
worker morale, and give a
better impression of the
products.
DENISE LEE YOHN

Brand-building expert
& author of What Great
Brands Do
> IKEA controls its product
assortment and leverages its international

footprint to purchase large volumes of raw
materials, which pushes prices down even
further. It follows a design philosophy
based on offering products so they can be
transported in flat packs and assembled at
customers homes. This lowers prices by
minimising manufacturing, transportation,
and storage costs.
> IKEA has done an exceptional

job of extending its brand
mission to its thousands of
global suppliers through The
IKEA Way(IWAY). IWAY sets out
a clear list of standards for everything
from environmental practices to
employee working conditions.
IKEA uses its brand as a management tool

that fuels, aligns, and guides everything
the company does. This is why IKEA has
thrived, while so many other big box
retailers have failed.
This is what great brands do.
> IKEA also keeps prices low by
25-40 per cent after covering the cost of

imports. Unlike hardwood furniture, MDF
furniture is assembled from knocked down
parts. This makes handling, logistics and
transportation easier. However, this
involves working closely with vendors to
enable them to change their traditional
25
manufacturing processes, says Chopra of

FabFurnish, which sources its products
from Malaysia, Brazil and Indonesia, apart
from certain pockets within the country.
Another major organised player, Style
Spa Furniture, part of Saroj Poddars
Adventz Group, also makes knock-down fur-
>
niture. The company, which recently introduced an e-commerce platform to complement its brick and mortar retail stores, offers
consumers the services of dedicated Style
Spa furniture assemblers free of cost. It uses
MDF boards, mostly imported from Europe.
It is not so much about MDFs being cheaper than solid woods. It is about design and
manufacturing quality. Raw materials
would be 60 per cent of the total cost of a
product. So design is the key consideration,
says DK Jairath, deputy managing director,
Style Spa Furniture.
Mumbai-based online marketplace,
Pepperfry is also looking at flat-pack design
for the fast selling SKUs of its private label
brand Mudra, which is 60 per cent of its total
merchandise; the rest is branded, knockdown furniture. Says Ashish Shah, cofounder & COO, Pepperfry.com, There is a
lot to be learnt from IKEA: How to design a
product that can be shipped at minimum
cost.
Bangalore-based curated marketplace
Urban Ladder is also inspired by IKEAs
frugal approach to business. Product
design at IKEA is such that the consumer
wants to buy every single piece. The second is the scale at which it operates. The
idea is to squeeze out inefficiencies and
ensure that the product reaches the consumer at the right price, says Rajiv
Srivatsa, co-founder and COO of Urban
Ladder.
Delhi-based Snapdeals line-up comprises 60 per cent home decor and 40 per
cent furniture. It sells both solid wood and
MDF furniture. Because of the ease of
movement and scalability, many in the
industry are moving towards easy-to-modify, acrylic-based furniture. This is a trend
big retailers abroad have capitalised on
already, says Amit Maheshwari, vice-president,
fashion
merchandising,
Snapdeal.com.
the last mile can prove to be a game-changer.
FabFurnish is closest to IKEA when it
comes to managing distribution. While the
company manages the last mile itself, it
charges a nominal fee of ~300 for assembling
services. Even product shipping is not free.
Style Spa undertakes last mile delivery
by itself. For its e-commerce platform, Style
Spa plans to use its existing brick and mortar stores in 65 cities as fulfilment centres. Its
physical infrastructure includes 28 warehouse and 115 physical stores. All online
orders are transferred to the store closest to
the customer location for execution.
In the same way, FabFurnish's hybrid
model allows consumers to touch and feel its
products first-hand. It has four brick and
mortar franchised stores one each in
Faridabad and Gurgaon (near Delhi) and
two in Bangalore. Says Chopra, FabFurnish
is built on three pillars: Price and design differentiation, access and trust. To build trust
and credibility, having partner stores is a
must. The average delivery time is five days.
Chopra thinks that India is not ready for
a marketplace in furniture. Vendors are
small and fragmented. So managing inventory in a cost-effective manner is crucial.
Our inventory levels are never more than
eight weeks, he adds.
By September this year, the portal
expects to notch up annual sales of ~200
crore and hopes to close 2014 with a revenue
of ~180-220 crore.
If Chopra is sceptical about the potential
of the marketplace model, Snapdeal is a
believer. It markets semi-knocked-down
products. While the transportation is handled by a third party, the firm keeps a hawk
eye on packaging, lead time, quality and
installation. Currently, it is the only player in
the category that dropships even bulky furniture.
Taking inspiration
Serving the last mile

More than one-fourth of furniture sold
in India constitutes bulky products,
such as bed, wardrobes, tables etc, which
makes the task of delivery and installation
cumbersome. Says Jairath of Style Spa, I do
not see DIY picking up in India. India will
always have the services component
attached to the offering, he adds, saying, How efficiently one can manage
Furniture
inspired by
the IKEA
Concept
26
from IKEAs way of conceptualising design,

most of the products at Urban Ladder are
designed in-house and outsourced to manufacturers handpicked from places such as
Rajasthan, Bangalore, Mumbai and Delhi.
It doesnt customise but allows free shipping, free installation and cash on delivery
(COD). We have to make it easy for a customer to purchase high-ticket items. We have
made discovery simple with our clutter-free
website and the purchase process easy by
offering COD on even expensive items, says
Srivatsa of Urban Ladder.
Urban Ladder is present in six cities
Pune, Chennai, Hyderabad, Bangalore,
Delhi and Mumbai and has warehouses
in each of these cities, besides one in
Jodhpur. It only sells products made of solid wood. It uses external logistics partners
for inter-city shipment. Last mile and
assembling services are provided by the
company.
On its part, marketplace Pepperfry has
brought down shipping costs to nearly a
third. It has reduced the shipping timeline to
three-eight days (from a fortnight earlier) by
building its own last mile delivery programme. It has hubs in cities like Delhi,
Jodhpur, Bangalore, Mumbai, Kolkata, Pune
and Chennai, which also serve as sourcing
and distribution centres.
Another key learning from IKEA has
been that in a category like furniture it is not
such a great idea to just sell a product. The
accent should be on selling a concept. So
that the customer can visualise how the furniture will look in a particular corner in her
house. Lately, IKEAs online catalogue has
attempted to simplify the shopping experience with its augmented reality app.
Customers can virtually place items from its
2014 catalogue anywhere in their homes
and see if they are of the right size, fit, colour
and style, before committing to purchase.
So whether one talks of inexpensive
design, the use of technology, a frugal supply
chain or rich customer experience, IKEA
seems to be the first port of call for Indian
e-retailers in the space. The Swedish retailers value proposition is based on simplicity which in turn makes it clear to consumers
how IKEA is like no other furniture retailer.
Sounds easy but replicating its model of simplicity is more difficult than it seems. Eretailers in India have the inspiration. Now
they have to get the execution right.
>
LEAVING ON
A JET PLANE
Research shows companies fall woefully short when it comes to
grooming employees for overseas assignments. Heres where they
need to focus their attention
DEVINA JOSHI
merican businessman and best-selling author Stephen Covey famously said, Strength lies in differences,
not in similarities. But when one speaks of
organisations spreading their wings beyond
their country of origin, managing such differences is hardly a breeze. In fact, as many
as two in five managers are said to fail in
their overseas assignments, according to a
survey on global leadership trends released

by Right Management, a global leader in
talent and career management workforce
solutions within ManpowerGroup. Only
58 per cent of overseas assignments were
judged successful by CEOs and senior HR
professionals surveyed last year by the
workforce solutions provider.
In India, companies especially in the
pharmaceutical, IT consulting and construction domains looking for growth
27
have ventured overseas in large numbers. It

is, therefore, imperative to place strong
emphasis on grooming employees for international assignments long before the plane
takes off. Such assignments affect the family members of the expatriate employee,
and they need to be prepared and supported too, say experts. Remember, language or
cultural training alone is not adequate. The
Right Management research suggests that
the best companies use a battery of assess-
>
ments to determine whether or not an
expatriate assignment will actually work.
Being aware of potential derailers that
could stand in the way of success is critical to understanding and adjusting to
an international role, Bram Lowsky,
group executive vice-president of the
Americas at Right Management, told the
Society
For
Human
Resource
Management, post the survey.
So how exactly do companies ensure
that a manager comfortable with the
language, people, work processes and living
conditions of his home country will survive in a foreign environment, working with
people from different ethnicities and
expectations? And how do firms tackle
cross-national disputes, should they arise?
A whole new world

Everything from job design, policies,
language, nuances of announcements, to
compliance, legal, economic and taxation
framework can be entirely different in
different parts of the world. Hence, for an
employee going abroad, it can be a challenge to accept that what has made him
successful in his home turf may not work
on the global wicket. For most Indians this
challenge seems bigger as their educational system or work culture grooming does
not necessarily prepare them for collaboration as much as it does for competition.
The important thing then would be to start
preparing the employee much ahead of the
actual transition.
Take the case of Glenmark
Pharmaceuticals, which operates in over
80
countries
with
around
75 per cent of its total sales ringing in from
the overseas markets. Glenmark has a workforce of more than 10,500 employees
belonging to 50 nationalities. The company
runs a well-structured programme to prepare employees for overseas stints. If it is a
non-English speaking country, the sessions
begin with local language training that start
in India and continue for them and their
families in the geography they are going to
settle in. Otherwise, in a country like Japan,
for instance, it may be difficult to even order
a coffee the right way.
We have many teams reporting to nonIndia leaders who spend a significant
amount of time every month in India for
knowledge transfer. An external consul-
STEP BY STEP
NIIT Technologies runs a Global
Etiquette Training Programme
that contains information on
the following:
HIGH AND LOW
COMMUNICATION CONTEXT
Indirect and direct style of
communication across
geographies
> Sensitised cross-cultural
communication
> Dos and donts of effective
business emails
>
GREETING ETIQUETTE
How to greet people in
business scenarios
> Heptic (science of touch) and
maintaining proper space
> Handshake
> How to give and receive
business cards
>
DRESS ETIQUETTE
Dos and donts of attire
(formal, semi-formal, casual)
> Power dressing
> Hygiene norms
>
DINING ETIQUETTE
How to handle cutlery when
fine dining
> Body language
>
TELEPHONE ETIQUETTE
Dos and donts
How to take a message
> Voicemail
All this is taught through
activities and discussions to
cater to the needs of all three
types of learners (auditory,
visual and kinesthetic)
>
>
tant runs the programme for us, says

Swati Rustagi, senior VP and head, human
resources, Glenmark. The sessions also
involve helping employees identify and
overcome perceptions about other cultures. The most important thing the company tells its people is to travel with an
open mind. At a senior level, Glenmark
28
goes so far as to coach executives on local

food, etiquette etc.
Glenmark shares an incident where it
has had to literally tutor a senior leader
who was being sent to Russia to refrain
from emulating Russians unthinkingly
just to fit in. Thanks to extreme climatic
conditions, Russia has one of the world's
highest levels of alcohol consumption.
Glenmark advises employees not to try to
be one of them as our physical make-up
and culture doesnt prepare us to handle
that level of alcohol. You will make a fool
of yourself we tell them, says Rustagi. We
coach them on such areas where extreme
adoption of another culture can make them
flounder.
Then take things like display of personal familiarity. Cuddling a customers baby
or pinching her cheeks may be acceptable
in India, but considered harassment or
abuse in some countries in the West.
Similarly, being strict with your child is
acceptable here, but not in most Western
countries. Again, in England, you can invite
customers home if you share a personal
relationship with them. This may be considered violation of personal space or overfriendliness in some other European country.
The work culture itself is very different
in different counties of the world. For
instance, in Latin America (particularly in
Brazil) and Western Europe, you may want
to send a text message to a work associate/client after work hours if it is urgent,
instead of calling the person up, the way we
do in India. This is because people dont
take work calls after office. The broad belief
is that the corporate culture overseas allows
for a 9-to-5 work regime where employees
are expected to be productive, with strict
timeslots allotted for lunch, and no room
for personal calls. It is even considered
impolite to disturb workmates on weekends. Most French labour contracts, for
instance, have to apply a 35-hour working
week.
More recently, a labour agreement
signed on April 1 by unions and employers
in the high-tech and consulting fields refers
to an obligation to disconnect communications tools, after an employee has
worked a 13-hour day.
This is vastly different from India, where
employees are used to long work hours and
>
prefer a hierarchical approach. Back in
India, asking someones age, marital status
or ethnic origin at the workplace is completely acceptable, says Santosh Karagada,
vice-president, HR, Wipro. When one works
in the US, he needs to learn that such questions can be construed rude.
While on the topic of communication,
there is something called an email etiquette,
which coaches employees on the best practices of writing crisp, professional emails,
using language that isnt abrasive or offensive, and when to take the direct or indirect
approach. For instance, in the US, using
ALL CAPS (writing words in capital letters
in a sentence) is frowned upon as it sounds
like youre yelling, while in India, this may
simply be seen as someone trying to emphasise a point. Furthermore, in places like the
UK, people have a strong sense of time,
where, unlike in India, arriving late for a
meeting is unacceptable.
We have seen more team orientation
and patience in Indian employees who
return from international assignments, in
addition to improved big picture vision,
says Rustagi.
Devil in the detail

If it is a family with children that will accompany the employee, the training programme
will be different, involving information on
local schools, accommodation, hospitals,
medical policies, immigration policies, public holidays, social security numbers, local
festivals, labour laws, helpline numbers,
maps, local politics/history etc. Consider
Tata Consultancy Services (TCS), which
has three lakh employees belonging to 118
nationalities in over 50 countries. TCS even
organises programmes for the spouses of
these on-site employees to interact with
each other. Most of the staff sent overseas
is already in touch with their on-site counterparts, so they are coached on local conversation topics like American baseball if it
is the US, or London rain if it is the UK, says
Ajoy Mukherjee, executive vice-president
and head of global human resources, TCS.
There are educational inclusiveness
programmes at TCS to eliminate bias
against other nationalities that an Indian
may harbour. The TCS dos and donts list
also includes a list of crimes, places to
avoid, safety precautions and policies.
The IT behemoth also has a Culture
Meter, an information-sharing tool on the

intranet that profiles various cultures, in
addition to a Global Village Programme, an
annual gathering that showcases culture
and cuisines across countries.
That said, working with people from different ethnicities or cultures could lead to
minor misunderstandings at best or a
racism/harassment lawsuit, at worst. NIIT
Technologies, which went international
in 1992 and has a presence across 18 countries, gears its employees through a Global
Etiquette Training Programme on what to
expect when they go abroad. (See box). If an
incident blows out of proportion, counselling is provided to the employee in the
home country or on-site, available via telephone, chat or a meeting. If the problem
involves racism, then we would take it up
very seriously at a corporate level, says
Rosita Rabindra, chief people officer, NIIT
Technologies.
Unity in diversity
In all this, one mustnt forget the more
mundane issues related to the physical
relocation to a new country. Availing of
services of relocation companies to help in
the initial settlement, buddy programmes
on-site and welcoming the extended fam-
29
ily into the organisational community help

significantly, says Prithvi Shergill, chief
human
resources
officer,
HCL
Technologies.
An engineer moving to the UK to work
at one of HCLs client locations, for example, will go through the i-fly programme
that will provide detailed information on
living in the UK and also the clients culture
in terms of policies and processes. On
reaching the destination he will go through
a tailored induction programme.
HCL uses a web-based tool, which offers
country-specific information for over 80
countries
in
over
45 languages. It also contains e-modules for
cultural introduction via simulation exercises like interactive sessions, videos,
quizzes, reading materials etc. It contains
global advice on over 25 topics essential for
a first-time as well as a seasoned traveller.
The cost of expatriation is a big investment for companies and the return on this
investment becomes difficult to reap if the
talent is poached, in which case, career
management and the international compensation philosophy should be clearly
articulated. Further, there are standard
practices like non-compete agreements
and legal terms stated at the time of
employment.
Diverse experience is good because it
broadens a persons horizon and brings the
added value of best practices, some of
which may be replicable, given the individual demographic environment, says
Rajeev Dubey, president, group HR, corporate services and after-market; and member, group executive board, Mahindra &
Mahindra.
Most often, overseas exposure brings
about additional work ownership and
enables quicker resolution of issues. It is
also very critical that employees being relocated see the movement as an opportunity
to learn and contribute and not a reward for
past performance. And that success abroad
thus rests on attitude, flexibility and cultural empathy not dissimilar to any effective recruitment process on the home turf.
>
OVERHAULTHAT
PERFORMANCE REVIEW
By taking three simple steps increasing frequency, involving
senior leadership and bringing in transparency corporations can
make their performance review processes more robust
ROHIT NAUTIYAL
-commerce company Snapdeals

leadership team which was in
news last month for raising ~590
crore from a group of five investors
including Azim Premji's family office
had another crucial task at hand around
the same time: that of conducting the
annual employee performance appraisal.
Initiated in April this year, the process
went off smoothly and the outcome was
announced soon after. As the celebrations of rewards and the latest round of
funding faded, employees geared up to
touch the next milestone: hitting the
sales target of $1 billion this fiscal.

Not far away from all the action, vicepresident, HR, Saurabh Nigam, began reevaluating the companys appraisal
process. The e-commerce market grew
by 33 per cent to ~62,967 crore last year
(source: Internet and Mobile Association
of India). Nigam could see how, with the
beginning of a new phase of consolidation, speed will be indispensable to success. As a result, the annual goals set by
Snapdeal for the next year will have to be
more fluid. So the company has decided
that employees must be evaluated either
on a half-yearly or quarterly basis. After
much deliberation, Nigam concluded it
30
would be a good idea to strengthen the

connection between performance and
rewards and move towards a bi-annual
rewards system as well.
While Snapdeal is working to align
the appraisal process to the changing
times, many Indian firms still see the
process as an annual ritual that simply
must be done. Says Moorthy Uppaluri,
MD and CEO of global HR consulting
firm Randstad India, With yet another
appraisal season coming to an end and
predictions that the job market will open
up, it is time for companies to use performance appraisal as a tool for talent
retention.
>
lines to follow, Gupta led from
to understand that the
the front by helping build the
days when it was enough
different functional teams
to offer similar hikes
and the supply chain from
across the board to keep
scratch. Casual meetings with
employees happy are
the founders and Myntras the
over. In the age of merithen small workforce of 100
tocracy, the onus to keep
employees to understand
employees motivated is
their personal values took up
on the leadership.
a lot of her time. At that point,
Coming
back
to
as part of a regular exercise,
Snapdeal, in the first
employees were encouraged
quarter of the calendar
An average
to interpret the annual goals
year its senior leadership
performance review set by the founders every six
team draws up the organfails to reflect the
months. Mukesh played a
isations goals for the year,
efforts made by the crucial role in allowing us to
including topline and
appraisee
experiment as much as we
market share targets. The
liked before zeroing on the HR
founders share these
policies, she adds.
long-term and short-term
SAMEER
goals with employees to
WADHAWAN
but employees should
add on/alter them as and
VP, HR & SERVICES,
own
it
when required. The next
INDIA & SOUTH WEST
ASIA, COCA-COLA
step involves designing
The Strategist asked HR
the organisational matrix
experts across different indusalong with the expectatries about the right frequentions from each function. Says Nigam,
cy of conducting performance reviews.
With a new phase of consolidation kickFMCG companies Coca-Cola, PepsiCo
ing in, topline growth is our priority. The and Parle Products give increments and
steps needed to reach this target are
promotions once a year, but the business
clearly spelt out and assigned to relevant
reviews take place every six in some
departments. The active participation
cases every three months. As we menof the top leadership team lends creditioned earlier, if business targets keep
bility to the process.
shifting from one quarter to the next,
The countrys biggest there is little you can do to prevent
fashion portal Myntra,
employees from asking for a more upwhich
was
recently
to-date rewards programme.
acquired by Flipkart, is
Myntra saw the possibility early in its
another example of how the
evolution. By 2011 the company realised
process can be made more
that the entire process of setting annual
inclusive. Its vice-president,
goals may have to be junked. With the
HR, Pooja Gupta recalls her
priorities of the founders and investors
first meeting with cochanging, the organisation realised it
founder Mukesh Bansal in
had to be more agile. It decided to draw
2010. This was the time
its goals on a quarterly basis. Says Gupta,
when Myntra was changing
Strategy will always come from the leadStrategy comes from its business model from B2B ership. But we have to allow every
the leadership. But
to B2C with the objective of employee to own the process of execuwe allow every
establishing itself as an
tion.
employee to own
online fashion and lifestyle
At Myntra, every employee has access
destination. Says Gupta, I
to their functions financial health
the process of
was happy to meet a leader
through the year. All this has a bearing on
execution
who wanted to build an
the acceptability of the entire review
organisation on the foundaprocess.
POOJA GUPTA
tion of a strong corporate
While the company has stuck to the
VICE-PRESIDENT, HR,
culture.
traditional practice of giving annual
MYNTRA.COM
With no specific guideincrements after the yearly performance
In other words, it is time to take a

fresh look at the prevalent appraisal system and make it more hard working. The
reason is not far to seek.
The UK-based recruitment consultancy Michael Pages Salary and
Employment Forecast 2013-14 for India
shows 58 per cent of employers anticipate an increase in staff numbers. With
regards to demand for talent, the survey
forecasts an increase in demand at the
middle management level across all sectors. A steady volume of recruitment at
the junior and graduate level roles is also
expected. The Strategist conducted a
dipstick among HR heads of leading
companies and domain experts to understand what steps can be taken by companies to make the appraisal process
robust.
We found out that appraisals matter,
especially for middle and lower-level
managers. Remember these people are
responsible for the execution of business
strategies drawn up by a companys leadership team. Says Alf Harris, regional
director, Michael Page India, The annual appraisal is of limited consequence to
the C-suite. For instance, it may take up
to three years before a new CEOs work
begins to show results.
And here are the three things you
could do as the HR head to make the
process less stressful, more
meaningful.
Leadership must drive the

process
Performance review is the
time when the interpersonal skills of a companys leadership are put to test. Our
survey revealed that senior
leadership often relies on
the HR heads to complete
the appraisal process as
peacefully as possible without recommending any
major changes in the format
year-on-year.
Domain
experts also told us that
many organisations choose
to stay away from performance reviews, paying limited attention to goal setting
and salary hikes. They fail
31
>
review, it has come up with several other reward components variable pay
each quarter, incentives for conduct and
recognition for star performers. In fact,
almost all the 500-odd employees in core
functions like technology and marketing, apart from the call centre and delivery staff, have received stock options.
By January this year when the company geared up to initiate its annual
appraisal process, employees started
expressing doubts about their future in
the organisation, given the media reports
on the possible acquisition by Flipkart.
However, the appraisal process was completed without glitches and the outcome
was announced in April. Gupta says given the dearth of talent, any person
employed by a A-list e-commerce portal
has two to three job offers at any given
time. For Myntra a robust appraisal
process turned out to be the saving grace.
Its post appraisal attrition this year was
5 per cent compared to previous years
average of 10 to 12 per cent.
so that it is transparent and is

perceived to be so
Speaking at the Georgia Institute of
Technology early this year Coca-Colas
chairman and CEO Muhtar Kent said,
Never eat alone, never stop making new
friendships, and never stop nurturing
those you have. This was one of his 10
tips for the millennial workforce.
Over the years, the beverage companys global leadership team has ensured
that employees who abide by Coca-Colas
corporate values consistently are adequately rewarded. Says Sameer
Wadhawan, VP, human resources & services, India & South West Asia, CocaCola, By the end of the appraisal cycle,
we not only assess if the targets are
achieved by the candidate, but how she
went about it.
Put in practice this means while
appraising an HR executive, the company will gather feedback from new joinees
and various vertical heads on the behaviour of an appraisee during the reference
year. Similar inputs will also be taken
from external recruitment partners.
Currently, such reviews are done every
month. Since line managers encourage
informal feedback during discussions,
there is room for course correction.

Following this system, if the employee
has passed the behaviour test but missed
some other hiring target by a fraction,
she will be considered a winner.
Providing every employee with a holistic
view of their performance is worthwhile
from a development perspective as well.
Such feedback helps performers understand their strengths as well as areas they
can improve on even if their direct supervisor was not privy to the situation.
The biggest flaw in an average performance review is that ratings do not
always reflect the efforts made by the
appraisee. Today we may not be the highest paying company, but thanks to our
robust appraisal process, our attrition
rates are one of the lowest in the space we
operate in, adds Wadhawan.
32
>
METHOD IN THE
MADNESS
Kishore Biyani has been aggressively
restructuring Future Groups retail
operations over the last year or so,
at times giving out mixed signals.
Here is the big plan
MASOOM GUPTE
> Somewhere in the middle of 2013, Future
Group underwent a thorough restructuring. Future Ventures, the groups non-banking finance company and investment arm
was relisted, with the fashion brands being
hived off under Future Lifestyle. The newly formed entity, Future Lifestyle is currently home to retail formats like Central
and Planet Sports as well as product brands,
including private labels and those with
which the group has licensing and franchising agreements.
In October, Future Lifestyle exited its

investments in ethnic wear brand Biba and
designer Anita Dongre-owned AND for
~450 crore as the five-year plus investments
had matured.
> Last year itself the group closed about 40
per cent of the Food Bazaar stores that were
not performing well and is currently
restructuring the FairPrice neighbourhood
stores and the home-furnishing chain,
HomeTown.
> Towards the end of 2013, the group started
Big Bazaar Directs pilot in Maharashtra. In
an interview to The Strategist Kishore Biyani
>
33
claimed, If it works, BBD will be bigger

than Future Groups flagship store Big
Bazaar.
> The year 2014 squarely belongs to the
Future Groups value format, FBB (Fashion
@Big Bazaar) with its promise to make
India beautiful.
hese are not disparate moves.

Kishore Biyanis Future Group has
been working hard over the past
year or so to get the retail vertical in shape.
The restructuring effort underway at
Future Group since the sale of Pantaloons
>
has been largely number-led, aimed at

reducing the accumulated debt. It has also
helped in streamlining Future Groups
sprawling fashion interests.
The focus on fashion isnt surprising.
Apparel is an important category in
fact, it is the largest after food and grocery
retail, says Ankur Bisen, associate director, Technopak. The size of the opportunity as well as the margins are quite
high for this category.
The other reason could be the high mortality rate in food and grocery retailing.
While this is the largest chunk of organised retail, it is a tough business to be in. It
typically has a gross margin of 12-15 per
cent, compared to 45-50 per cent for
lifestyle and apparel. Now you know why
the gradual shift from sasta (cheap) to beautiful (aspirational).
Currently, the group sells over 15 crore
garments in a year, of which around 10
crore are sold through its value retail format
and the rest through its lifestyle stations.
The fashion vertical of the group has been
growing at over 30 per cent annually and
stands at around ~6,500 crore, contributing
around 55-60 per cent to the overall
turnover of the group currently.
Biyanis fashion strategy rests on one
simple proposition aligning complementary brands under one roof to make
the most of the groups capabilities in
brand-building and distribution.
Complementary brands
under one roof
Take a look at the businesses housed under
Future Retail and Future Lifestyle. Future
Retail is home to the groups flagship brand,
Big Bazaar, the food and grocery chain Food

Bazaar, and more recently, FBB. Future
Lifestyle, on the other hand, houses retail
formats like Central, Planet Sports and
Brand Factory and fashion brands like Celio,
Clarks, Manchester United, Rig and Bare, a
mix of joint ventures, licensed brands and
private labels.
We have adopted a portfolio approach
in our fashion business as is the common
trend in retail. We maintain a mix of value
retail as well as lifestyle brands, holding
over 30 brands currently, some our own,
some joint ventures or even some through
minority stakes, says Kishore Biyani,
founder and CEO, Future Group, speaking
of the groups overall approach to fashion.
As for the segregation of the different
verticals, Sandip Tarkas, president, customer strategy, Future Group, says, It is a
separation of our business interests. Future
34
Retail is home to our value formats, with

the only exception being Foodhall, and
Future Lifestyle looks after our interests in
premium retail.
So while Future Retail focuses mostly
on retail formats, Future Lifestyle defines
itself as an integrated fashion company,
with presence across key segments within
the fashion industry that is, from design
to distribution. The Future Lifestyle portfolio covers sub-categories like formal
menswear, casual wear, active or sportswear, womens ethnic wear, womens denim
wear, womens casual wear, footwear and
accessories and is present across various
price points.
The group has long followed this
approach of bunching complementary
brands under one entity before. But that
didnt stop it from cashing in on groupwide synergies or having a group-wide
strategy for a particular brand.
An example will make this point clear.
Take denim brand, Lee Cooper. The brand
covers a wide price range of ~1,000 to
~7,000. While the exclusive brand outlets
may display the entire range, the different
retail formats take a segmentation
approach. An FBB, given its primary appeal
to a value conscious customer, will sell
items
in
the
range
of
~1,000 to ~2,000, whereas the rest of the
range at the higher end of the price band
would be retailed at Central.
Focus on strategic investments

When Future Group sold off its stake in
brands such as Biba & AND, the reason cited was maturity of investment. It was
simply an investment and it cant be con-
>
exclusive stores this year in

Tier-II and Tier-III markets.
FUTURE GROUP
The Future Group also hopes to
expand the franchise of I am
In, a youth-targeted chain that
was piloted last year. This forFUTURE
LIFESTYLE
FUTURE
CONSUMER
ENTERPRISES
FUTURE RETAIL
mat targets the 18-24-year
Lifestyle retail and fashion brands arm
Value retail arm
group and will stock all in(exception:
Foodhall)
house brands such as Jealous
21, John Miller, Rig, Bare,
Retail &
Product
Big Bazaar
Fashion Brands*
Distribution
Brands
Indigo Nation etc.
Fashion Retail
Food Bazaar
Brands
It makes sense, says Bisen
Clarks
Sach
Central
Fashion@Big Bazaar
speaking of Future Groups
KBs Fair Price
Lee Cooper
Clean Mate
Planet Sports
plans of opening up exclusive
eZone
Aadhaar
Bare
Care Mate
Brand Factory
stores for its private labels. If
Home Town
Big Apple
they stick to retailing their priJohn Miller
Ektaa
aLL (A Little Larger)
Foodhall
vate labels in existing formats,
Jealous 21
Think Skin
I am In
be it Big Bazaar or Central, the
Converse
growth of these home-grown
* Under Future Lifestyle, the group currently holds
FACT SHEET ( FY 14, in ~ crore )
over 30 brands; Of which
labels will depend on the
Scullers
Company
Net sales
PAT
Total
18-20 are private brands (Rig, Bare, John Miller,
growth of the formats footdebt
Jealous 21, Indigo Nation)
Manchester
print, he adds. It may not be
7-8 are brands with minority stake
United
Future Retail
13,654.77 80.30
(Mineral, Tresmonde, Peprone, Giovani,
possible to open a huge store
Famozi, Desibelle)
5,229.97
Umbro
in an upscale locality. It is eas3-4 Joint Ventures (Clarks, Celio, Holii)
Indigo Nation
ier to open smaller, 5,000Source: Capitaline, Compiled by: BS Research Bureau
6,000 square feet stores and
expand quickly in a more targeted fashion.
That said, the consolidation process
fused with the groups fashion business per
doesnt look complete yet. The group exitse, says Abhishek Raghunath, VP, Phillip
Distribution synergies
ed investments in womens ethnic wear
Capital India. The two demand comacross the group
brand Biba last year, leaving a gap in its
pletely different approaches.
portfolio. The Desi Bell minority stake may
Since the group exited these two
The groups thrust on value fashion, reprenot be sufficient to fill that gap. Similarly,
investments, it has picked up minority
sented by FBB, is evident in the aggressive
the group doesnt have a play in childrens growth targets set for the brand. FBB has a
stakes in over seven brands, including,
wear. That may be another segment to look
footwear firms Tresmode and Famozi
footprint of 31 stores currently, which is
at carefully given Future Lifestyles longShoes and Mineral, a designer label from
expected to go up to 100 by the end of this
term aim to conquer the entire fashion
Priyadarshini Rao. Wherever we pick up
year, adding another 50 next year. Biyani
landscape.
a minority stake, our approach would be
says that FBB is likely to touch the ~3,000PE-like. We will look at maturity of the
crore sales mark by the end of this year.
Building up private labels
investment over time and exit, says
To ensure that the group meets the
A lot has been written about why both
Biyani.
expectations of the price-sensitive, valueonline and offline retailers are investing
Future Lifestyles mandate, consultants
fashion segment consumer, the company
heavily in home brands. The crux of the
believe, wont be purely PE-like though,
has moved to a single distribution centre
matter is that private labels offer margins
following the credo of invest, reap and
model for this vertical. A single warehouse
that are at least 5-10 per cent higher than
exit. The approach may be more strategic
in Nagpur supplies the 10 crore garment
home brands. But the shift in consumer
going forward, with brands and ambitions
units that FBB sells in a year through its
approach to certain categories is also shiftchalked out for each individual brand, givoutlets across India. A separate distribuing the sands in this business. Across the
en the groups overarching portfolio
tion centre manages the lifestyle business
approach to the vertical. Tarkas says, Pure board, consumers are starting to get value
requirements.
conscious. Especially for categories like legfinancial considerations should not be conThe group is gung-ho about its fashion
gings or inner wear where the brand really
fused with brand strategy. The two should
vertical, with a lot more investment flowdoesnt matter, consumers are willing to
not be mixed up. For instance, the group is
ing into this business than any other. There
buy private labels, says Bisen of are no more exits planned for now. We
committed to the footwear business, aiming to growing it beyond the ~1,000 crore Technopak.
dont see any investment mature enough
To give its home brands Bare and Rig a
mark and would invest steadily in brands
or plum enough to be picked right now,
leg up, the group plans to set up at least 10
like Clarks.
Biyani says candidly.
The Future Family Tree
35
>
DOING MORE
WITH LESS
Heres how e-commerce players
are shoring up revenue per
visit or the money a website
makes every time a customer
enters the online
store to stay ahead
in the race
ROHIT NAUTIYAL
One fine Sunday morning, 29-year-old
Nishant Malhotra woke up to non-stop message beeps from his smartphone. Irritated, he
picked up his phone. The first SMS read,
Stop everything and start shopping: Get
extra 40 per cent off only today; 900-plus
products. Code WOW 40. While this offer
came from Gurgaon-based online shopping
portal Jabong, the next message he checked
had information on a similar promotional
offer running on fashion portal Myntra.
There were myriad SMSes from a handful of
other shopping portals urging him to make
the most of his day-off from office.
Malhotra, an avid online shopper, began
his Sunday early but without a whimper
of protest.
s the next phase of consolidation kicks in with Flipkarts

acquisition of Myntra, e-commerce companies realise that
the one metric that will help
them achieve growth is focusing on revenue per visit or RPV, which is a combina-
36
>
CUSTOMERS DON'T LIKE TO BE SOLD BUT

LOVE BUYING AND WELCOME ANY HELP THEY
CAN GET. Good salespeople know this and
focus on fulfilling customer's shopping
mission by offering relevant
recommendations. In the online world,
analytics aims to substitute this
responsive salesperson with three
important differences:
We can leverage a "perfect" memory
and "infinite" computing power to
find what is relevant to the customer
at the moment
We can reconfigure the store layout
and "show" customer only these
relevant things
We can leverage reviews and buying
behaviour of friends/peers
With every action customers are
conveying information about their
attitudes, preferences, life-stage and
socio-economic status. If you regularly buy
a full basket of groceries, but never buy
meat, odds are higher that you might be
vegetarian. What if this kind of customer
understanding can be developed
algorithmically at internet scale covering
millions of customers, billions of
transactions and interactions? We can
create rich customer understanding across
several dimensions. Companies have
developed solutions to understand
customers, decode their "genome" and
use it to make better recommendations.
Once you understand your shopper,
tion of the conversion rate on the website

and the average order value. Mind you, this
is one step ahead of the single-minded focus
on conversion rate visible at the time when
the e-commerce industry was still young.
The smart ones know that while they could
probably double their conversion rate by
cutting all prices in half, this would likely
have a negative impact on the bottomline by
reducing the overall revenue generated.
Watching revenue per visit ensures that the
host site is increasing the rate of conversion without compromising revenue.
Leading e-commerce companies like
Flipkart, Myntra, Jabong and FabFurnish
already claim they are shipping around two
to three and in some cases up to five products for each order received on their website.
you must also learn what she is trying to

do. What search terms did she use? What is
the time of the day, day of the week and
her geo-location? When you search "red
roses" instead of "cheap flowers", Google
results and Ads are very different. In the
first instance, Google shows fewer ads
than in the second instance where Google
"knows" you are more likely to buy.
Understanding customer context can
dramatically improve the relevance of
product recommendations.
Once we "know" the shopper and the
context, we can hyper-personalise her
experience of the store with relevant
products and offers that meet her needs.
This is a problem of plenty analytical
techniques discussed above can prune
and prioritise these offers.
When you see a store having sections
like "people who bought this also
bought this" or "people who
considered this product
ultimately bought this", the
recommendation engine is
at work to personalise the
page. The higher the
relevance of
recommendations, the
bigger is the size of the
SRIKANTH VELAMAKANNI
CO-FOUNDER & CEO,
FRACTAL ANALYTICS
The whole idea is based on simple math

really. Experts peg the cost of acquiring a
customer by e-commerce companies has
come down at `300, down from `1,000
two years back while the cost of servicing
an order has gone up with an increase in
manpower and infrastructure costs. Says
Ravi Vora, senior vice-president, marketing, Flipkart, There is enough noise about
online shopping today and the best part is
that each player is not required to put efforts
separately to draw attention. Today more
than 60 per cent of shoppers on Flipkart
are repeat customers.
In such a situation what will separate
the men from the boys will be the way a
player clubs his offerings and services the
last mile to make the whole process more
37
shopping basket.
If relevant information about our
friends is presented, it can increase
conversion and help shoppers take the
leap of faith required before high
involvement purchases. Advice from other
users is usually seen as credible, unbiased
information and improves customer
conversion and size of the customer's
shopping basket.
Online stores frequently have limited
time offers (for instance, additional 15 per
cent off for three days only) and basket
size-based offers (for instance, additional
10 per cent off if you spend more than Rs
5,000) to create time pressure and
improve size of the customers shopping
basket. Customers can get hooked to these
tactics and stores might find it difficult to
wean customers away from these
expensive tactics.
Stores can experiment by
understanding customer price
elasticity and offering every
customer a unique price at
which they are willing to buy.
So, a store can charge one
customer a high price if she is
price insensitive and offer
another customer
enough discount to
make her buy. When such
pricing is permitted by law, it
can still lead to customer
angst and loss of trust.
efficient. Praveen Bhadada, senior director

at Zinnov, believes, Analytics will decide
the prospects of growth for e-commerce
players. In other words, how well a firm
knows who its customers are, what they
want and how to urge them to spend more
every time they walk into an online store is
key. And what will arm online store managers with this knowledge is customer data
harnessed from the website and other
sources and crunched and put in a shape
that helps in customising each offering.
Discounts are juicier than ever
Coming back to the point on driving volumes by offering discounts, many players
have a similar discount strategy: lure customers into spending a fixed amount of
>
money by dangling the juicy bone of high
discounts, sometimes up to 50 per cent.
Now there are two ways of offering discounts. One is the old school general sale
in which every consumer gets a fixed discount at a certain point in a given category.
The other, and the more new way, is about
creating different catalogues for different
customers. To put it simply, a catalogue
sale is an occasional deal available on a
given assortment for a stipulated time
period. For example on June 23 both
Myntra and Jabong ran a discount deal of
40 per cent on a set of products compiled
in one catalogue. Says Praveen Shah, cofounder and managing director, When we
give incentives to shoppers, the chances of
repeat purchase go up significantly.
FabFurnish follows a variant of the
ticket-size principle to design discounts
and drive volumes. The company claims
that currently the average number of items
on a shopping basket is two/three. The baskets are divided as furniture and non-furniture. While the average order size of a
furniture basket is around `10,000, nonfurniture basket, which may include bed
and bath, dcor, lighting, kids and baby
products etc stands at `3,500. In the last
two years, FabFurnish has tweaked its discount strategy completely. If earlier it was
offering discounts based on the ticket size
that is, the higher the ticket the bigger the
discount now it has fashioned lucrative
offers on smaller ticket prices as well.
Alongside, it has chased this set of buyers relentlessly by improving its product
recommendations. The principle of recommendation works like this: Apart from
suggesting brands and offers, the site will
also prompt other categories of products
that a buyer could buy along with the original product on the list to avail of an extra
discount. The results, the site claims, are as
expected. About 30 per cent of the shoppers
clicked on the recommendations and conversion rate went up by 20 per cent. Says
FabFurnish co-founder Vikram Chopra, If
one does not put some constraint on the
order value, the revenue will go down. Also,
it is the best way of increasing the number
of items per basket.
To drive volumes and cross-category
impulse purchase, Myntra has been running what it calls basket promotions for a
year now. Says the companys COO Ganesh
Subramanian, Picture a scenario in which
a consumer has come on the website to buy
two products. After making the selection
her order value comes to `X. By adding one
more product of lesser value, she will be
able to claim a Y per cent discount on her
order. In most of the cases we have observed
the consumer ends up buying the third
item. What he means is that in doing so the
consumer usually experiments with a new
category. Myntra claims the number of
items per order has gone up by a count of
three products in the last one year.
Catalogues created for women have driven
volumes for the company. Similarly Jabong
has seen a big jump in sales by cross-selling
accessories.
Getting the logistics right
As leading e-commerce companies exit
the phase of customer acquisition to take
on the challenge of customer retention,
logistics will be crucial. Says Shah of
Jabong, When per-order value goes up
along with the number of items, it is viable
for us to pass on the savings to the customers. This is achieved by driving efficiencies in logistics.
Let us try and understand the math. The
cost of delivering two items of the same size
to the shoppers doorstep will not be radically different from what it takes to deliver
one unit. In this scenario, if the ticket size on
a given order goes up by, say, `1,000, an ecommerce company can log savings of up to
20 per cent on its delivery cost, say experts.
How? Take just one element: call centre
charges. When an e-commerce company
outsources call management, it has to pay a
certain amount. If the number of calls
remain the same but the order value associated with a call goes up, it means same
workload and therefore the same fee
for the call centre but higher realisation for
the e-shop.
While most online shopping companies that started off with an inventory-led
business model have cut down heavily on
stocking inventory and moved towards the
managed marketplace model, order aggregation is forcing them to re-evaluate their
strategies. Take this example. Suppose a
customer in Chandigarh has demanded
two products from a website that works
on the managed marketplace model. If it
has to source these two items from two
38
different merchants located in, say, Surat

and Delhi, it is unlikely that both the items
will reach the customer on the same date.
Add the shipping cost the e-commerce
company incurs. Where does it leave loyalty and efficiency?
Subramanian of Myntra the portal
which hopes to be profitable by 2015
says, the website tries to forecast as best as
possible but yes, it doesnt get it right 100
per cent of the times. There is a gap
between demand and forecast, he adds.
But our split order percentage is in low
double digits.
But theres a catch. Delivering more
items per order will demand more investments from logistics partners. Says Sanjiv
Kathuria, co-founder and CEO at e-retail
delivery fulfilment company Dotzot, a
DTDC company, If the weight per shipment is 1 kg or more, we will have to look for
a transport solution other than bikes. To
leverage the network of DTDC and accomplish timely deliveries, Dotzot is planning to
bring some of the best global practices in
logistics to India. Click and collect is one.
As part of this, online shoppers will be able
to pick up and return their orders at multiple booths set up by various players.
Aggregating orders is one answer. But
the task is easier and faster for companies
that stock a major portion of the inventory.
With a number of promotions lined up during any given week Jabong has managed
to increase the number of items per order by
25 per cent from last year. To service its
biggest market of Delhi NCR faster, the company has opened four packaging centres in
the NCR itself. In this way it is able to deliver within 20-24 hours of receiving an order.
In all this shopping portals are following
in the footsteps of their brick and mortar
predecessors. Devangshu Dutta, chief executive officer of specialist consulting firm
Third Eyesight, sums up the trend succinctly: E-commerce companies in India
have to focus on the principle of low price
and low cost. Global players like Amazon
and Walmart have grown by offering lowest
prices and keeping their operational costs
low. Promotions drive repeat purchase that
eventually make up for lost margins and
this is no different for e-commerce companies.
MAKING DOWNTIME COUNT

During a slowdown, limiting idle time could be a sure-fire way to
cut costs. Heres how some smart companies are playing the game
MASOOM GUPTE
ast year was one more difficult
year for the tourism and hospitality industry in India. A protracted global slowdown and a
sharp deceleration in the
Indian economy have been at the root of
their misery over the last few years. High
inflation, especially the sharp rise in food
and utility costs, rising interest rates and
currency volatility have compressed players margins and squeezed their profitability. Unavailability of land, particularly in the metros, and the delay in
securing government approvals stretched
project outlays, undermining investor sentiment
in the sector.
The prolonged environment of eco-
nomic uncertainty and lower economic

growth rate has resulted in reduced travel spends across key business segments,
points out Siddharth Thaker, managing
partner, Prognosis Global Consulting.
Even the fresh inventory coming in doesnt help, leading to further fragmentation
of demand, dragging occupancies down.
The average hotel occupancy rate in
India dropped to a low of 60.4 per cent in
2012-13, marginally higher than the 59.9
per cent occupancy of 2009-10. The average room rate also increased only marginally from ~4,487 in 2008-09 to ~4,507 in
2012-13, a ~20 increase over five years,
according to Federation of Hotels &
Restaurant Associations of India. The net
income for this period fell from 37.9 per
cent to 30 per cent.
39
While average room rents have been

depressed for five years, operating costs
especially labour and utilities have skyrocketed. Things are not expected to turn
around too quickly either. In its
September 2013 report, Indian Hotel
Industry, ratings agency ICRA put out a
negative outlook for the sector for 2013-14,
stating, With occupancy levels yet to firm
up, we do not foresee adequate tractions
in rates during the current fiscal.
If that is the more gloomy part of the
story, the bright side is about how the pressure on margins has forced hoteliers to
focus on operating efficiently. While many
hoteliers have reduced their staffing levels
and are exploring other cost-cutting
options, others are looking to cut idling
costs and make every resource they own
>
count. This has some serious lessons for

other industries.
No such thing as idle fleet
Minor departments become major
HOTEL OWNERS seem to have influenced their

partners along the way as well. In this case,
the fleet attached to the hotel. Most hotels
have outsourced their fleet management to
external partners, with cars stationed within
premises depending on load expected. A few
chains own the cars. These parked vehicles
have found an additional, unlikely partner:
Uber.
An American cab service-of sorts, Uber
launched its operations in India in September
last year with Uber Black, a premier sedanled, on-call cab service. Users can log on to
the Uber app, check for the nearest available
Uber cab and book a ride. The catch is that
the cab pulling up at the consumers
doorstep is not owned by Uber. These are
fleets attached to hotels or rental agencies
that have signed on to take clients on behalf
of Uber. They are not under any obligation to
Uber and work in their free time.
Hotel fleets are beginning to experiment and
explore this option. So, remember that the
next time an Uber cab pulls up, you may just
be driven by the guy who just dropped off a
Fortune 500 CEO.
The revenue streams of a hotel can be

divided into five parts mainly: rooms, food
and beverage (F&B), banquets and conferences, telephone and minor operated
departments. The weightage of each of
these revenue centres in the overall pie
has undergone some shifts over the past
few years. Telephone, for instance, has
become redundant. The proliferation of
mobile phones and the ubiquitous 3G networks may be thanked or blamed,
depending on which side of the fence you
stand for that. Similarly, F&B has gained
a place of prominence, with the eating out
culture seeing a steady uptick and hotels
catering to walk-ins in equal numbers as
hotel guests.
The emerging star may as well be
referred to the minor operated departments. The term encompasses all the conceivable extras that a hotel pools together in its customer service bid. Typically, it
would include services such as laundry,
gift shops, business centre, spa, gym, pool,
news stand, parking etc. Last year, June
onwards we noticed that occupancies had
started dipping, continuing in the vein
for the remainder part of the year. This
year, weve seen the occupancies pick up,
said Sumit Kant, GM and VP, Four Points
By Sheraton. That hasnt stopped the
hotel from looking at activating the ancillary departments for extra revenues.
The hotel has worked out plans for its
minor operating departments like gym,
pool and spa. It does not rely on hotel
guests alone for using these departments
optimally, opening up the services to the
general public. For instance, the hotel has
opened up its pool facility and gym for
wider membership starting last year. Now
it has a membership of over 700. At an
annual membership fee of ~18,000 (plus
taxes) for both , it is proving a serious revenue generator, while the fee remains prohibitive, ensuring that membership is regulated at the same time.
Similarly, the hotel has tied up with
partners for these departments, bringing
in expertise and distancing itself from
non-core areas simultaneously. For example, the hotel has tied up with Mickey
Mehtas Wellness Group for programmes

at the hotel gym and a corporate spa
brand, Aristo, for its largely business traveller clientele.
Even as the hotel focuses on these
select minor operating departments, it
has kept certain others out of the ambit of
the revenue-generation pressure. Taking
on outsourced laundry loads is one of
them. Select five star-chains like Marriott
and Hyatt are known to take on outsourced laundry loads from smaller establishments in the neighbourhood. This
practice is picking up, especially with the
rise of budget hotel chains. These chains
do not have in-house capabilities to manage their laundry loads, given their acute
focus on cost management.
Taking on these additional loads can
prove to be a double-edged sword though.
The hotel taking on the job may not only
40
earn additional revenues but also utilise

its installed capacity optimally. However,
this can bring with itself a unique set of
challenges. The prime one being: logistics. For any outsourced assignment, you
need to have a completely separate logistics mechanism, right down to the
entrance, the in-and-out movement of the
load and its storage. The problem gets
compounded in case of hotel loads. Most
properties use white linens. There can be
cases of mix ups, losses etc. Resources
must then be additionally deployed to sort
out these issues, says Kant. Due to these
reasons, Four Points By Sheraton has
stayed away from such outsourced
assignments. However, the hotel does take
on a load from a regular guest on a chargeable basis, of course, even if they are not
staying with them at that moment. We
have several senior level corporate guests
who stay with us for prolonged durations.
Even after they move out, though, they
like to use our hotels laundry services.
We extend them these services purely as a
way of building our relationships, says
Kant.
Optimisation beyond revenue

generation
Resources tend to lie idle during lean
times. Looking at out of the box solutions to up their usage and earn an extra
buck at the same time is one way of looking at it. The other is to use the downtime
to get the much needed chores done, that
may be an eyesore otherwise.
Vacation owner Club Mahindra doesnt
face the pinch of falling occupancy in the
traditional sense as it has a captive consumer base as well as revenue stream in
the form of annual maintenance fees. But
non-peak season is an inescapable reality
for the company too. We have on occasion put out select inventory with online
travel agents for non-members. But that is
a limited practice. We use the downtime to
mostly get the repairs and cleaning programmes done. The staff is also encouraged to coincide its annual leave with the
lean period, so that we are fully staffed
when the load is heavier, says Deepali
Naair, CMO, Club Mahindra. She adds,
With multiple properties on our plate, it
is also possible for us to shuffle our staff
around depending on requirement.
>
LONG WAY
TO GO
Online grocery companies are mushrooming

but scaling up will be far from easy
DEVINA JOSHI
onsider this: at $360 billion

(~21,60,000 crore), India is the
sixth largest grocery market in the
world. Within this, modern retail
(led by the top eight cities) accounts for

around 20 per cent. If one slices the pie further, you will find that a new kid on the
block online grocery retail is slowly
wedging itself in, and is expected to reach
around 2 per cent of the expanding gro-
41
cery market by 2020, creating a potential

market size of around $10 billion (~60,000
crore).
This niche segment is expected to contribute 10-20 per cent of overall e-commerce jobs, with each warehouse of online
grocery companies employing around 50 to
100 workers depending on the scale of
operations, according to Randstad
India. Since this segment works
with perishable items, there will be
a demand for experienced supply
chain management professionals,
including procurement, inventory
management, cold storage management, quality and logistics, says
Moorthy K Uppaluri, CEO, Randstad
India. Being largely localised, players
will face challenges in attracting the
right talent. Over and above the tough
job of stocking and marketing perishables, there is the hassle of localisation. But these are small problems compared to the overwhelming task of
changing consumer habits.
So why are new players joining the race
in droves? What were the main hurdles that
forced earlier entrants to throw in the towel? Above all, how easy or difficult will it be
to convince consumers to switch from the
local kirana and order cauliflower through
a click?
Fixing the basket of offerings

The selling point for e-grocery is that it
offers more convenience than the neighbourhood store; but to be sustainable they
have to do this cost-effectively. And that is
not the easiest job to pull off.
People are used to either picking up the
phone and ordering from their local kirana
store that offers credit, or making two grocery trips one for the monthly purchase
and another for top-up buys a month at
a nearby supermarket /mall. This has been
the general trend for a long time. To get
people to try e-groceries and to get them to
believe that the products will be delivered
fresh, on time and with post-purchase service if need be, pose a serious challenge.
Add to that the lack of touch and feel in the
case of online perishables FMCGs, by
contrast, are pre-packed, cutting out the
feel factor and the task of selling
becomes a little more onerous.
A way out could be to other
>
tiple SKUs in a single order, and unlike

in the case of electronic products, sinA look at some e-grocery models operating globally
gle SKUs are not necessarily supplied
Company Strategy
Geography/revenues Basket size
with tamper-proof packaging to protect the contents. This essentially
Ocado
Company-owned large distribution centres (DCs) with
UK; $1 billion+
19,000 orders per
investment up to $300 million. Uses limited DCs to serve
day, average
implies higher logistics costs to ensure
the entire country. Uses Waitrose, a chain of supermarorder size $155
there is as little damage as possible to
kets, for a large range of products. Picking is automated
the products.
With fruits and vegetables, we
Yihaodan Uses a hub and spoke model. Own DCs in each major
China, $1-1.5 billion 600,000 orders per
work on a zero inventory policy and
city and hundreds of distribution points. Picking largeweek; average order
maintain a minimum inventory level
ly manual with software assistance
value about $51
in case of packaged food products,
says Rajiv Tetviya, co-founder and
Peapod
Hybrid store-warehouse model. Uses retailer Aholds
US; $0.6 billion
75,000 orders per
CEO, Greencart.in. For fresh produce,
stores as backend for online orders and has wareweek; average
Greencart goes to the vendor directly
rooms located next to stores. Spends $2 million per
basket size $155
usually the farmer or in the case of
warehouse. Picking largely manual with software aid
imported fruits, the agricultural midFreshDirect Single DC in Long Island serving the NY Metro area
US; $0.4 billion
800,000 customers
dleman. At regular intervals, the online
generating 45,000
orders are checked and the farmers
orders per week
informed. Greencart uses cellulose
films (derived from plants) for packaging to protect fresh produce from human
list stationery and art material on its portal.
niches/ancillary products that e-grocery
BigBasket also offers own-brand products touch and environment factors. For leafy
portals could try and service, which could
fruits/vegetables, the company uses custhat have a share of well over 40 per cent in
rub off on the primary offering. This could
tomised cold storage boxes during transthe overall sales.
involve
the
promotion
of
portation. Greencart claims to have a 98.5
Apart from having a rub-off on tradidifferentiated/under-distributed food
per cent success rate of complete fulfiltional groceries, stocking ancillary prodproducts as opposed to undifferentiatment, which means it satisfies 98.5 per cent
ucts could also help improve margins.
ed/over-distributed food and grocery
of its orders.
Groceries yield low margins even in physbrands. Take Godrejs Naturesbasket.
In the case of EkStop.com, the sourcing
ical stores. Typical gross margins hover
com. The portal realised early on that to
of perishables is done real-time through
around 7 per cent for e-grocers. To boost
survive, it had to go beyond aloo-gobi.
agricultural markets in Vashi (Navi
margins, the goal has always been to sell a
Considering that our focus is on offering
more profitable basket to customers that Mumbai) and through wholesalers who
premium gourmet experiences and with a
serve as stock-points within city-limits.
include higher margin products, says
growing proportion of consumers accessing
With 180 employees across four locations in
LocalBanyas co-founder Rashi Choudhary.
the platform through their smartphones, a
Mumbai, EkStop uses a hub-spoke model
dynamic e-tailing site gives us an edge, For example, a section of the portals customers, which is willing to pay a premium for warehousing.
says
Mohit
Khattar,
MD,
For its part, LocalBanya has set strinfor top-quality branded products, try
Naturesbasket.com. The target group? The
gent hygiene and storage standards that its
organic options and even opt for internatime-constrained Indian residing in cities
vendors have to meet before their produce
tional ranges, all of which adds to its overwhere it already has a physical presence.
is accepted in the warehouse. If a customer
all margins.
Another set comprises those who live in
gets a product that is not up to the mark,
That said, the average Indian consumer
areas where gourmet foods are not availthere is a no-questions-asked return policy.
is used to just-in-time purchases rather than
able.
BigBasket trains its people extensively
buying in huge quantities so more often
Or take the 2012-founded Mumbaion handling fresh produce, besides investthan not, the average basket size is subbased LocalBanya, which has gone beyond
ing in chilling/freezing equipment to han~1,000.
standard groceries, fruits and vegetables,
dle storage at its hubs and in delivery vans.
In effect, sustainability hinges on deriving
and stocks exotic vegetables, personal
The e-grocer also ensures that fresh promargins, which in turn, requires a careful
care/household supplies, detergents,
duce spends the least possible time in storanalysis of categories to be served, and, more
kitchenware, breakfast items and packaged
age typically only a few hours to
importantly, smart sourcing.
snacks.
ensure that it remains in top condition
Bigbasket.com, which operates in
Getting a handle on sourcing
when it reaches the customer. We achieve
Bengaluru, Mumbai and Hyderabad, is set
this through direct sourcing, using finely
People know what they are buying when it
to increase its range too by adding pestituned inventory models and using techcomes to packaged food products. But fresh
cide-free/organic fruits and vegetables
nology to predict customer-buying patproduce involves a short shelf life and deft
apart from pre-chopped vegetables.
terns, says Vipul Parekh, co-founder,
handling. That apart, e-grocery entails mulMumbai-based EkStop has gone as far as to
GLOBAL SUCCESS STORIES
42
>
BigBasket.
As opposed to a traditional retailer who
has to hold about 1,000 SKUs on an average at any given time, BigBasket carries
more than 10,000 SKUs. Technology has
been the biggest facilitator in inventory
management; typical inventory turnover
at BigBasket is about 40-45 times a year.
Managing inventory
and delivery
Normally, e-commerce works with a delivery promise of a certain number of days
while with e-grocery, the deadline was yesterday as the adage goes. Internationally,
pick-up-point-based delivery models are
popular but these are unlikely to work in
India. The key reason is that customers
order groceries online to avoid the hassle of
going to the store, and a pick-up will undermine the convenience factor. Besides, India
is a DIFM (do it for me) market as against
the DIY (do it yourself) mindset prevalent
in the West. But unlike the personal care
category, the existing courier-delivery model cannot be used for e-grocery. At any given point, an e-grocery firm deals with 500
vendors at a time, which adds to the complexity.
EkStop brings six, two-hour, delivery
timeslots and like other players, offers free
same-day home delivery. The company has
beefed up its delivery team four-fold since
inception in 2012. Greencart goes so far as
to text its customer should a delivery be
made before time. For same day delivery, it
takes online orders right up to 3.00 am.
Naturesbasket.com uses its offline stores
to manage deliveries, minimising the need
for warehousing. LocalBanya, on the other
hand, tries to create differentiation by letting
users enter up to three addresses as their
delivery destination. In addition, the portal
offers corporate programmes wherein
employees of participating companies get
discounts if they choose to have
their orders delivered to the work place.
Based on order analysis, LocalBanya
uses a mix of JIT (or just-in-time inventory
that comes in at pre-fixed time slots from
vendors and moves out as quickly as it
arrives) and warehousing for product management. LocalBanya, which clocked in
revenues of ~10 crore in FY13, is targeting
~70 crore for FY14, on the back of the 700
deliveries it makes per day through over
Scaling up
GOOD TIMES AHEAD?

If consumers are to fully convert into
online grocery shoppers, some of the key
triggers could be:
Organised grocery retail is under
penetrated and unprofitable due to high
rents and utility bills. As a result finding a
good store, which carries all of what a
customer needs is not always possible
The local kirana is too small, carrying
only 1,000 SKUs, and
hence does not always meet the needs of
customers
Traffic, lack of parking, frequent outof-stock situations are some of the
problems customers face
when shopping through
physical stores
Grocery buying is typically the same
month on month. Hence, customers are
very familiar with the products and dont
feel the need to touch and feel a majority
of the items. For fresh produce, this is an
issue but easy return policies can convert
customers
VIPUL PAREKH
Co-founder, BigBasket
130 employees.
BigBasket also rides on technology for
forecasting, buying and managing inventory. Picking, packing, storage at the warehouses and delivery routes are tech-assisted and deliveries are managed by using
GPS-enabled devices and transport. To differentiate itself from the others, BigBasket
offers customers guaranteed delivery times
with built-in penalties for late or incomplete deliveries.
43
One of the key issues with online grocery is

that it is a local, city-specific operation.
Every time you add a new city, it is akin to
launching the business afresh. This makes
grocery a more difficult category to go
national with, and more challenging in
terms of operations. However, an online
player who builds an efficient model can
quickly scale up across cities, says Parekh
of BigBasket.
EkStops protocol and processes, teams,
corporate structure, marketing, sourcing,
warehousing and logistics have been built
with a copy-paste city-capture model.
Attacking micro-markets to scale the business and having tier-A processes to provide customer delight and drive a robust
operational process is the best approach to
the e-grocery business, says Sumat
Chopra, co-founder and CEO, EkStop.
There are players like Aaramshop.com,
who follow a near-hybrid, asset-light business model. It fulfils orders placed on the
site via the preferred neighbourhood retailer closest to the customer, who will deliver
at the consumers doorstep within a couple
of hours of placing an order. We are leveraging the existing last mile strength of the
independent neighbourhood retailers and
integrating it with the opportunities offered
by the entire digital eco-system, says
Aaramshop CEO and MD Vijay Singh.
By providing contact information of the
nearest retailer, isnt Aaramshop in danger of
becoming a classifieds for kiranas? Not really, says Singh, as Aaramshops revenue model is not based on specific transactions, but
on premium services offered to brands (like
analytics, activations, coupons, advertising
etc) and subscription-based privilege services for retailers. The attempt is to enable
engagement between retailers and customers, be it through walk-ins, phone-based
orders, online orders or even a mobile app (to
be launched in August). Aaramshop currently operates in 35 Indian cities with 3,500
retailers with an access to 2.5 million urban
households.
Experts still feel that for an e-grocery
company, a localised operation may be
viable, but a scaled up version of the same
is where the model could get stressed. Our
advice: Go hyper local with e-grocery, even
while thinking of acquisitions.
>
GETTING OFF ON
THE RIGHT FOOT

As the Indian footwear industry
becomes more organised,
players are honing their
forecasting, distribution and
display skills to woo the
fashion-conscious buyer
ROHIT NAUTIYAL
hat could possibly be the significance of a footwear collection placed neatly at the window of the store of your favourite brand?
While to the average shopper it would
appear to be a preview of the latest fashion trend in the industry, for the canny
store manager it could be articles that
the company wants to push during a given time period. It has little to do with
creative fancy, and is based on some
hard-nosed forecasting built on facts,
intuition and an eye for whats next.

Things get trickier when one considers the size and the complexity of the
footwear market. The footwear market
in India stands at ~35,000 crore and is
expected to touch ~38,500 crore by 2015.
Within this market you have everyday
shoes, special occasion shoes and special purpose shoes.
Just imagine the forecasting challenge, trying to figure out the popularity
of each new design or shape or material
used months in advance. You can well
imagine the financial risk as well: make
44
too few and you lose sales and annoy

customers; make too many and you are
stuck with unsold or perhaps
unsaleable inventory.
Here it is important to understand the
difference between short-term forecasting and long-term forecasting. Most
trends that you see on the Net or in magazines come from fashion shows and so
it is easy to foresee what might work for
the next one-to-two-year cycle. Then
there are trends that are forward thinking
for instance, a breakthrough in the
materials used or in the architecture of a
>
ing over the best way of colIII consumer. We figured

lecting data is pointless.
that a shoppers location
Making new designs availhas no relation with her
able and replenishing stocks
taste in fashion. It is more
quickly are equally imporregion
specific.
For
tant. Says Gupta of Liberty,
instance, we discovered that
If channel partners dont
shoppers in the north-east
see any ROI, the axe will fall
India are more fashion-conon the manufacturer. In
scious than buyers in many
footwear, the lag between
metros . In effect, tracking
procuring raw material to
street fashion in the northsending the inventory to the
east can give valuable
Other than studying store is three to six months
insights into what will work
the previous years
on an average. The going
and what wont, enabling
data, we look at
gets tough for players who
the right business decisions
operate through the franfor companies navigating
how a shoppers
chisee model. Five years
an extremely competitive
product preference
ago, Liberty was stuck with
landscape.
and frequency of
dead inventory running into
Heres one player who
visits change
lakhs. The problem ran
learned that shopper data
across key functions like
has strategic importance
SUMIT KUMAR
design,
manufacturing,
and not just tactical beneVICE-PRESIDENT & HEAD,
logistics, and supply chain.
fits. In the late 2000s,
MARKETING AND
By 2008 things were almost
Liberty Shoes was facing a
CUSTOMER SERVICES, BATA
out of control. There was no
serious erosion in market
Know your customer
logic behind forecasting,
share with very little insight
especially at the distribuon what the new buyer
First let us understand how forecasting
tors and retailers end. If a particular
wanted. As it turned out, the problem
works in footwear. Largely, companies
range sold well, the distributors and
lay in its distribution model. Till the midin the organised segment forecast fashretailers responded by placing big orders
ion trends and sales twice a year: spring- 2000, it operated through exclusive franchisees who met twice a year to give their of that item. In some cases when demand
summer and autumn-winter. There are
dropped, franchisees were left with six to
inputs on the kind of
some exceptions. For
12 months of inventory and limited workdesigns and price points
instance, Bata and Reebok
ing capital.
that would sell over the foldo more than four forecasts
This issue hit Liberty hard when it
lowing months. The compain a given year. For the purrealised that new products were not makny realised that to get a betpose of forecasting, these
ing it to the retailers shelves. The comter handle on emerging
brands rely a lot on historipany voluntarily started giving small
trends it had to own stores.
cal data. Says Sumit Kumar,
batches of inventory with margins in the
Today, the company has 100
vice-president and head,
range of 24 to 30 per cent to its channel
company-owned and 450
marketing and customer
partners. This too failed as distributors
franchised stores.
services, Bata, Other than
and retailers started demanding higher
While forecasting, the
studying the previous years
margins. When we returned to the drawcompany slices and dices
data, we look at how a shopSince it is impossible data captured at the compa- ing board, our first lesson was to work
pers product preference
to get the forecast
with a conservative forecast. In India, a
ny-owned stores. Admits
and frequency of visits
right all the time, in Adesh Kumar Gupta, chief pair of shoes is still a need, adds Gupta.
change.
any fashion
While Indias per capita shoe consumpexecutive officer, Liberty
Tracking consumer data
can sometimes offer mindcategory, it is best to Shoes, It was impossible for tion is one pair (the number may go up to
two-three pairs for consumers living in
us
to
boggling facts. Says Asif
react fast to market
the metros in India), in the US it is
get genuine data on sales
Merchant, managing direcdynamics
between seven to 10 pairs. Liberty decidand shoppers from frantor, Catwalk Worldwide,
ed to identify the constraints in each
chisees.
Companies have the tenKIRAN KOTHEKAR
department, leading to overhaul of its
dency to pigeonholing the
Reach on time
DIRECTOR, VECTOR
business model.
shopper into location cateCONSULTING GROUP
That said, footwear compaThis course correction was kicked off
gories like metro connies also realise that obsessby the company five years back. Says
sumer or the Tier-II andpair of shoes that have staying power
and require more thorough investigation. In other words, trend spotting and
forecasting is a continuous effort. Done
properly, this gives a brand/retailer a
heads-up on the changing demands of
their consumers and helps minimise
dead stock.
Before we proceed, we would like to
add that our research is based on conversations with some national and international brands that dominate the organised segment and represents about a
third of the total market; the remaining
two-thirds is controlled by several small
and unorganised players. When it comes
to design, the organised market emulates
the trends in mature markets like the US,
France and Italy. With more international players entering the country, the
industry is under constant pressure to
raise the bar with regard to manufacturing, logistics and supply chain management.
45
>
Kiran Kothekar, director of Mumbaibased consultancy Vector Consulting

Group, Since it is impossible to get the
forecast right all the time in any fashion
category, it is best to react faster to market dynamics. Around 2011 Kothekar
was roped in by Liberty to help the company execute its plan. In the first year,
the company changed its supply chain by
setting up a central warehouse in
Panipat. In the second, it worked to
strengthen its relationship with distributors and franchisees. Distributors are
allowed to hold inventory for 30 days
now. To ensure speedy replenishment,
Liberty began contacting its distributors
and retailers on a weekly basis to take
stock of what was selling. The lead time
between the manufacturing and replenishment at the store was brought down
from 90 days to 21. The consumptionbased pull system, as opposed to a
reorder point system ensures lower slowmoving inventory in stores as supplies
are made as per sales rate, not minimum
order quantities.
As soon as this was achieved, the franchisees were asked to improve assort-
ment at stores. The company narrowed

down its product range to 3,000 models
per year. It started killing slow-moving
SKUs, replacing it with new models. The
new ranges were classified as bestsellers
and innovation. Bestsellers (models that
sell consistently through the year) comprises 70 per cent of Libertys production target. The innovation category
includes models displayed in high street
stores. With these moves, the company
was able to cut down on its discount percentage during a sale period to 5 per cent
from 14 per cent a few years ago.
Put up a great show

Outdoor brand Woodland, which operates 500 company-owned stores across
India, has put the onus of inventory management on its store staff by making
inventory turnover a key performance
indicator. The company keeps a close
watch on how every store meets its sales
targets. Says Amol Dhillon, vice-president, strategy & planning, Woodland,
Usually area managers prefer placing
bulk orders to stock maximum inventory. This helps them show numbers. When
46
they are not able to meet targets, the next

step is to move the distress inventory in
clearance sales twice a year. We discourage this by allowing them to stock four
months inventory.
The company also uses select stores
located across metros for soft launching
new products. Currently it is conducting
a soft launch of its premium outdoor gear
that includes high-end walking sticks,
solar power charger, waterproof mobile
phone covers, sleeping bags etc. Since all
these products are manufactured in Italy,
it is crucial for Woodland to get its forecast right in terms of the potential of the
market in India. The data captured here
will be played back to the company and
production targets will be modified
accordingly. The time Woodland gives to
a soft launch is between 15 and 30 days.
To push sampling of products priced
in the premium and medium range,
Woodland will soon come up with
experience centres with an average area
of 20,000 sq ft. The company also plans
to enhance the consumer experience
with drastic changes in its visual merchandising strategy.
>
A Honda Amaze car on the

production line at the
companys plant in Greater
Noida
KEEPING IT SIMPLE
Japanese auto makers are experimenting with shop floor
flexibility to keep costs on a tight leash
ABHILASHA OJHA
hen Maruti Suzuki India

launched the highly successful
compact car Swift in 2005, followed up by the sedan Swift Dzire in 2008,
there was commotion in the board room
instead of celebration. While the companys
dealers were asking for bigger stocks, its
production managers were splitting hairs
over how to meet the growing demand. As
the waiting time for customers kept
increasing from two to six months its
engineers went back to the drawing board

to look for ways to cut production time.
Among the first things the company did
was abolish the idea of keeping two separate production lines for the two cars. The
key was to make the production process
flexible so that multiple variants of the two
car models could be manufactured on the
same line. While the move helped speed
up the assembly process, there was one
more step that Maruti Suzuki engineers
took they reprogrammed the assembly
line robots to automatically adjust to the
47
contours of the car model on the line. The

flexibility as Rajiv Gandhi, executive
director (production) Maruti Suzuki India,
puts it, expanded production capabilities
by transforming the existing production
line into a faster, more precise operation.
It was a simple adjustment at the shop
floor but it was one that allowed Maruti
Suzuki to cut out the prospect of worker
fatigue or of adding costly labour.
Since then Swift has raced past the million-unit sales mark (in 2013, in a little over
eight years). Today, it is the second-largest
>
EXPERT TAKE
Learning from Toyota

THE OVERALL STRATEGY OF LEAN PRODUCTION
SYSTEMS IS THE SAME FOR DEVELOPED AND
EMERGING MARKETS: perfect quality, lowest
cost, just-in-time with high safety and
employee morale. That does not change.
What does change are the specific vehicles
that can be sold in a market. For example,
Toyota has been caught without enough
low-cost options in emerging markets like
India and China and has had to develop
new vehicles for those markets. Toyota
always has the philosophy of investing in
team members, including stable
employment. In emerging markets where
turnover of hourly employees is common
for small increases in pay, Toyota has had to
work to retain its core group of team
members. Investing in team member skill
and creating efficient workplace also means
there is less pressure to use automation as a
way to reduce cost.
There are other opportunities. So even
in expensive Japan, Toyota often will use
less automation than its competitors.
People are the most flexible resource and
automation is a fixed capital cost. Of course,
in developing countries where labour rates
are lower, Toyota can use even less
automation and rely more on people. Yet,
Toyota still works very hard to be highly cost
efficient, whether in an expensive
developed country or a developing country.
selling car in the country with close to 2

lakh units sold annually. For its part, Swift
DZire became India's best-selling car last
year, ending the Alto's long stint at the top.
Robots have been a part of automotive
manufacturing for decades and not just
in Suzuki factories. But as a new generation
of safer, more user-friendly robots emerges,
they are working more closely alongside
humans, making processes faster and flexible, thus freeing up valuable corporate
resources. Here, we will take a look at some
new techniques (aside from automation)
that Japanese automakers long hailed as
JEFFREY K LIKER
Professor, Industrial and Operations Engineering,
University of Michigan,
& author, The Toyota Way
The automation philosophy to be

followed, as I have mentioned in my book,
The Toyota Way, are:
Use technology to support people, not to
replace people. Often it is best to work out a
process manually before adding technology
to support the process.
Conduct actual tests before adopting new
technology in business processes,
manufacturing systems, or in products.
Reject or modify technologies that conflict
with your culture or which might disrupt
stability, reliability, and predictability.
Consider all new technologies when
looking into new approaches to work.
ambassadors of manufacturing excellence

globally are adopting in India to make
their assembly lines more efficient.
Begin at the beginning

Analysts reckon that 60 per cent of the cost
of a car comprise investment in the production facility while 20 per cent is
accounted for by the parts/components
that actually go into making the car (the rest
being labour and marketing costs). This
means the idea of keeping costs low should
kick in right at the beginningthat is, when
setting up or refurbishing the production
48
Quickly implement a thoroughly considered

technology if it has been proven in trials and
it can improve flow in your processes.
This does not mean that companies can
avoid technology or be afraid of introducing
new technology. It means companies
should be thoughtful about technology,
studying all the implications intensely
before jumping on the bandwagon. Think
about how it will affect the overall flow of
material and information. Consider
implications for stable employment of your
team members. Consider all the life cycle
costs. Consider how user-friendly it is for the
operator and for those who have to
maintain it. Consider opportunities to
improve your current process so you are
comparing a very lean process using the
technology you have to new technology
rather than comparing an inefficient
operation with a lot of waste to the
alternative of new technology. The
balancing act is thinking, studying, and
continually improving instead of
thoughtlessly doing simple cost-benefit
analysis and jumping into major
investments for new technology.
In my opinion many companies have
such great opportunities to improve the
processes they already have, with very little
capital investment, and should focus on
that before spending a lot of money on
advanced technology.
facility itself.
Take Toyota Kirloskar Motors, which
has taken simple steps at the shop floor to
cut wastage. So instead of having cars dangling down from ceilings, the cars at its factory are rolled on a simple raised platform.
This helps in keeping the height of the ceiling at its factory lower, thus reducing building costs. It also helps if you are thinking
ergonomically line workers can concentrate on a stationary object placed at eye
level, rather than constantly looking up
and reaching out for a vehicle under construction. Then, instead of moving along an
>
assembly line vertically (engine to boot),

the cars in some instances move sideways (imagine a parking lot in the mall or
next to an office building). This step allows
the line to be 35-40 per cent shorter than
those with cars lined up vertically, leading
up to a smaller factory where investments
are much lower.
The companys automation strategy
hinges on multi-tasking robots and at
reducing the size of machines to be able to
build smaller plants at new locations.
Work along the way

Some automakers are looking at solutions
that will allow lines to get lengthened or
shortened at will or on building special
paint spray lines that will allow the three
coats of paints to be applied on top of each
other while they are still wet so as to eliminate the extra time for them to dry out
completely.
For Honda India, the blueprint for a
low-investment plant came from the companys plant in Yorii, in Saitama Prefecture,
Japan. At this factory high-speed welding
robots make the car body frames, advanced
hemming machines shape doors and
hoods, and 3D printing cuts the need for
prototyping to some extent. The advanced
production line has reduced the number of
the total processes by 9 per cent and cut the
assembly lead time by 18 per cent.
By replicating the whole process at its
facility in India, the company has cut the
risk of trial and error. It spends more of the
management time in learning the peculiar-
ities of the Indian market. Its plant in Alwar

which until the roll-out of the Amaze was
producing body panels and engine components only is remodelled in such a way
that different variants of different car models (whether petrol or diesel) can be assembled keeping in mind ebb and flow of customer demand.
For its part, Nissan (which operates in a
strategic partnership with Frances Renault
through a cross-shareholding agreement
since 1999) depends on local sourcing to
reduce the cost burden on its books. In a
departure from its usual machinery sourcing
policy, Nissan has taken on Pune-based
PARI for its plant in Chennai as well as for a
new line producing engines in Europe, at
Clon (a major Renault powertrain plant),
near Rouen, France. Sourcing equipment in
Chennai has been a great opportunity for
the Renault-Nissan alliance to discover new
suppliers. In addition to sourcing machinery,
the alliance also has two logistics platforms.
These are for sourcing and shipping components from Pune and Chennai for Renault
and Nissan plants abroad.
The company has tried to make the production system at Chennai as simple as possible using a lot of manual processes to build
in flexibility. It follows a random production method (that is cars are built to order;
however, the difference between build-toorder in India and elsewhere is that the customer in India wants the car immediately. So
the build orders are based on dealer predictions), under which it can make changes on
the assembly line based on the platform or
49
model. These can be made in batches as low

as a single unit.
Look at the extent of flexibility its
assembly line affords. It is able to accommodate up to four different platforms and
eight different upper bodies. This is
enabled by a clever jig-changing system, a
little like what Nissan does in China, but
further improved by taking the best of both
Renault and Nissan. For example, for making all the closures, the AIMS way is to use
roller hemming as this is much more flexible than clinching by presswork. All this
has helped the company to bring down the
jig changeover time to 10 seconds, the same
time it takes for the body to advance
between stations.
According to Toshihiko Sano, CEO and
managing director, Renault Nissan
Automotive India, Production of multiple
vehicles of different brands in the same
manufacturing facility is the unique advantage of the company. The company has
also introduced simple innovations in the
factory building and at the paint shop
specifically to reduce wastage. The paint
shop, for instance, has installed a special
system (first of its kind in India) to cut water
wastage completely. The Chennai plant of
Nissan-Renault has also installed a threewet painting system under which the car is
dried only once, instead of three times,
which is the norm. Also sections of the factory roof are fitted with transparent sheets,
allowing for natural light to illuminate the
floor.
>
ONLINE
ONLY
Why bran
ds like Mo
torola, Xia
and Philip
omi
s are flock
ing to onl
ine
marketpl
aces
ROHIT NAUTIYAL
n November 2013, while discussing the

re-entry strategy for India, the top brass
at Motorola Mobility balked at the
sight of competition. About 44 million
smartphones were sold in the country that
year (IDC estimates), up three-fold over
2012. (Total phone shipments in the country stood at 257 million units, up 18 per cent
over 2012s 218 millions.) All major global
brands from Samsung to Sony, Apple to

HTC were in the fray besides a clutch of
nimble-footed home-grown brands such
as Micromax and Lava. In that scenario,
the company surmised, speed to market
could clinch it for a brand aspiring to grab
even a minuscule share of the market. The
only way to play the game, Motorola figured, would be to focus on price and dis-
50
tribution.
So after pricing its second-inningsopener Moto Gs 8GB variant at ~12,499 and
the 16GB at ~13,999, the company initiated
talks with Flipkart to sell them exclusively through its online marketplace. That was
certainly a bold step for a company that
largely sold its mobile handsets through
retail stores globally. Had it failed, everyone
would have written off Motorola as being
foolhardy. But to its amazement, Flipkart
went out of stock within 15 minutes of
opening 16GB Moto G orders for the first
time and then in one hour the second time.
The 8GB variant too sold amazingly well.
Since February Motorola has sold over a
million handsets of Moto G, Moto X and
Moto E on Flipkart.
What are the lessons for brand
marketers
from
Motorolas
tryst
with Flipkart?
Who wants to sell?

Let us understand the groundwork a company needs to do
before bringing its offerings to
consumers through physical
stores. The first option for a company looking to sell handsets
through brick-and-mortar stores
is to build its own distribution
network. The second option
involves roping in an established
distributor. For instance, if an OEM
is importing handsets from China, it
has to first look for a national distributor who will make a margin on
the deal. Regional distributors who
come at the second stage of this chain
will also keep a margin before the
product makes it to a retail store. A
third slice of the margin goes to the
retailer. The overall channel margin
ranges from 6 to 15 per cent. So a company looking to test waters or trying to
knock-off the mark-ups along the way
could follow in the footsteps of a Motorola
or a Xiaomi, and enter the market through
the online route (Chinas Xiaomi has an
exclusive partnership with Flipkart to sell
its flagship Mi smartphones). This cuts out
overheads such as rent, salary of store staff
and relevant IT infrastructure.
Had Motorola chosen to build its distribution network from scratch through
the traditional channel, the price of its
>
Selling exclusively online

helped Motorola control
pricing and pass on
the amount saved along
the value chain to
its customers
Going exclusively online is the

choice of companies that
accept e-tailing as the future.
The leadership of a company
should have the guts to
embrace the online channel
Going online does not mean

that we are cutting corners by
not selling through physical
stores. An e-commerce
platform can ensure the
desired reach for products
AMIT BONI
MICHAEL ADNANI
RAHUL TANEJA
GENERAL MANAGER & COUNTRY

HEAD OF SALES, MOTOROLA MOBILITY
VP, RETAIL & HEAD, STRATEGIC BRAND

ALLIANCES, FLIPKART
SENIOR DIRECTOR, BUSINESS HEAD,

CONSUMER LUMINARIES, PHILIPS INDIA
handsets would have gone up by ~3,000~5,000 in the least, claim analysts. So for
a relatively late entrant, the compulsions
for going online are understandable. But
does it make sense for companies with
well-established offline distribution networks to push their offerings exclusively
through an online platform? The answer is
an overwhelming no. Explains Karan
Thakkar, senior analyst, research at IDC,
In doing so, the company will end up
upsetting the trade. This strategy is not
good in a country where retail is big and
largely unorganised.
It is not as if Motorola dismissed the
brick-and-mortar channel right at the start.
Says Amit Boni, general manager and country head of sales, Motorola Mobility, It was
a combination of scale and speed that reaffirmed our faith in partnering with the
countrys biggest e-commerce company.
He has a point: Flipkart, the largest e-commerce marketplace in India, has close to
22 million registered users.
In Bonis opinion, selling exclusively
online has also helped Motorola control
pricing (here Boni is referring to the fact
that the same product is listed on different
websites wearing different price tags) and
pass on the amount saved along the value

chain to its customers. Through traditional retail, it may take close to 30 days for
a new product to percolate down the distribution channel. Additionally, since
mobile handsets are sold in various organised and unorganised single and multibrand stores, the consumer experience is
seldom standardised, he adds.
Sounds good, but what about reach?
Indias internet penetration data doesnt
really paint a rosy picture. As per TRAI
data, Indias internet subscriber base stood
at 238.71 million as on December 31, 2013.
Though the number of internet users is
high, internet penetration in the country is
still much lower than most countries across
the globe. The latest report from research
firm eMarketer points out that India has
had the lowest internet penetration growth
in Asia Pacific at 17.4 per cent so far this
year. What does this mean for a company
toying with the idea of selling exclusively
online?
Obviously, it will lose out on millions of
potential customers who are not necessarily online. Next, this way of selling has no
room for the most decisive part of shopping touch-and-feel. The likes of Flipkart,
51
Snapdeal and eBay may disagree with that

contention because in last three years ecommerce has prised open two of the most
touch-and-feel categories apparel and
furniture. They have an endorser in
Motorolas Boni who says, Our research
shows touch-and-feel is overrated. Even if
we consider organised retail, only a couple
of stores allow consumers to try their hands
on a real handset. Usually one gets to see a
dummy phone. Agrees IDCs Thakkar,
Touch-and-feel is not the main criterion in
decision-making in electronics anymore.
Consumers are willing to spend online as
long as the product is genuine and comes
with manufacturers warranty.
That said, Motorola itself might have
underestimated the value of going online:
it got the launch demand forecast wrong
twice first at the time of the launch of
Moto G, and then again during the launch
of Moto E in May 2014. Boni says the company managed to address only 40 per cent
of the overall demand in the first two days
of the Moto E launch. Given its experience,
Motorola says, it intends to keep half a million units in stock for day one of the next
launch. Indeed when Motorola Indonesia
was working on the launch of Moto G in
>
that country, it fell back on the experience

in India to project sales and ensure there
was no stock-out. Now the company is
working on extracting valuable demographic data from the sales data on Flipkart.
Motorolas association with the e-commerce company has also helped it generate
user content relating to its new phones. At
this point, there are more than 2.5 lakh
reviews of various Motorola handsets on
Flipkart.
Who wants to buy?

Post the successful run of Motorola and
Xiaomi on Flipkart, many more companies are looking at this platform seriously and trying to slice and dice
available data to understand
the consumer better. When it
comes to buying smartphones
online, available data shows,
shoppers dont worry too much
about the price. A ~15,000-plus
handset can easily fly off the shelf if
the consumer thinks it is worth every
buck on its price tag. Buyers scouting
for deals on electronic products that are
on the expensive side mostly come from
Tier-I and-II cities. Tier-III consumers are
anyway off the radar for
nership with Disney,
most smartphone compaPhilips Lighting has also
nies. In the last five
Touch-and-feel is not
decided
that
its
months we have seen
the main criterion
Imaginative Lighting
demand coming from
while buying
Range for kids (aged
places
like
Satara
electronics online.
between three to seven
(Maharashtra), Silchar
Consumers are
willing to spend as
years) is best sold on
(Assam) and Adilabad
long as the product is
Amazon. Priced between
(Telangana), says Boni.
genuine and comes
~800 and ~5,000, these
While buying electronwith a warranty
products are targeting
ic products online, the
affluent young parents
biggest concern for a
who frequently go online
shopper is to get genuine
to scout for quality products for their kids.
products without any damage. Here the
Says Rahul Taneja, senior director, busicredentials of the e-commerce company
ness head, consumer luminaries, Philips
plays a key role and can sway consumer
India, This partnership with Amazon is
decision in a big way. Michael Adnani, vicenot meant for cutting corners by not selling
president, retail and head, strategic brand
alliances at Flipkart, says going exclusive- through physical stores. We believe a strong
e-commerce platform can ensure the
ly online is mostly the choice of compadesired reach for such products.
nies that accept e-tailing as the future of
Philips Lighting already sells some of
retail. The leadership of a company should
its products on e-commerce platforms like
have the guts to accept this change, he
Flipkart and Snapdeal. Also, its market
says.
research shows that kids-only brands do
Mind you, mobile companies are not
the only ones gravitating towards online not enjoy great reach in this country. In
fact, UK-based retailer Mothercare and
marketplaces. As part of its strategic part-
52
Mahindra
Retails
Mom & Me are the only two brands with a
wide presence and therefore high recall.
Given this scenario and given the fact that
a Disney-branded lighting range, in all
probability, will appeal to a customer who
is already purchasing a lot of stuff online, it
was not difficult for Philips to figure which
basket to put its eggs in.
Going forward, the company says, it will
make the Imaginative Lighting Range
available in brick-and-mortar stores as well.
Says Taneja, In the decorative lighting category, the advice of the store staff can help
customers make the right choice. The
advice is customised based on the requirements of the customer. I dont think such
support can be provided as effectively
online.
>
INFOSYS
SHYAMAL MAJUMDAR &

BIBHU RANJAN MISHRA
ishal Sikka keeps shaking his head to

stop the steward from refilling his
plate every time he shifts his attention to something else. This is Indian culture. They want to pamper you, quite unlike
in the US where you are expected to help
yourself. You feel flattered, but you tend to
gain fat as well, Infosys new managing
director and chief executive officer jokes
during a lunch he hosted for the media on
his first day in office on August 1.
But Sikka seems to have already found a
way to control the after-effects of all this
pampering. A colleague recounts his experience of finding himself far away from the
office while discussing something with
Sikka. Thats because the CEO has this habit
of walking for miles to work out a strategy,
often taking along colleagues with him. I
am now wiser. Infosys has a 170-acre com-
NEW APP
Vishal Sikka, the IT services firms highprofile servant-leader, wants to go fast

forward by pressing the innovation key.
Will it click?
53
>
GAME OF THRONES
successfully emerged from the shadow of a

founder-predecessor.
Staying with the IT industry, consider TCS
DEVINA JOSHI
founder FC Kohli and his successor S Ramadorai.
Ramadorai took over as CEO in 1996 when TCS
onsider this. Twenty years after he founded
earned just $100 million and had 6,000
the company Dell in his dorm room,
employees. Under Ramadorai, the company
Michael Dell passed the reins over to Kevin
grew to $6 billion and came to be counted
Rollins, a former Bain partner. But Rollins was
KV KAMATH
among the worlds largest global software and
unable to match up to the legendary founder.
Non-executive
services companies. FC Kohlis strategy and
Under his leadership and attempts to alter
chairman, ICICI Bank
business model was scaled up by Ramadorai
what the Dell stood for, the company faced
and his team to a level no one imagined was
customer service complaints, growing
VIVEK PAUL
possible. Now take ICICI Bank. When KV Kamath
competition from HP and IBM, and an SEC
returned to the ICICI fold as managing director
investigation into its accounting. When Rollins Former viceand CEO of ICICI Bank in 1996, he immediately
resigned in 2007, Michael Dell returned to make a chairman, Wipro
instituted a series of changes that successfully
turnaround. A similar tale unfolded at Starbucks when its legendary
transformed the project finance entity into a
founder Howard Schultz retired in 2000 handing over the baton to
retail finance powerhouse. Over the years he
Orin Smith and later, to Jim Donald (2005). Both these leaders were
led ICICI Bank into areas such as insurance,
responsible for overexpansion, a move that impaired the fortunes of
retail lending, internet banking, online
the brand till Schultz returned in 2008 to take charge. The pressure
S RAMADORAI
trading, business process outsourcing and
of the larger than life halo effect of a founder is always felt by his
Vice chairman,
commodities trading. Interestingly, under his
successor, says Aditya Narayan Mishra, president, staffing,
(non-independent,
successor Chanda Kochhar ICICI Bank gave up its
Randstad. Strong impressions in the minds of stakeholders, after all,
non-executive), TCS
earlier philosophy to be the biggest in
are difficult to erase or match. Even if a legacy founder has no
everything it did. It is now less of a risk taker; it
direct operational role, his words carry weight. So he
The pressure of
is focused more on credit quality and capital conservation
should consciously distance himself from daily
the larger than
than on all-or-nothing growth. In a way, Kochhar has
operations and give enough room for his successor to
life halo effect
dismantled the very ICICI structure she has grown up with,
grow using his own unique strengths, he adds.
of a founder is
say analysts.
Look closer home, and a similar story seems to have
always felt by
his successor
Looking out of India, a more recent example of a
played out in a host of companies. When Vivek Paul,
successful change of hands would be at Apple, where
vice-chairman of the company at that time, put in his
Tim Cook replaced founder Steve Jobs. The two couldnt be more
papers at Wipro citing restlessness at the organisation, founder Azim
different: Jobs was brilliant, fiery and prickly, while Cook is said to be
Premji faced a delicate situation. Paul was a star performer and a sort
even-keeled, methodical and quietly persuasive. Cook seems to be
of brand ambassador for Wipro. On the other hand, Premjis old guard
doing alright, managing to move out of the shadow of Jobs and not
was becoming resentful, and something had to happen. One cant
crumbling under investor pressure to reignite growth with
really say if Premji felt upstaged by Paul, but theres a thought.
breakthrough products.
That said, there are quite a few examples of new CEOs who have
plex. I would better have my walking shoes

on before meeting him, the colleague says,
with a smile.
Shedding the flab, however, is the least of
the challenges that the 47-year-old PhD in
computer science from Stanford University
faces as he begins his innings as Infosys
first non-founder CEO. The real problem is
getting Infosys out of the widespread perception that it has lost its plot and is in a crisis-like situation something that forced
NR Narayana Murthy to come back from
retirement before handing over the baton to
Sikka. Though the numbers have improved
somewhat, the fact is that the 33-year-old
company has lost its bellwether status to
Tata Consultancy Services in the last couple

of years. Worse, it has been overtaken in
profit and revenue by Cognizant, and even
HCL Technologies is giving it a hot chase.
For 2014-15, Infosys revenue guidance is
much below that of industry body
Nasscoms. Infosys employee attrition hit a
record high of 19.5 per cent in the AprilJune quarter of 2014-15 and the company
has lost more than 10 senior executives in
the last one year.
The other question of course is how the
160,000 Infoscions, especially the senior and
middle-level employees, would react to the
transition to an outsider CEO. Will investors
continue to have patience with the new man-
54
agement for long? The man himself is trying

his best to play down expectations by saying
Infosys could do without the intense scrutiny. The results that you see now are the
results of activities that were done quarters
or even in some cases years ago. Therefore,
no matter what we do now will be reflected
on our results after a certain amount of time,
Sikka says.
Others agree about the challenge Infosys
faces in acceptance of the new CEO. From
a cultural perspective, Infosys is a deeply
inwardly focused organisation, and what
Sikka brings in is an outsider approach. But
that will be healthy for Infosys as the new
CEO will bring a fresh perspective and a
>
el employees and ask them to show him
the best software codes they have written.
While he wanted to have a first-hand experience of the kind of work Infosys did in the
past, his move had an opposite effect. Many
of the employees reached out to their
friends and former colleagues and even
recruitment firms assuming that perhaps
their days are numbered. It took lengthy
discussions before employees were convinced about the real reason.
Infosys, thus, has big plans for employee engagement to make a break from the
overhang of the larger-than-life presence of
the founders. Srikantan Moorthy, HR head
of Infosys, says Sikkas endearing personality would help break the ice faster. But
Sikka obviously wants a more tangible
demonstration effect and that is why the
company has started an initiative, called
Murmuration, to crowdsource ideas from
all employees in significant areas of operation. Murmuration is a word used to
describe a flock of starlings, a species of
birds that is highly social hence the relevance to crowdsourcing. The idea has
worked as 2,400 substantive ideas have
already come in, which Sikka and Praveen
Rao, the chief operating officer, would personally look at.
I believe in Rabindranath Tagores servant-leader model. No one man can have
monopoly over innovation anymore, Sikka
says. He is also engaging with the employees quite vigorously through town-hall
meetings and blogs, and wants to take classes regularly both the online and physical
versions.
The CEO as a brand
A file photo of Infosys founder NR Narayana Murthy with CEO & MD Vishal Sikka in Bangalore
customer-oriented perspective, says Peter

Bendor-Samuel, founder & CEO, Everest
Group.
Focus back on employees
Sikka says he is deeply aware of the emotional attachment that many employees
still have with the founders, all of whom
have left the organisation for the first time
and his first task would be to assuage their
concerns. But he believes what Andy

Grove, the founder of Intel (Sikka was once
an intern at the chip-maker), once said
about founders of iconic companies:
Founders instincts should be institutionalised through processes.
Thats easier said than done as the old
instincts are still strong. For example, one
of the first few things he did even before
taking charge was to reach out to senior-lev-
55
His global brand equity is perhaps the

greatest thing Sikka has brought in apart
from his intellectual prowess. He is known
in the C-suites of all leading global companies and when he talks, people all over the
world take him seriously. He would have
to become a visible standard bearer for the
Infosys brand, something that the Indian
IT services companies need at the level of
maturity they are at, long-time Infosys
watchers say.
Many experts agree that what Infosys
actually needed was not a CEO who is a
master sales person but someone who has a
strong brand recall. And in all these categories, Sikka supersedes many of his coun-
>
terparts in Indian companies. The management change at Infosys signifies many
things, says Harish Bijoor, a well-known
brand and business strategy specialist. One
of the big things is the fact that Infosys is
moving on to become a Silicon Valley-based
leadership from the earlier Bangalore club,
he says.
Besides, Infosys has brilliantly revived
the earlier CEO-COO model. While Rao, an
Infosys veteran would be his second-incommand and would manage the day-today operations and manage the show in his
absence, Sikka would himself focus on
Americas and Europe, which account for
90 per cent of the software majors revenue.
He would of course spend a week every
month in India. According to Sudin Apte,
CEO and research director of advisory firm
Offshore Insights, the new model under
Sikka may gradually evolve like the Nandan
(CEO) Kris (COO) format wherein all the
delivery and sales organisation will report to
the COO. Sikka will be the external face to
clients, will make Infosys visible at various
avenues and platforms, create its thought
leader image and will be expected to work
as a rainmaker to get the deals inflow, Apte
says.
Intellectual property all the way
While these are still early days and the
new leadership will take some time to
frame out the specifics of its new strategy,
one thing is crystal clear: Sikka is not
going to change the founders focus
upside down. Rather, he would focus
more on products, platforms and intellectual property (IP) creation. Many people
ask me, Are you going to help Infosys into
becoming a product company? They miss
the point. We will continue to be a services
company, but bring in the efficiency of
intellectual property into services business, says Sikka.
It is not a particularly new strategy for
Indias second largest IT services provider.
Infosys 3.0 (this is the second year of the
implementation of that strategy) was primarily aimed at growing the non-linear
revenue stream and position the company
away from the commoditised services. But
the plan could not click due to the changing
requirements of the clients on the back of
the global slowdown in spending. That was
the reason why one of the first things
Murthy did after returning to the company

as the executive chairman in June last year
was to bring back focus on the companys
bread and butter application development
and maintenance business, a low-hanging
fruit which is primarily based on labour
arbitrage.
Everests Bendor-Samuel, however, says
Sikkas appointment is a clear indication
that Infosys will go back to its emphasis on
IP, instead of just labour arbitrage-led businesses. Given his pedigree, the IP space
would certainly drive growth and profitability going forward, he says.
Sikka doesnt disagree with that view.
He clearly has plans that are radically different from the way Infosys ran all this
while. And if implemented, this is going to
fundamentally change the way Indian IT
services companies serve the clients. To
start with, Sikka has serious reservations
about the whole concept of staff augmentation wherein clients hire resources from
service providers to do the work their existing team has been doing. But the very fabric of that business has been laid on cost
saving. To me, its very depressing for IT
companies to say we will do whatever you
were doing but more cheaply. I think its
about doing more than what was being done
before bringing more to it, being innovative, Sikka says.
For example, he wants to focus more on
staff amplification whereby end-users
(clients) become more powerful and can do
more what they are capable of. He talks
about the huge opportunities in oil and gas,
56
retail and automobiles. Think about the

number of car breakdowns all over the
world, he says. They are an expensive proposition as you have to call the mechanic, get
it repaired and waste a lot of time. Thats a
huge opportunity as we can help clients by
offering predictive maintenance solutions.
There is more. Infosys, as a part of its
infrastructure management services practice, runs the infrastructure of hundreds of
clients and because of this, the company
has deep insights into the clients business.
We can give them feedback like hey, if you
did this or that, you would improve things
by this much. Thats the opportunity I see,
Sikka says.
Traditionally, the IT services industry is
overly focused on utilisation of employees
or what per cent of their overall employees
are engaged in some productive billable
works in a quarter. Sikka wants to change
this disproportionate focus and use the
bench for more training and education.
Sarabjit Kour Nangra, vice-president,
research, Angel Broking, says Sikkas focus
is on four broad areas delivering high
operating margins to maintain Infosys
leadership in the sector; actively managing
and strengthening client relationships; and
put the unutilised cash on books to use by
scouting for acquisitions, provided the
company to be acquired meets the required
return on investments criteria. That would
be a great way of running Infosys. But
everyone agrees at the end of the day,
investors and stakeholders would want
Sikka to live up to his name, which literally means coin in Hindi. And he will be
measured precisely by that revenues
in the coming months in an organisation
struggling to keep pace with the blistering
growth of some of its competitors.
Sikkas big claim to fame so far has been
development of HANA, SAPs flagship product that allows customers to organise and
process massive amount of data quickly.
The former chief technology officer and
executive board member of SAP often
referred to it as his little girl.
Infosys is eagerly waiting for another
little girl from its new CEO.
>
CREATING ACULTURE
OF INNOVATION
In markets disrupted by constant change and a relentless quest for
efficiency, one of the most coveted corporate virtues is innovation.
But many of the pillars of corporate success hierarchy,
repeatability, lowering the possibilities of failure can end up
killing the spirit of innovation. So how does a successful company
build and sustain an environment in which risk-taking is not
stymied and new ideas can thrive? Anand Mahindra, chairman,
Mahindra Group, and Chanda Kochhar, MD & CEO, ICICI Bank, talk
about how India Inc could improve its innovation quotient and
how encouraging risk-taking is an important part of the equation
DEVINA JOSHI & DEV CHATTERJEE
Would you agree that Indian corporations
are way behind their Western
counterparts when it comes to
innovation? Given that Indian engineers
are powering Silicon Valley, why dont we
have a Google or a Facebook springing
from India?
Anand Mahindra: It is really about competition. It is about allowing the ecosystem

here to compete with the world for everything. If you look at the past, we stagnated as
an economy because of a lack of competition. People asked us why we were not
investing more in R&D in India. To allow
the worlds best to compete here we have to
ensure that the barriers to business vanish
here.
Second, we seem to have a bias against

consumerism here. Somehow, there is this
inbuilt socialism in us. But if you look at the
most interesting innovation, it comes from
encouraging people to consume. When
people consume, they want more, then
they choose the best, and you suddenly get
innovation coming in. Now, combine that
with desperation and people wanting to
get a better life, you have a potent combination for innovation.
Chanda Kochhar: One important ingredient that we havent touched upon is the
Indian consumer. When we in our sector
talk of the adoption of Indian consumers to
new products and innovative ways of doing
banking, they always exceed our expectations. In India, we have the opportunity to
give innovation the kind of scale that no
57
other country in the world can. Innovation

is a necessity. India did not innovate with
the ATMs. But when we brought ATMs into
India and made the machines talk in 15
regional languages to the people in rural
India, we got millions of transactions on
the ATM.
Facebook has been around, but can you
complete a banking transaction on social
media? We made that happen. India is
among the countries that are most ahead in
terms of the percentage of banking transactions on electronic channels as opposed
to those in the physical branches. If you
take existing ideas and make them affordable and scalable, you substantially change
business models. India lacks an education
system that is research and creativity oriented. We need to build this culture of inno-
>
vation before individuals actually join

organisations. Second, we dont have the
financial ecosystem... those angel investors
who are willing to put their passion and
money behind it.
So you are putting the blame squarely on
the education system in the country for
not fostering a spirit of innovation among
people who are entering the workforce?
Kochhar: The education system needs to

add a lot of creativity for starters, and then
get into research as we go up the curve. The
education system is very examination-oriented but an application of that knowledge
is lacking. How much are we adding on the
ability to think differently and apply basic
knowledge into different models and
research?
The other thing you said was the absence
of an ecosystem that can encourage
innovation in India
Mahindra: I think were getting there. Take

ICICI Ventures for example, which has
done extremely well.
The time has come for

India to move from
jugaad' (somehow)
to jhakkas' (superb)
ANAND MAHINDRA
What have you done at an organisation

level to encourage a culture of
innovation? Google, for instance,
encourages employees to spend about 20
per cent of their time experimenting with
their own ideas. Do we have any such
example of a more casual and unorthodox
approach to management in India that is
so typical of the Valley?
Kochhar: In our company, we want people

to come up with ideas. In fact, we track the
number of ideas people come up with,
which in a way becomes a rewarding factor
for them. You have to have a process where
these ideas are seriously looked at and fil-
58
tered to be taken forward. We have an

Innovation Council, which looks at those
ideas and picks up a few of them that are
taken for further application. Innovation
in any company has to work both ways
top-down as well as bottom-up. When it
comes to bottom-up, here is what we ask
people to do: look at technology, look at
what your customers want and come up
with ideas. At the same time, you may want
to try out two or three major themes as a
CEO, which will then be the top-down
approach.
For example, digitisation and mobility is
changing the world, so I want all my products to convert into digital and mobile. But
an employee may say, if we have this on
the internet, why dont we have it on smartphones, or can we not combine it to give a
customer a seamless experience? What are
the five different things that the 18-year-old
is looking for when he looks at internet
banking, rather than just a 35-year-old?
Mahindra: We have an annual leadership
conference with around 500 people, and
>
our theme last year was innovation. I proposed a 5S framework. I divided them into
two things: Two of the Ss were in the sphere
of context creation. These include space. I
said, were living in a world where we dont
give ourselves enough space. Were always
on this device (points to his smartphone),
were always working and thinking were
being innovative but were not.
Sometimes the only kind of innovation
comes when you have some solitude; when
you step away. If Newton hadnt been
lolling under the tree, the apple wouldnt
have fallen on his head, you know. He was
goofing off frankly! The second S is what
I call self-indulgent creativity give
everyone time. Ask them to do some work
which has nothing to do with the business
objective. Some innovation which has
nothing to do with producing a better car,
for example.
The other three Ss are simplicity, and
then a French word sans, which means
constraints, or without money doing
more with less, and the last S is sustained
experimenting keep at it. The Samsung
microwave story is an example there. They
kept at it, despite a number of things that
bombed.
Those are the five Ss. Did anyone listen?
I wasnt too optimistic, but then I got an
email from our head of R&D in auto, who
said he was using the 5S framework,
including allowing the context. I think it is
happening. Have we reached the point
where we have people goofing off under
trees? I dont know. But I hope people are
giving time and allowing their minds to be
open to questioning.
Foreign direct investment (FDI) can give a
big boost to innovation in new products,
according to R Gopalakris-hnan (Tata
Sons). Where do you stand on this debate?
Mahindra: I have no problem with money

coming in and spawning competition. I am
honest enough to admit that Mahindra &
Mahindra would not have been going to
the IITs and doing research, if there was
no competition. Were rational animals
after all. Why would I spend more money,
if I wasnt pressured by competition to do
so? The more the FDI, the more the competition. In principle, I am in favour of it.
Kochhar: Innovation gets driven by both
constraints and opportunities. A constraint
The ways of learning are tremendous; ownership structure is just one of them.
If you can make

existing ideas scalable,
you can change
business models
CHANDA KOCHHAR
could even be competition, which drives

you to innovate. Without getting into the
ownership structure, I would say, how much
are you learning from what is happening
around the world so that you innovate? You
learn from how the customer lives her life
and how technology makes things possible.
As a bank, you can learn from even the hospitality industry and say, this is how service is measured. You can even learn from
the automobile industry and say, this is how
a back office operations shop should work.
59
Experts talk about disruption these days.

What are some of the challenges you
foresee in this context for companies like
yours in the coming years?
Kochhar: The way to look at it is, what are

those emerging trends which will impact
your business model. As a bank, we look at
the impact of mobility and digitisation, and
if every bit of your product and your channel does not adapt to mobiltiy in time, your
existing business models will get disrupted.
So instead of looking at what are the constraints, you have to look at what are the
driving factors that keep pushing you to
innovate, so that you arent left behind.
Mahindra: You have to seed internal disruptors. You need sources of internal disruption. They dont guarantee your survival but you have got to try. One of those
>
the chance?
internal disruptors that we have is called

the Shadow Board. All our group companies are required to form a Shadow Board
made up of people under 35 years of age,
who are to meet quarterly and behave like
if they were the Board of Mahindra, what
they would be doing differently. One of
the classic examples of their performance
is, when we were not bidding for Punjab
Tractors at one stage. At our annual conference, during these Shadow Board presentations, one of them did a very interesting skit. They pretended that they were
from a competitor, and they play-acted as
if they had bought over Punjab Tractors.
They demonstrated that if they bought it
and Mahindra didnt, what would happen
in the market. I had never thought of this
way. We had been looking at IRRs (internal
rate of return), our walkaway price, our
strategic synergy value etc. And I came
away frightened out of my mind. I have no
doubt in admitting that all of us there who
eventually bought Punjab Tractors were
affected by that, because a bunch of people took the time out to think about what
would happen if we didnt. Punjab
Tractors today is among our most successful acquisitions.
Second, why did we buy Reva? We
wanted internal disruption. Why would
somebody making diesel-based products
buy an electric car product when there was
no viable business for it? Even then, we
are often asked in the media about how
many cars have been sold in a month, and

that the strategy doesnt seem to be working. How about saying that the one disruption in the automotive industry today
is Tesla? When the future comes, it doesnt
come with a very long overture; it comes
with the curtain just about rising. Or dropping. Today, if someone says Tesla is going
to disrupt the automotive universe, Ill
answer, Not Mahindra!
Kochhar: An example I can give is something that we came up with last year at ICICI called Youthisation. When I coined the
word, I didnt know if such a word existed.
This means I want x number of 25-year
olds who will look at each of our products
and channel interfaces and tell me whether
the 18-year old wants to interact with us on
these. It is working well. It is okay for us to
believe that the 35-year old finds our website useful and interacts on that, but does
the 18-year old, who will be my customer
three years later, even know what ICICI is all
about and that we are present on Facebook?
Are we touching that part of his mindset?
Even if they are not our current customer,
they are influencers today and will be customers tomorrow. I ask my team to look at
every product and every channel, and
whether we can Youthise them.
In India, we do not celebrate failures
enough like they do in many Western
cultures a sure deterrent to innovation.
How would you like to change that, given
60
Mahindra: It comes from the home. First

ask yourself, how are we as parents? When I
look back, I frankly think I failed at not being
tolerant enough. I constantly had a vision of
what I wanted my kids to be; I wanted them
to measure up. How do we get to a point
where children feel that there is no gravity
pulling them down by our expectations? If
you have a child who has grown up only
respecting authority, then it boils down to
the school. But when it comes to encouraging individuals to question things, it comes
from parenthood, then the school. Today,
most of our schools dont reward imagination, and this is at the root of the rot in our
society. We can talk about infrastructure
and ecosystem, but how are we as parents
and teachers? Only then can we move on to
the Tatas and Mahindras celebrating failure. Then I can ask, as a CEO, am I still making the mistakes I committed as a parent, or
am I genuinely listening? Am I just simply
saying I celebrate failure, and when somebody fails do I say, Fire the guy?
Kochhar: What do we mean by celebrating
failure? I think it means that we have to be
tolerant towards failure and celebrate the
ideas and the learnings. Failure has to lead
to learnings. That is what we need to celebrate.
Many scholars describe the Indian way of
innovation as an extension of the Indian
tradition of jugaad: developing
improvisations and make-dos to get
around the issue of scant resources to
solve seemingly insoluble problems. The
term jugaad has also assumed a
connotation of compromise on quality.
Do you subscribe to this view?
Mahindra: Low-cost innovation is essential for solving many problems facing the
country. We should not confuse jugaad
with frugal innovation. Jugaad does imply
a positive can-do attitude, but unfortunately, also involves a 'make-do' approach.
It can, hence, lead to compromises on quality and rarely involves cutting edge or
breakthrough technology. Constraint-led
Innovation is a better approach. It targets
the most advanced technology but with a
philosophy of more for less.
The time has come for India to move
from jugaad (somehow) to jhakkas
(superb).
>
RETHINKING
THE
MEDIA
PLAN
Instead of thinking in
silos, marketers
should try to create
immersive storyscapes
ROHIT NAUTIYAL
n another era, every marketer worth

his salt would work relentlessly to
crack that great creative insight that
could then be amplified across media
starting with a burst on television. Then
he would drive his agency to integrate
the creative thought across above-theline and below-the-line media in a forceful way. That was more or less the standard approach to media planning half a
decade ago, before the grand arrival of
digital and social media into the mainstream. Post the Lehman collapse, as the
world began to turn upside down and
advertising dollars became hard to come
by, corporations and their agencies began
looking at the digital media in right
61
>
earnest.
In the following years, almost every
major event in the media and advertising
world had at least one panel discussion
on digital media. As a result, the significance of digital went up several notches
in the media plans of different product
and service categories. Despite the interest, this area remains troubled as a large
majority of marketers in the country are
still hesitant in allocating sizeable portion of their media budgets to digital. One
reason why digital advertising is still at 10
per cent of the overall ad pie in the country, which stands at ~31,877 crore (according to the Pitch Madison Media
Advertising Outlook 2014, which expects
the market to grow strongly at 16.8 per
cent in 2014 to reach ~37,000 crore). By
the end of this year, companies would
have spent around ~14,300 crore in buying airtime on television, and ~15,405
crore in print. Radio will see spends in
the region of ~1,097 crore by some estimates.
This is in sharp contrast to what is happening globally. In 2013, for the first time
ever, interactive advertising revenues in
the US touched $42.8 billion, exceeding
broadcast television advertising revenues
of $40.1 billion (according to the IAB
Internet Advertising Revenue Report,
prepared by PwC US).
Despite all the talk, the digital or
interactive medium remains thoroughly under-utilised. Barring few truly
remarkable digital spots, as an advertising
medium, the internet and the mobile
have been in some sort of a time warp,
with television and print taking precedence, both at the agency and the clients
end. Much of the time, digital has simply
been used as a reminder medium a
fate FM radio was relegated to in its early
days.
Anshuman Singh, head, digital business & consulting group, Mindtree
Europe, says the problem is that digital is
often mixed up with below-the-line communication. He says, It is like mixing
the means with the end. The question to
ask is if the media used is targeted or not.
A lot of digital media is still treated like
above-the-line. For example, just because
I am visiting Business-standard.com from
the UK, doesnt mean that I am interest-
In todays media landscape, the

lines between ATL and BTL have
blurred
SANGEETA SHARMA
MANAGER, MARKETING &
COMMUNICATION, LUFTHANSA
ed in enrolling for Barnet College (Barnet

and Southgate College is a further education college in North London). This ad
is no different from what might appear in
the education section of your newspaper.
That is because the space is bought in
bulk. Even today, most social media campaigns rely on extrapolation of reach. You
can
leverage
custom
URLs in TV and print campaigns to calculate the same.
To an extent the problem with digital
is not just about focus; it is also a factor of
reach. Of the total population of 1.27 billion in India, only 243 million people are
internet users. (Source: Internet and
Mobile Association of India)
Beyond ATL and BTL

A lot has changed in the last 10 years
though. Earlier, as part of a pan-India
plan, a media planner would cover 20-30
markets in a year. Usually television was
the lead medium and print followed with
long copy ads; radio and outdoor were
slapped with similar creatives without
much innovation. Today, plans are more
fluid and may change several times in a
given year and are designed according to
the profile of the consumer targeted.
62
Take Germany-based Lufthansa,

which has been running operations in
India for 55 years now. It is an example of
a brand which has relied on short-duration media plans to deliver results. Over
the years, the brand has learnt a key lesson in media planning: a solid media plan
varies from one set of its target group to
the other. For instance, a first class customer can be targeted more effectively
with direct mailers and below-the-line
initiatives. In fact, the engagement level
of its direct mailers is 28 per cent. Says
Sangeeta Sharma, manager, marketing
and communications, Lufthansa, When
lines between ATL and BTL blur, the concept of 360 degree falls flat. So today our
agency partner does not make a presentation saying that we will start a campaign with television. She adds that the
timing was perfect for Lufthansas first
major TV campaign launched recently,
More Indian than You Think. While market research pointed out that the German
airline is already known among the frequent flyers for its punctuality and
straightforwardness, it failed to portray
its emotional side. By addressing this in
the latest campaign, the brand has been
able to reach the flyer-population joining the ranks from tier-II cities.
Televisions dominance in an average
media plan is undisputed in this country.
Consider e-commerce companies as
examples. When they started appearing
on media channels like television and
print, many eyebrows were raised. Why
advertise on a passive medium? Arent
they mass and therefore impersonal, the
anti-thesis of the internet as a medium?
Yet, after the success of Flipkarts adultlike children campaign in 2011, almost
every e-commerce company with a sizeable media budget has hitched its fortune
to television.
Says Raghu Bhat, co-founder of
Scarecrow Communications, which
handles creative duties for online classifieds company Quikr, If one players TV
commercial hits the bulls eye, other players in the category jump at the first opportunity of achieving something similar.
Bhat has a point, especially in the context of e-commerce companies. Instead of
focusing on profitability, which is still a
couple of years away for these compa-
>
nies, owners of these businesses are keen
on driving maximum user traffic.
Since internet penetration is still low
in India, the challenge for shopping portals is to be the first destination for someone who has never shopped online. That
explains why this online battle is being
fought on television, and to some extent
print. The likes of Flipkart, Snapdeal and
Jabong are learning fast by observing
leading players in FMCG, retail and telecom. They are launching quick followups and myriad edits of a campaign in
the same year.
Short-term sales pressure is visible in
a lot of these commercials that harp on
limited-period sales and deep discounts.
This also marks a major shift in TV advertising as players from across categories
are moving from brand building on TV to
more tactical pieces of communication.
Says Amit Tiwari, director & country
head, media, Philips India, Television
has become a snacks box for viewers.
Dwell time is as low as 30 minutes per
day or even lower.
Not everyone approves of the trend.
Jayant Singh, executive vice-president at
GlaxoSmithKline Consumer Healthcare (GSKCH), says, The life cycle of a
TV campaign is shortening. Multiple creatives wont do much to build a brand.
Since its launch in 2011, GSKCHs oralcare brand Sensodyne has stuck to showcasing testimonials from dentists. As part
of its research, the company saw that the
awareness level regarding teeth sensitivity in India was low at 17 per cent.
Instead of relying only on television, the
company decided to focus on below-theline initiatives to build awareness about
dental problems.
Integrated approach
Digital and radio are similar, especially in
terms of their consumption patterns.
Both the mediums can be consumed onthe-go, their appeal is personal and the
content can be localised to a large extent.
That is exactly what Hindustan Unilever
(HUL) achieved with its Kan Khajura
Tesan (KKT) campaign. KKT or The
Earworm Channel is HULs very own
structured, branded media channel on
the mobile platform that offers jokes,
music and Bollywood content. This con-
The life cycle of a TV campaign is

shortening. Multiple creatives
wont do much to build a brand
JAYANT SINGH
EXECUTIVE VICE-PRESIDENT,
GLAXOSMITHKLINE CONSUMER HEALTHCARE
tent is interspersed with advertisements

for HULs mass consumer brands. This
was done through a missed call campaign.
Now look at what Philips did recently
during Jamai Shashti, a festival celebrated in West Bengal and dedicated to sonsin-law. Philips decided to push the
shavers from its personal grooming range
as a gifting option during this festival. As
part of this pilot, two local radio stations
were roped in. RJs spoke to the viewers
about the festival and recommended
Philips shavers as one of the gifting
options.
Says Singh of Mindtree, I think a mix
of strategy is what works. A company may
create awareness using mass media, but
may leave a hook for targeted messaging.
Simple missed call campaigns have far
wider reach than apps or websites.
So there you have it: no point in thinking TV, print, digital. The best way to deal
with the customer who jumps in and out
of different mediums is to follow them
around like the Vodafone pug. In sum,
use all the mediums seamlessly.
63
>
LEARNING FROM
THE MASTERS
The blossoming IT services sector in India has learnt many lessons
on staffing from manufacturing
DEVINA JOSHI
eavy competition and the economic downturn notwithstanding,

TCS has managed a 6.3 per cent
reduction in the average employee cost
every year over 2007-2013, as per HfS
Research. The data shows that the percentage of freshers hired increased from
51 per cent to 81 per cent during this period
which the research firm points out, is the
likely reason for maintaining such a low

headcount cost. To cite the report, hiring
more freshers gives TCS the flexibility to
deploy them in lower value and transactional activities thus freeing other high calibre experienced resources for higher value
work.
What has helped TCS reduce costs during a slowdown has, in fact, been a winning trope for an unrelated industry
manufacturing since its early days. And
64
why single out IT consultancies? A look at

the hiring policy across the services sector
whether we speak of IT, ITES, management consulting, hospitality, telecom, BPO
or even retail reveals it has been borrowing freely from rules either pioneered
by, or are identified with, the manufacturing segment. The Strategist takes a closer
look at some of the key HR lessons the services sector has borrowed from manufacturing or even built upon.
>
EXPERT TAKE
India Incs blended workforce strategy

he success of manufacturing
process anywhere in the world
largely depends on three factors:
appropriate manpower, the quality
of products and efficiency of
production. Indias manpower
strategy for manufacturing was
heavily influenced by the German
apprenticeship model and, hence,
the establishment of our own
Apprentices Act in 1961. Identifying
freshers directly from engineering
institutes/polytechnics and keeping
them as apprentices for a period of
one to four years was done to
RITUPARNA CHAKRABORTY
President, Indian Staffing
gradually enhance their skill of
Federation
operating heavy machinery and
become productive.
Manufacturing in India seems to have lost the plot to new age
industries like ITES, telecom and retail on account of archaic labour
Catch them young

A fresher-heavy manpower plan is almost as
old as the manufacturing industry itself.
Unskilled labour engaged in activities such
as packing, material movement, maintenance etc is usually contracted out to graduates and undergraduates. However, for
roles that require specific skills such as
welding, carpentry, plumbing, machine
operations, fork-lift truck driving etc
training is important. Early on, to comply
with labour laws and sometimes due to
cyclical/seasonal product needs, manufacturing realised it was better to keep inducting young people and offer them opportunities for career growth within the
organisation as opposed to lateral hiring.
Manufacturing has been doing this to save
costs and to better manage peoples careers,
says Rajeshwar Tripathi, chief people officer,
Automotive & Farm Equipment Sectors,
Mahindra & Mahindra.
On the other hand, companies in the IT
and ITES space now have end-to-end ownership of projects. It isnt just about offering
a wide variety of services; it is about developing the product, testing the applications
and maintaining the product across its life
cycle. And thanks to this, the scope of programmers has widened and companies
laws that were resistant to change. Interestingly, taking a cue from

manufacturing, the IT sector has started hiring a large number of
freshers though not exactly as apprentices because law restricts
the appointment of apprentices in the services sector currently. In
case of the ITES, the trend was set in motion by the coming together
of the needs of the youth as well as the employers, which made the
taxi cab' employment relationship (marked by rampant job
hopping) look cool. While young people right out of college got the
chance to make decent money every month before they could figure
out what they wanted to do, employers got ample time to train them
and make them productive. Plus a churn was essential every two
years to ensure that wages dont go up and corporates remained
competitive. The idea of flexi-staffing gained currency as the services
sector took the lead in employment and in contributing a big chunk
to the GDP. Given that proposed amendments and the various
innovations which have been instituted around the apprenticeship
regime, I wouldnt be surprised if apprentices along with flexiworkers start playing a bigger role in corporate Indias blended
workforce strategy.
have the flexibility and ability to hire more

freshers.
Now take telecom and BPO, which have
made efforts to correct the tooth to tail
ratio. In military parlance, this ratio is the
number of support infrastructure people
(tail) needed for the combat soldier (tooth).
In a telecom scenario, it means the ratio of
frontliners/workhorses servicing the end
consumer to the rest of the team. Higher
the percentage of frontliners (a healthy one
is 65-70 per cent) in consumer servicing
functions, the better the productivity.
Many times, more workhorses have come
in, and people in the mid-management level have been reduced. This helps save cost,
as the cost of senior management and middle management is 2.5 times higher than
the frontliners, says Sandeep Gandhi, chief
human resource officer, Aircel, a telecom
company that closely follows this strategy.
About two years ago, Aircel had 55 per cent
frontliners. The percentage has now
improved to 70.
Hiring youngsters might also have a lot
to do with automation of certain processes
another trend noticeable in manufacturing. As processes mature, companies
can get a junior person to maintain them,
thereby expanding the scope to hire fresh-
65
ers. Consider the assembly line in an automobile manufacturing plant where some
processes are run on an auto pilot mode
with minimal human interventions. In
functions of predictable performance and
processes, automation can come in for
greater efficiency and streamlining, says
Moorthy Uppaluri, CEO, Randstad India.
Examples in IT are aplenty. Most IT firms
now create automated platforms that figure
out issues on their own and in some areas,
work that was done by mid-management is
delegated to machines. An example in the
financial space could include IVRs reducing the need for human interface in banks.
This is exactly what happened in factories.
The assembly line system has come into play
in some service sectors. Delivery platforms
enable much higher levels of automation
that can replace manual work. In a way, this
is the industrialisation of the software sector, says Saurabh Govil, senior vice-president and global head, human resources,
Wipro.
Moreover, with a huge number of engineering graduates walking out of colleges
every year according to estimates, India
trains around 1.5 million engineers, which
is more than the US and China combined
the entry level salaries of engineering
>
graduates joining the IT services in India
has stagnated at a measly ~20,000-25,000
per month. Also, these engineers, if hired
full-time, would require a huge amount of
training before they can start becoming
productive. This leads us to the next point:
the growing trend of hiring apprentices,
la manufacturing.
Foot-in-the-door technique
Large manufacturing firms have historically
met their growing need for workers to meet
consumer demand through apprenticeship
programmes by hiring Industrial Training
Institute or 12th class pass-outs, particularly
to handle seasonality/variability of products.
Apprentices are put through a structured
practical and theory training programme.
Firms have also hired fresh engineers as
Graduate Engineering Trainees (GET). The
GETs go through a one or two-year training
programme and are then absorbed as frontline supervisors and engineers.
According to an IT analyst, TCS was one
of the early adopters of apprenticeship programmes among the large IT services companies, and is one of the largest employers
of apprentices today, be it engineering graduates or diploma holders. TCS hires a huge
number of apprentices every year, trains
them and at the end of their apprenticeship
period absorbs them or lets them go, based
on performance, says the analyst. The
advantages? Whether it is IT, ITES, consulting firms or accounting firms, this kind of a
transient workforce forms a reservoir from
which talent is identified, without having to
give them the kind of monetary and other
benefits that permanent employees enjoy.
While India Inc blames the countrys outdated labour laws as a hindrance to growth,
the use of apprentices by IT and ITES companies is likely to get a boost with the
National Employability Enhancement
Mission (NEEM), a government initiative
to promote apprenticeship.
Furthermore, there is a high level of
attrition at the fresher level (and so training
cost is wasted) because sometimes, freshers
quit and decide to pursue higher studies or
simply switch their field of work. NEEM
can be useful in such cases. Apprentices
are like test drives. You can evaluate them
over six months or a year and weed out the
people not up to the mark, unlike freshers
who get absorbed from the beginning. It is
also much more convenient, says Zarir
Batliwala, consultant, HR, TeamLease
Services. If given a free legal hand, popular opinion goes that services is likely to, or
probably already is, doing a better job of hiring apprentices than manufacturing.
Lessons in outsourcing
Industries like automotive were among the
pioneers of outsourcing or in manufacturing terms, contracting jobs realising
the value of getting things done through
specialists. A make versus buy conundrum, so to speak. Firms learnt that for
greater manufacturing efficiencies, they
need satellite firms for non-core businesses.
The need to contract jobs also arises when
companies need some additional work to be
done jobs that are seasonal/temporary in
nature. To have a better end product there
is also need to up the skill quotient of your
suppliers/vendors. When Hyundai came
in, they came with a whole separate ecosystem of suppliers partners in automotive
accessories etc, says Rajiv Krishnan, partner and leader, people & organisation services, EY. The services industry has learnt
this, especially when it comes to vendor
development.
Largely, the trend of outsourcing is about
portfolio rationalisation. There are instances
when multinationals from India have gone
and acquired brands/companies in Europe
and Asia but still retain a manufacturing/service base in India to stay cost competitive.
Some feel outsourcing also allows you the
opportunity to prune your workforce during
a downturn. Outsourcing of skilled and technical roles also helps in a project-based
assignment (you need not absorb employees
after project completion). The IT services
industrys practice of maintaining a bench
of people between two projects is fast becoming outdated as there is a huge cost associated if they arent being billed on a project,
says Batliwala.
Conversely, in the telecom and BPO segment, the old model of insourcing (purely
for non-core services) is back which,
strangely, has its roots in manufacturing
as well. The cost of outsourced call centres
has gone up; ditto for managing network
operations. Telecom growth has slowed
down from 40 per cent a few years ago to 5
per cent currently. Add to that, the ARPU
(average revenue per user) today is only
66
~150-160. There was a time when we used

to outsource our network operations to vendor partners. This became an expensive
proposition. While it saved CapEx, we lost
a lot of OpEx, says Gandhi of Aircel. Today,
almost every telco player is revisiting its
outsourcing models including network
operations and retail management. For
instance, Bharti Airtel recently brought its
network planning in-house, along with
some IT functions.
Work environment, referrals and more

Classically, manufacturing has instituted a
multi-shift work environment. Take a
process type manufacturing plant (processing oil and gas, chemical, steel etc), which
demands that you operate in shifts as you
cant simply stop certain types of machinery
after a certain number of hours. In other
words, you need people to operate/maintain them round the clock. In discreet manufacturing (producing finished output like
cars etc) continuous operation has never
been in vogue; now many firms are moving
to it, if only to do more with less.
Services may have picked this trend for
entirely different reasons: when we look at
IT and ITES, it is more about alignment
with different time zones. They need their
workforces to give real-time support to
clients at different time-zones. But even if
we remove that linkage of serving customers abroad, the 24x7 work environment
in BPOs or IT/ITES companies has proven
beneficial by saving costs by utilising
the same facility round the clock by different shifts.
Apart from these big-bang shifts, there
are other smaller trends the services sector
seems to be borrowing from manufacturing. Particularly in BPOs, background
checks have been borrowed from manufacturing. As the industry evolved, it
became an important part of HR, particularly when people were jumping jobs in
BPOs too quickly or when cases of fraudulent education degrees were reported, says
Sanchit Gogia, chief analyst and CEO,
Greyhound Research. Ditto with conflict
resolution. These could be territorial wars,
like deciding who gets to go to the US
and who stays back. How do you ensure
people dependency and their expectations
are managed? Services has learnt this from
manufacturing, opines Gogia.
>
DEALING WITH
THE PROMISCUOUS
SHOPPER
Just when you thought its over for daily deals
and group-buying websites comes a fresh
onslaught from a bunch of upstarts
ABHILASHA OJHA
hen FreeKaaMaal.com, a deals

and discounts website, began its
innings four years ago, its founder
and CEO Ravi Kumar had no inkling of the
hurdles lying in his way. Since the e-commerce website was not about selling products or services which meant there was no
physical inventory to stock or dispatch
investment in the venture wouldnt be high,
he surmised, and the prospect of big deals
would bring in traffic by

the droves. Other daily deals
and discounts websites that burst
into the Indian e-commerce scene
between 2009 and 2011 spurred by the success of Groupon, the website that started the
international group-buying gold rush, also
thought the model was foolproof their
websites would entice users with lucrative
deals and offer merchants a unique set of
customers every time. While for the merchant it would mean a chance to showcase
their products, for the customer it would
take the drudgery off deal-hunting.
Heres how the daily deals model collapsed. The deals dried up fast, merchants
moved on, and customers refused to come
back. The problem, say experts, was in the
fine print of the deal. So even when there
67
was a 70 per cent discount on a spa treatment, a customer could avail of it when she
visited the outlet between, say, 3.00 pm
and 4.00 pm difficult to do if she planned
to keep her full-time job. And even when
she managed to walk in with her discount
coupon, the service provider gave precedence to the full-fare customer as opposed
to the discount client. So there was no way
the customer would come back to the salon,
and there was no reason for the merchant
to think it was going to do his business any
good. Which essentially meant there was
no reason either for the merchant or for
the deal hunter to go back to the website in
question.
The fact people follow brands that offer
discounts or other incentives doesnt obviously mean that they would want to have a
relationship with the website that facilitated the process. Indeed, they could migrate
to any other website that offered a better
deal. Also as Kunal Bahl, co-founder and
chief executive of Snapdeal, which started
>
as a daily deals site and changed subsequently to an online marketplace, had told
Business Standard during an earlier interview, The deals business is high-volume,
low-value in nature and is difficult to scale
up.
Affiliate marketing
FreeKaaMaal quickly changed tack when
it figured the disconnect between its user
base and the merchants. We knew deals
and discounts business model would work
in India after all, the consumer here loves
the concept. We just had to work around the
hurdles intelligently, says the companys
CEO Ravi Kumar. The company decided to
ditch offline merchants and deal directly
with e-commerce marketplaces such as
Flipkart, Snapdeal, Myntra and a host of
other online merchants for exclusive
deals.
There was no point looking at just the
neighbourhood brands. Our business model now runs parallel to e-commerce sites
and if they grow we also grow, he says. The
affiliate marketing industry (where the affiliates get a small commission in return for
the extra traffic) is at a nascent stage right
now but as global players enter, it is bound
to grow. Since the entry of Amazon.in,
FreeKaaMaal has seen its revenue jump 20
per cent. Global companies understand
the value of affiliate marketing and with
competition rising, e-commerce sites are
exploring this model of sales, says Kumar.
Faced with the prospect of going belly up,
FreeKaaMaal swung the game in its favour
besides established e-commerce players
it has more than 450 merchants on its roster and gets 4.5 million hits per month.
Couponation, another big player in the
segment, is also focusing on curating exclusive coupon deals with online retailers for
customer traction. In a first of its kind
experiment, Couponation has acquired a
huge customer base through white label
tie-ups with media houses like Indian
Express and Hindustan Times on their
respective websites.
While some websites were able to make
a comeback, a host of others didnt. The likes
of Dealsmagic.com, MasthiDeals.com and
Taggle. com went out of reckoning, and many
others toggled along before shutting shop
altogether. Says Siddharth Puri, CEO, Tyroo
Media, Many of these websites have
EXPERT
TA K E
Changing landscape of Indias online

deal and discount industry
The online deal and discount
industry has seen many companies
changing their business models.
Traffic has increased and the channels have matured but incremental
revenues remain a challenge
he exponential growth of internet retail in India,

advances in technology and a more favourable consumer
SANDEEP LADDA
mindset towards couponing are driving online shoppers to
India technology leader,
deal sites such as Groupon, MyDala, FreeKaaMaal,
PricewaterhouseCoopers
CouponDunia etc. These sites now boast of robust
merchandising technologies and sophisticated tracking,
analytical and reporting tools. While the revenue model of these portals has been a
challenge, the landscape of the industry has changed significantly with several deal
websites closing their operations, while some others have opted to change their business
model.
The last five years or so have seen sites such as Dealsmagic, Dealivore, Vamoose,
MasthiDeals and Taggle withdrawing from the marketplace. Taggle, while winding down,
stated that irrational price wars and deep discounts made the business unsustainable.
Differentiation also became an issue since all these websites offered similar deals and
discounts. Other companies also faced issues of high customer acquisition costs and low
profitability, forcing many to exit, including investors. In addition, acquiring and retaining
bulk customers proved too big a challenge. Several companies were not able to prioritise
between the consumers and merchants, largely ignoring the merchants. Koovs abandoned
the daily-deal model and transformed itself into an online retail store; Snapdeal turned to
e-commerce; MyDala decided to modify its operations instead of entirely transforming it.
The site started focusing more on merchants and aimed at becoming an advertising and
promotional platform for small and mid-sized merchants instead of only offering discounts
on services.
Currently, the deals and discounts market is led by Groupon, DealsAndYou and
CouponDunia. The websites have been focusing on innovative marketing strategies to
popularise their business. Consolidation has also begun in the industry with Times Internet
acquiring a majority stake in CouponDunia in May 2014; it will merge its homegrown deals
website TimesDeal with the acquired company.
Thanks to smartphone penetration and growth in e-commerce, the outlook is positive
for these players. Cost rationalisation and the use of technology in providing services would
be key for survival.
changed their business models because

under the earlier model the cost of customer
acquisition was high. It did not justify the
average value of the deals. Then, unlike in the
West where even the neighbourhood merchant (restaurants, stores etc) would have
loyalty programmes and understood the
68
concept of deals, in India merchants are not

as evolved, making the deals and discounts
model even tougher to execute.
Going mobile
Mydala.com, which describes itself as
Indias largest discount coupon platform,
>
learned the rules of the game the hard way.
When it started out (it was launched in
2009), it used to offer huge discounts but
eith the condition that the deal seeker had
to pay for the service (minus the discount
amount) upfront (when she was buying the
discount coupon on Mydala.com). It did
this to safeguard itself from the fickle customer, who could ditch the merchant and
put Mydala in an embarrassing situation.
The website realised this route had no
future because customers were not willing
to pay money upfront before consuming
the product/service.
Says Anisha Singh, CEO of Mydala.com,
We knew that discounts and deals worked
in India. What we realised, however, was
that even though they were our targets, both
merchants and customers were also our
pain-points. As with other websites in the
business, Mydala too was staring at a bleak
future when it decided to go back and tweak
the whole proposition. The idea was to
acquire and retain the customer and have a
pan-India focus keeping the core offering
(deals and discounts) intact. Remember,
2010-11 was a time when the number of
mobile phone users in India was rapidly
increasing. If we could reach out to mobile
service operators, our footprint would
increase, telecom companies would find
value and neighbourhood merchants would
find greater value than before for their deals
and discounts, adds Singh.
With this in mind, Mydala first tied up
with Vodafone exclusively for deals and promotions. We made investments in analytics
and technology thus enabling the telecom
operator to understand users better while
customising offers for them, explains Singh.
Today Mydala partners with telecom brands
like Airtel, Idea, Tata Docomo, Samsung and
Karbonn to reach out to users who dont own
a smartphone yet and encourages them to
make transactions for deals and coupons
via the mobile phone (these are micro payments, such as paying the mobile phone bill,
discount coupons offered by retailers like
Big Bazaar etc) through a pre- or post-paid
mobile account (not debit or credit card).
It also offers real-time deals based on
where a user is located. This real time
model works very well in Tier-II and Tier-III
cities and the merchants are seeing repeat
value and telecom companies are getting to
understand their consumers better,
explains Singh. Given that Mydala (like

most other companies in the business) gets
the bulk of its revenue from commission
from its partners (telecom companies, merchants etc), the company can afford to
charge a nominal fee from the consumer
who avails of a deal/discount on its site.
In a sense, we have become a marketing
vehicle for other companies and brands
and we are no longer seen as just a deals
website, says Singh.
If Mydala went all-guns-blazing for
mobile marketing, CashKaro went a step
beyond merely offering deals and began
offering cash-backs. The company understood that customers had several go-to
options and thus it needed to be different to
be relevant. So, if you purchase a pair of
sneakers for ~499 from Flipkart using the
deal coupon at CashKaro, the company
gives a further 10 per cent through the commission it earns from Flipkart. It is all
about valuing the customer and ensuring
she stays with you, says Swati Bhargava,
co-founder, CashKaro. As part of its strategy, the company closely tracks what customers look for on its website. If, for
instance, 10 customers show interest in
buying a Samsung Galaxy tablet, CashKaro
gets back to the brand with ideas on creating a lucrative deal for the group of customers ready to buy the product. CashKaro
feels it is the right approach that has a high
change of hitting the bulls eye when implemented.
Sticking to the knitting

Even as some players learn new tricks and
innovate to stay in the game, the flag-bearer of the e-deals industry, Groupon, has
come to command a 75 per cent of the business in India by simply sticking to the core
69
business model. Ankur Warikoo, CEO,

Groupon India, says that many in the race
made the mistake of taking the merchant
for granted. Also, while aping the developed market models, where neighbourhood retail offers very competitive deals,
Indian companies in the business forgot
that more than the discount it was the value of the product that mattered to the customer.
Not that Groupon India was able to do all
this initially in its desperation to be
counted among the first people to latch onto
a new idea, it promised deals to customers
without keeping a check on the merchant or
its capabilities. We quickly realised that
we needed to fine-tune, admits Warikoo.
Groupon targeted five-star hotels, branded
spas and salons, high end stores etc to tie up
deals. It started curating exclusive deals
for instance, at Taj Mahals restaurant Varq,
the chefs new menu was on offer exclusively on Groupon. A dedicated team at
Groupon is always in discussion with merchants to understand the issues they face
rather than just to coerce them to offer deals.
Other players missed the insight that the
customers should be able to trust merchants
not just the website thats announcing discounts from the merchant, says Warikoo.
The site has a strict screening process for
merchants and blacklists companies that
go back on a promise. Theres also a noquestions-asked refund policy if a customer
is not satisfied. The site has a once-in-threemonths policy for merchants to appear on
the site so that no one merchant comes to
dominate the others. All these efforts have
started paying dividendsGroupons customer acquisition rate is among the highest
in the business.
As is evident, deal-marketing has traditionally been undermined by bad targeting. People are willing to convert when they
are sent a more personally relevant message. That is what makes this space interesting the web and the mobile have the
potential to seamlessly connect the consumer who wants value and the retailer
who is grappling with challenges in driving
in-store footfall.
>
BEST OF
BOTH
WORLDS
Omni-channel is not just a buzzword; it represents a fundamental
shift in the retailing experience
ANKITA RAI
Group plans to invest ~100 crore
>over
> Future
next 18 months to provide consumers
a single view of its many brands across
physical and digital channels. It is targeting
30 per cent increase in business once its
omni-channel platform becomes operational.
Infiniti Retail, which operates a national chain of multi-brand electronics stores
under the brand name Croma, has started
delivering orders placed online the same
day in 16 cities where it has its stores. The
number of daily clicks on Cromaretail.com
stands at 2,10,000.
Textile manufacturer and the flagship
company of the Lalbhai Group, Arvind Ltd,
recently launched its online custom clothing brand, Creyate, on the back of which it
hopes to build a ~1,000 crore business in the
e-commerce space over the next three
years.
Trendin.com, the e-commerce website of
Aditya Birla Nuvo-run Madura Fashion &
Lifestyle, has witnessed 200 per cent
>>
>>
>>
growth in its online orders since its launch

in 2013 and is planning to launch store pickup and return services. Trendin.com showcases merchandise for men, women and
kids and houses brands such as Louis
Philippe, Van Heusen, Allen Solly, Peter
England and People.
et the drift? Most traditional retailers are moving towards omni-channel marketing. As consumers move
seamlessly between digital and physical
channels, even during the same shopping
trip, the lines between online and in-store
shopping is getting blurred, and reaching
out to consumers through all possible shopping points is becoming imperative.
When we see the world through the
eyes of our consumers, we make better marketing decisions, says Kit Yarrow, professor of Marketing and Psychology, Golden
Gate University, San Francisco. A big
adjustment that businesses need to make is
to understand that their shoppers do not
see the world as online versus in-store. It is
fully integrated in their minds and lives.
70
But until very recently, most businesses

were set up with an online division that
often competed with their brick-and-mortar
division. Thats just going to confuse consumers, and it is not leveraging insights
across teams for the betterment of the company, Yarrow says, adding, Omni-channel retailers need to get out of silo thinking
and integrate various functions.
Indeed, the survival of traditional retail
depends on it. How? According to the latest
AT Kearney report on omni-channel, shoppers who jump in and out of platforms are
more loyal and spend more than singlechannel shoppers. It also showed that brand
loyalty is directly related with retail channel
usage. Such consumers are 15 per cent more
likely than single-channel consumers to
recommend a retailer and that the average
spend of three-channel consumers is more
than twice that of single-channel shoppers.
It is about staying relevant. With the way
the retail ecosystem is evolving, technology
will change the way a customer experiences
retail, says Ankur Bisen, senior vice-president, retail and consumer products,
>
EXPERT
Technopak Advisors.
Think of it this way: traditional retailers
are in a unique position to reap the rewards
of a well-laid out omni-channel strategy.
As Kumar Rajagopalan, chief executive officer, Retailer Association of India (RAI),
points out, These players already have a
trusted brand. An extension of the brand
offerings over other channels helps in creating better customer-centricity.
TAKE
Getting omni-channel right
Endless aisles
Omni-channel is no longer an option for retailers it has become a

must-do. Here are some tips to get omni-channel right:
1
ERIC TOON
COUNTRY
MANAGER,
SOUTHEAST ASIA
AND INDIA,
HYBRIS
SOFTWARE
Ensure brand consistency
What most retailers and customers want is brand consistency. You

are looking for that ability to take your offerings and provide an
experience to the customer that is consistent across all touch points.
You are also looking for a real-time system of reference. So it wont
help that an inventory lasts only for a few good months and then you
hope the trend doesnt change when, in fact, as a retailer
you have to change constantly
Use open standards
One needs an open platform because you cant create everything new yourself using your
own technology team. The ideal approach is to have an environment with a single stack of
technologies that can serve all the different touch points. This enables the marketing, product
and sales teams to collaborate and present all of their offerings to the customers, using any
technology or device, all coming from a single source, from the technology standpoint
Implement mobile commerce
Mobile commerce radically improves your ability to run a more agile and customer-focused
business. With mobile commerce as part of the omni-channel solution, the ability to deliver
exceptional web-based experiences to a constantly connected customer base generates
streamlined purchase processes, more informed sales force, improved service delivery and
overall efficiency. Mobile commerce will also help distributors and wholesalers minimise the
cost of labour-intensive processes through the use of self-service technologies
Know tomorrows customer demand
A robust supply chain will give your business the following benefits: Higher customer service
levels by having products available in stock as customers need them; lower expediting costs by
reducing repositioning and expediting through improved short-term forecasts, improved
collaboration with demand planning across stakeholders through embedded analytics,
scenario analysis, and collaboration tools. Lastly, an enhanced production agility by
translating demand signals to short-term supply requirements
Personalisation is key
Retailers need to embrace moving on to a platform that can seamlessly provide the connection
between manufacturers and customers for all of their products that they want to offer, and to
personalise it down to the level of an individual customers location.
71
The biggest challenge physical stores face

is being able to showcase all the stock they
have under the roof. High real estate and
distribution costs also stand in the way of
rapid expansion. According to a
Technopak report, E-tailing in India, 56
per cent of the total organised retail is in
the top 24 cities, which includes metros,
and Tier-I cities. This is where the learnings from their peers in developed markets namely, Walmart and Best Buy
can come handy. To counter the challenge posed by the likes of Amazon,
most big box retailers in the US have
gone online and are also opening smaller standalone stores. Thats the idea
behind endless aisles, which implies
that consumers have access to not just
product held by the high-street outlets, but smaller stores or even online.
The in-store computer terminals and
kiosks allow customers to shop and
purchase from a retailers entire
inventory. Says Kumar of RAI,
Offline retailers in India can use
multichannel capabilities to bring
to life the concept of endless aisles,
which means they would offer
things that are not necessarily
restricted to the physical location
or capacity of the store.
Now look at how Indian retailers are building their omni-channel capabilities. Tata Groups retail
arm Infiniti Retail advertises a
shop-online-pick-up-in-store service on its online portal.
Consumers can also return or
exchange the products bought
online in the stores. It also plans
kiosks at places like airports
where people can surf and place
orders. Ajit Joshi, CEO and MD,
Infiniti Retail, explains the ben-
>
efits, The store pickup concept, which
allows customers to order online and
pick it up later from store, is popular in
electronics as consumers need a little bit
of handholding in terms of personalising
the product being purchased.
Future Group is targeting 30 per cent
increase in business once its omni-channel platform becomes functional. It
recently announced a tie-up with Hybris
Technology to roll out its omni-channel
platform. By next year, consumers will
have the option of shopping online from
our stores. We plan to first implement it
in Ezone, followed by Planet Sports and
Big Bazaar. We will offer services like
cash on delivery; we will set up kiosks
manned by franchises who will deliver at
your doorstep; you can order online and
pick from the store. We want to reach the
customer whom we cant reach through
physical stores, says Kishore Biyani,
CEO, Future Group.
We will leverage our modern warehouses, the distribution centres and the
huge customer data that we have to offer
a seamless experience, adds Biyani.
Shoppers Stop, which also operates
an e-commerce portal, is confident that
its omni-channel approach will start
showing results within the next 24
months. Says Govind Shrikhande, customer care associate and managing director,
Shoppers Stop, Our omni-channel retail
approach aims to create a seamless and convenient shopping experience for customers.
A customer can shop at the neighbourhood
Shoppers Stop store, shop online
(www.shoppersstop.com), browse through
the latest trends on our six million-plusstrong Facebook page, view a fashion tutorial on our YouTube channel and buy merchandise, shop at our airport stores you
name it. Customers can shop online and
exchange products at our physical stores.
Aditya Birla Group-led Madura
Garments, which owns brands like Louis
Philippe and Van Heusen, unveiled its shopping portal TrendIn.com last year and goes
as far as to offer an in-store alteration facility for orders placed online. Says
Shivanandan Pare, head of e-commerce,
Trendin.com, Madura Fashion & Lifestyle,
We launched Trendin.com to cater to the
changing consumer. The idea was if the
consumer is going online, the brand should
The store pick-up concept is

popular in electronics as consumers
need a little bit of handholding to
personalise the product
AJIT JOSHI
CEO & MD, INFINITI RETAIL
material and sit at the stores iMacs to

design their clothes. A 3D visualisation
engine allows them to see how their final
garments would look. The store also has a
magic mirror that can be operated
through hand gestures and consumers
can use it to virtually try on garments.
As the Indian e-commerce market
evolves, customers will become more discerning and come to the internet for
things other than discounts and wide
offerings. For the apparel category, experiential e-commerce will become more
relevant, says Kulin Lalbhai, executive
director, Arvind Ltd.
Easier said
We want to reach the customer

whom we cant reach through
physical stores
KISHORE BIYANI
CEO, FUTURE GROUP
be there. The same thinking led us to launch

exclusive branded outlets 10-15 years back.
The brand also has a responsive mobile optimised site. The experience is similar to an
app browsing screen.
Eyewear retail chain GKB Opticals
launched its e-commerce portal in 2012.
While eyewear can be a difficult category to
market online, the 50-year-old retailer
hopes to leverage the learnings from its 60plus retail outlets to power its online stores.
The website has a try on mirror and a face
shape guide to help customers try-out
products sitting at home. Consumers can
also return, exchange and get the frames
they purchased online serviced at all of its
retail outlets. Dhruv Gupta, CEO, GKB
Online, says, Having an online presence
has also increased traffic and engagement
at stores.
For its part, Arvinds Creyate allows
consumers to create a garment on a threedimensional (3D) visualisation engine.
Customers can touch and feel apparel
72
For brick-and-mortar retailers to successfully move into other channels needs

radical rethinking in terms of the service
(always open), speed (right now), scale
(everywhere), says Devangshu Dutta ,
chief executive, Third Eyesight.
An effective omni-channel strategy
really needs to embrace every touchpoint as one unified whole. Studies have
shown that physical retailers who simply try to mimic pure-play online retailers are not taking advantage of their legacy, says Nikhil Prasad Ojha, partner &
head, Indias Strategy Practice, Bain &
Company. Firms must integrate both
the channels if only to avoid duplicity of
efforts. Agrees Vivek Mathur, CEO,
Giftease Technologies, Given that many
of these are older, larger businesses, silos
are often too hard to break, unless driven
from the top.
In contrast, in the more developed
Western markets, physical stores have
played an instrumental role in the growth
of omni-channel retailing. According to a
recent Forrestor study, Minding the OmniChannel Commerce Gap, such synergy has
many benefits physical stores can cut
merchandising costs and improve customer satisfaction when they move online.
By delivering products from local stores,
online players can cut delivery cost and
time. Brands need to use their distribution network when going online. Instead of
fulfilling an order from a central warehouse
brands can use their nearest stores to fulfil
orders, says Sushant Kashyap, who heads
fulfillment and omni-channel services at
Delhivery, an e-commerce-focused logis-
>
tics service provider, which also offers

omni-channel services to retailers to help
them integrate their myriad channels.
Gupta of GKBOptical.com says that the
biggest challenge is to ensure that the product is shipped on time. Leveraging inventory across channels and geographies
becomes difficult when you take into
account various state tax laws, he adds.
Infiniti Retails Joshi says, We are working
with our suppliers so that we can track each
other real time. For instance, if we are pushing a sale, they should be in a position to
transfer stock to the nearest distribution
centre. We are also trying to minimise the

time taken for a supplier to reach our local
warehouse by improving our logistics intelligence.
Croma is leveraging its distribution muscle to deliver orders the same day in 16 cities
where it has its stores. If a consumer orders
before 2:00 pm, a Croma employee will
deliver it the same day. He will brief the
consumer in case she wants product
demonstration and help with data transfer
for mobile phones. This is a key differentiator because everybody else is using a courier service, says Joshi, adding, Currently,
73
Croma has 97 stores and it has distribution

centres in Bangalore, Delhi, Mumbai,
Chennai Hyderabad and one in Gujarat.
With this network we are currently servicing
more than 300 cities and towns.
On its part, Madura leverages its central
warehouse backbone to ship products.
Earlier the warehouses were shipping bulk
orders. But once we went online, we had to
build capability to ship individual customer
orders. This required huge investment in
technology and employee training to equip
them to handle single shipments, says
Pare.
>
BIG DATA
in HR
A growing number of companies

are trying to apply a data-driven
approach to the unpredictable
business of human interactions
ANKITA RAI & ABHILASHA OJHA
ver wondered how Google

manages to draw the best out of
its engineers all the time? It
does so with the help of a retinue of smart managers. The
data mining giant understands that managers have a much greater impact on
employees performance and how they feel
about their jobs than any other factor. And
how did it develop this insight? Not by
chance, nor by accident. Its 2009 initiative,
code-named Project Oxygen, cranked out
what is referred to in popular media as the
Eight Habits of Highly Effective
Managers traits that have been incorporated into its various training programmes and have given the company statistically significant improvement in
manager quality for 75 per cent of the worstperforming managers, according to various reports.
While Google was smart in applying
knowledge gleaned from months of
research to better manage its workforce,
several other companies are still learning
the ropes. But the fact is workforce analytics is hot topic in HR discussions today and
a capability in high demand. To use the
words of an eQuest whitepaper, for human
resources in particular, big data marks a
74
>
historic opportunity to make the most
rigorously evidence-based human-capital
decisions ever.
Relevant, according to experts, in the
three core areas of talent acquisition,
learning and development and employee
engagement, the challenge now is to
derive value from analytics. As Aditya
Narayan Mishra, president staffing,
Randstad India, puts it, Analytics helps
HR find the blind spots in the company
identify departments that are doing better
and what influences success and how it
can be replicated elsewhere in the company.
Of the three areas, the most important,
of course, is the value analytics can add in
improving employee engagement and in
pinpointing the correlation between
engagement and performance, retention/attrition, growth of people in an organisation. A company can map the correlation between the recruitment cost and
customer satisfaction scores, for instance.
It can apply modelling with different kinds
of weightage and predict things like which
departments the new leaders are coming
from, says Rajiv Krishnan, partner and
leader, people & organisation Practice, EY.
But how does all of this work? The
answer lies, in part, in the very information
that the HR department in an organisation
encounters daily.
Why it is trending
Typically, if HR uses data, it collects business intelligence on things or events that
have already occurred. Through predictive
analysis, however, big data can tell HR professionals why something happened and
allows them to make some pinpointed forecasts. In fact, it is this predictive nature of
data analytics that is changing the role of
HR for the better. Earlier, when CEOs
and CFOs talked, the conversation was
based on solid data. HR conversation, however, was merely anecdotal. Now, thanks
to data analysis, HR is able to spot trends,
make predictions, create a roadmap to succeed and have conversations with other Csuite members of the company based on
solid facts, says Shaswat Kumar, partner,
Aon Hewitt. In his view, what is critical is
the HRs role to ask the relevant questions
failing which data analytics would be rendered irrelevant. The role of HR is impor-
MAKE DATA ACTIONABLE

To convert diverse and disparate data into tools for business insight, HR teams
must:
| Ask the right
questions: By
looking at key
indicators such as
turnover and
recruitment success,
absentee rates, HR
teams can ask the right questions
and pull out appropriate data to
gain better insights on how
organisational hurdles can be
cleared
| Integrate diverse
data: Collating and
integrating data
across
departments, time
frames and
geographies is key to unlocking the
value of the data an organisation
generates. To ensure that your HR
department develops the systems
and processes necessary for
effective integration, organisations
should cobble together an HR team
that has expertise in aggregating
data and analysing its meaning
| Stress on
compatibility: HR
executives across
geographies must
ensure their data
speaks the same
language. In other
words, there has to be
a consistent structure to input
information so that there are no
overlaps or costly omissions
| Unleash insights:
Staring at reams of
big data is not
enough; HR
executives must
have the capability
to slice and dice that
data and share
information with others. One great
way to communicate complex data
is through visualisation. Graphs,
infographics and one of today's
most shared tools online videos
can be powerful tools to help
digest the insights uncovered from
big data
Source: HR books and internet reports
tant and it has to start with the right questions and then analyse the trends correctly and predict the trends, adds Kumar.
Says B Sivaramakrishnan, managing
consultant, Hay Group, India, By using
data analytics in work force management,
HR can help companies maximise return
on manpower investment. For instance, in
manufacturing the impact could be 10-12
per cent of total sales while in services
industry, due to its people intensive
nature, the impact on ROI could be 70 to
80 per cent. In his view, the recruitment
cost in a company is on an average 15 per
cent of an employees cost to the company and typically 12 to 15 per cent of an
employees salary is training cost.
Those are quantifiable results. That
apart, predictive analytics can help companies maximise return on employee
investment and help them figure out if any
increase in recruitment cost increases the
chances of finding the right candidate who
75
can fit in with the culture of the company.

Now come back to employee engagement. If numbers are anything to go by, by
deploying data analytics companies have
been able to reduce attrition by more than
15 percentage points, improve hiring cycle
by 30 per cent. According to a Hay Group
study, The Business Case for Effective
Employee, by investing in engagement and
enablement of employees, companies can
reduce turnover rates by 54 per cent and
increase revenue growth by 4.5 times. In
fact, in retail the difference in sales could be
3x or 4x between a person who is engaged
and the one who is not.
Talent acquisition and talent management need to dovetail, and recruitment
should be tied to business results that the
organisation is aiming for. Consider the
financial services and insurance sector to
understand the significance. For one, predictive analytics has the capacity to keep
manning ratios high. If a banks branch
>
ing all the information was done manually.
As P Thiruvengadam, senior director
Deloitte, India, explains: When done in the
right way, tracking, analysing and sharing
employee performance metrics can be beneficial for both, you and your staff. You
should analyse real-time information, boil it
down into performance data and empower
employees with reports from that data.
needs at least 10 people but has only six, it

cannot work smoothly. Manning is a critical parameter, says Pankaj Bansal, cofounder and CEO, PeopleStrong. But to
make this work, HR has to make the link
among the data about the organisations
needs and use that information to implement a predictive analytic strategy.
Doing it right
Those in the business say that once data is
accessed, the next step is to understand
the engagement points and how it can be
leveraged for better results. According to
Hirak Kayal, vice-president, Applications
Outbound Product Management, Oracle
India, there are four engagement points
with respect to workforce management.
First, understand the behaviour and body
language of the candidate you are evaluating. Find out if the prospective hire is a cultural fit. The second is workforce modelling. It is a very unstructured and manual
process and depends on your organisations
objective. The next step is compensation
planning. There is lot of structural analysis
possible by using the companys internal
data. The challenge here is if you want to
benchmark the employee salary vis-a-vis
others in the markets. Thats when you
need predictive analytics.
In his view, performance evaluation is
the most important engagement point
and predictive analytics can help them
treat each employee carefully. It can even
predict the impact of performance
appraisal on the employee whether it
will increase the possibility of her leaving
or whether it will help improve her
engagement score. And when an organisation is more precise in finding the people with the skills it needs, it can reduce its
cost-per-applicant and cost-per-hire. So
there are these psychometric assessments
used by companies and offered by talent
assessment firms such as Wheelbox to
understand what skills a candidate
requires before the company hires him.
According to Bansal of People Strong,
even though the predictability of psychometric tests is limited to 70 per cent, it is
relevant in finding out the best-suited candidates for a job in the most efficient manner.
Lets see what Googles Project Oxygen
did right. The statisticians at Google gath-
Avoiding the pitfalls
ered more than 10,000 observations about

managers across 100-plus variables collated from various performance reviews,
feedback surveys and other reports. Next,
they manually started coding the comments to look for patterns. Once they had
some working theories, they created a system for interviewing managers to gather
more data, and to look for evidence that
supported their notions. The final step
was to code and synthesise all those
results to emerge with 400 pages of interview notes. Spread over a year, the results
were then collated, grouped and communicated to various divisions in the company. A host of training modules were initiated under Project Oxygen and at every
step, instead of depending on software,
the process of reading, rereading and cod-
76
The process of collating data, reading and

decoding trends is far easier said than done.
The biggest challenge in predictive analytics is having a unified set of data from the
same context. Says Kayal of Oracle India:
The challenge is having unified profile
information, including accomplishment
data of a particular employee, salary, aspirations, interest areas, education, skill set
etc. The data element is all scattered. It is
sometimes very difficult for an organisation to create a unified profile by accumulating all the data. But creating a unified
profile data for a candidate is crucial as this
is the foundation on which predictive analytics is done. Unfortunately, companies
fail to match their organisational objectives
with talent management objectives while
executing analytics. The more the delineation, it is tougher to have a talent management structure and build a leadership
pipeline. These problems are seen in succession planning, learning and development too, says Kayal.
Despite the odds, companies like Nestle,
Unilever, Pepsi, ICICI, for instance, are
doing a great job of culling data and using
it to study their employees and leveraging
people metrics and insights to improve
business performance and employee
engagement. Eventually, it comes down to
data versus insight. The skills of uncovering
insight and being able to communicate
this effectively as a story that correctly
influences human capital decisions, is of
critical importance in the global economy,
says Arun Dhaka, country sales director,
India and South Asia, Cornerstone
OnDemand.
>
A FabFurnish
experience centre in
Faridabad, Haryana
AN IN-STORE AFFAIR
To deliver a superior experience to the omni-channel shopper,
retailers need to align a rich front-end experience with an
integrated back-end infrastructure
ROHIT NAUTIYAL
eres just a snapshot of what a

shopper dropping by at British
luxury fashion house Burberrys
27,000-square-foot flagship store on
Regent Street in London can expect. There
are radio-frequency identification (RFID)
chips embedded in certain items of clothing and accessories so that when a customer approaches one of the screens in
the common areas or in a fitting room, she
is greeted with custom content say,
information about a bag's stitching and
craftsmanship, or a video showing how a
trench coat was worn on the catwalk. The
chips are attached before products leave
manufacturing centres to assist with
inventory tracking and management.

Too fancy? Not really, its just one of the
new capabilities brick-and-mortar retailers are deploying to deliver a superior pointof-service experience to the omni-channel
shopper.
The point is, in every category of products today the tension between the manufacturers and the two retail channels
brick and mortar and online is
mounting. While on the one hand retailers
and distributors are struggling to save their
shrinking margins, on the other hand, in
absence of the visual stimuli of physical
stores, online players along with the manufacturers are trying to figure how to create
the right consumer experience. Even when
marketers overhaul their communication
77
strategies to catch the consumers attention even for a split second, the new generation consumer has started sabotaging any
attempt at engagement, whether online or
offline.
In this scenario, if a customer spares
even a few minutes to visit a brick-andmortar store, the company behind it must
see this as a huge favour. More importantly, consumer brands should take every footfall as an opportunity to create an unforgettable experience. This is because the old
notion of a linear customer journey has
been splintered by the plethora of choices
available today. Every transaction online
or offline has a distinctive experience built
into it. This plain fact is often missed by
companies, says Lucy Unger, managing
>
EXPERT TAKE
things to avoid if you

wish to create lasting
consumerexperiences
Starting without purpose:

Make sure you know what
you are trying to achieve why
are you doing this and what are
your key success factors: footfall,
dwell time, revenue increase,
brand showcase, service etc. This
knowledge focuses every aspect
of the thinking and creative
development and ensures
relevant and effective consumer
experiences
LUCY UNGER
Managing director, South Asia,
Fitch Design
Anything that the brand

ultimately cannot deliver:
Relevant and lasting consumer
experience means being
authentic to who you are as a
director (South Asia), at global retail and

brand consultancy Fitch Design.
A different route
Retailers are taking two approaches to
make the point-of-sale experience unforgettable by upgrading the ambience at
the physical stores, and also by setting up
dedicated try-before-you-buy (TBYB)
shops. The second category comprises outfits where you go and experience products, no strings attached. In fact, some of
these outlets don't have the mechanism
to process a buy request. It is not a big
trend yet but it is a significant addition to
the retail environment because it represents two major developments. One, the
growing tension between manufacturer
and retailer brands (private labels), where
we see both brick and mortar and e-retailers pushing their own products at the detriment of national brands. A dedicated
TBYB store helps a national brand reach
the buyer directly with a better-trained
sales force. Two, these are also seen as a
brand and what you stand for in

peoples minds. The experience
has to be the proof-point of
your promise. Customers are
smart and they will see right
through you if you arent
Not understanding who

your customer is: You must
understand who they are, what
they want, why they want it and
how they want to engage with
you. Also never forget that the
initial sale is one thing but
creating an advocate for life is
actually the key. So focus on
how to deliver the experience
post purchase (and keep on
delivering)
Linear, flat customer

engagement: The world is
no longer linear in shopping
terms and customers in this
social age have many ways and
means of engaging. They want
reaction to the try and buy option many eretailers are promising. But in most cases
e-retailers have restricted the exercise to
select product categories and to select pin
codes. The other point to note is that while
the whole idea originated in the luxury
category (Miele for instance), over time it
has percolated into more mass categories
like say, paints and even kitchen and
bathing products.
Take Asian Paints for which the decision
to unveil experience zones was more strategic it had to create excitement in a largely low involvement category. The journey
began almost a decade ago following a
major shift in its communication strategy.
Back then and even now, Indian consumers
find the chore of painting their houses quite
daunting. The real problem exists right at
the start of the procedure. Consumers prefer to rely on the wisdom of a contractor.
Asian Paints decided to educate the consumer about the pitfalls of this disengagement the contractor may not understand
what you need or require or even jack up
78
brands and retailers to enter

into a dialogue, be responsive,
dynamic and inclusive. Great
retailers understand this and
relevantly employ the physical,
human and digital channels to
deliver their own unique blend.
Another word of warning
don't do things just because you
can; if, for example, you decide
the experience of your brand is
ultimately personal service
driven, don't make it all about
high-tech self-service
Creating experiences in
isolation of the rest of the
organisation: Every aspect of
your organisation should be
focused on the same vision
not just the retail. Ensure that
the brand, your customer and
your vision of their experience of
the brand is understood
and embraced by all aspects of
the organisation
the prices to keep a higher margin for himself through its advertisements and experience centres. To begin with there was no
roadmap for the experience centres and
the brief the company had for its design
agency was make our stores look nicer.
Over a period of time, Asian Paints along
with its design partner Fitch Design, saw a
huge opportunity in this project. Asian
Paints came up with two sprawling experience centres at Bandra in Mumbai and
Connaught Place in Delhi in 2008 and 2012,
respectively. People walking at both the
experience centres go through an experience that instills colour confidence. Says
Lucy Unger of Fitch Design, The staff at
stores was briefed not to pester customers
with aggressive sales tactics. At the same
time, we asked them to ensure that customers should leave the stores with a
roadmap. Interestingly no advertising
campaigns were executed to create buzz
about the two experience centres this time.
Within six months, sales of surrounding
cluster of stores near the experience centres
>
went up by 35 per cent. The shelf life of an

experience centre is not more than five
years. So you need to refresh the store at the
right time, adds Unger.
For its part, Kohler, the US-based manufacturer of plumbing products, targets
two set of consumers through its experience centres. While the first set comprises
commercial and residential real estate
developers and architects, the second set is
end consumers. In India, Kohler is present
across 260 single and multi-brand stores. Of
this, 100 stores have what the company
calls Experience Islands. These mini experience zones are spread in an area of 25 to
100 sq ft. Says Salil Sadanand, managing
director, Kohler India, These experience
zones are in line with our global strategy.
While operating in a low-involvement category like bath products, creating the right
experience is crucial because nearly all the
consumers walking into your stores come
with the intention of buying.
Kohler has worked hard to ensure the
customer encounters the right experience
at the store. For instance, audio-visual is a
key element of Experience Islands. Store
staff is trained for seven days every month
about new launches and on ways to push
the existing range. The company tracks the
performance of its Experience Islands
through a matrix based on product specification, sales and brand image.
Kohler has ambitious plans for its experience zones. It feels the shop in shop format is not enough to showcase its entire
range. So the company is setting up an
entirely new channel of exclusive experi-
ence centres that will be spread over 5,000

sq ft floor space.
Even players for whom experience
zones havent worked seem to be rooting for
the idea. Manish Sharma, managing director, Panasonic India, which has closed
down its two experience centres, says,
Whatever experience a retailer creates
must ease purchase decisions made by consumers. In 2011, Panasonic invested in two
large format experience centres in Gurgaon
and Mumbai for its B2C and B2B products.
Besides displaying its entire product portfolio including niche products related to
security and surveillance, Panasonic looked
at these stores as points to create consumer
engagement. The calendar for these
engagement activities was set by the store
staff in advance. For instance, weekly cookery classes were held with housewives as
participants using Panasonics cooking
range to prepare dishes.
Both the experience centres were shut
down last year. Says Sharma, In the electronics category, it makes sense to invest in
experience centres when a company has a
new range of products to offer.
It doesnt have to be fancy

Deploying state-of-the-art technology (like
Burberry does) is not the only way to ensure
an unforgettable consumer experience. The
key is understanding what the shopper
wants.
Take apparel for instance. Retailers
often forget that fitting rooms are the places
where a lot of decisions are made. In fact, a
survey by Envision Retail substantiates this
79
insight. Of 8,000 apparel shoppers who participated in the survey, 71 per cent who
tried on clothes in fitting rooms bought
something. Only 10 per cent of those who
did not use fitting rooms ended up buying
something. The idea is to give the shopper
the time and space to make up her mind.
Some e-retailers are looking at experience centres as a tool to deal with the last
vestiges of consumer resistance that
need-to-be-sure-before-putting-down-themoney feeling. Gurgaon-based furniture
and home dcor company FabFurnish
operates four large format experience centres across the national capital region and
in Bangalore. Each experience centre is
spread over 5,000 sq ft and is fitted with
touch screens with catalogues besides displaying some of the products listed on the
site. Says co-founder Vikram Chopra, Our
experience centres are meant to build confidence in shoppers who are serious about
buying high-ticket items. The experience
centres have also triggered sampling. The
company claims that its website gets 2 lakh
visitors every day. Chopra believes even if 5
per cent of these people make it to the experience centres, his job is done. Currently
each store is bringing in attributed sales of
~ 70 lakh a month, he adds. Going forward,
the company plans to invest in high streets
and in furniture hubs like Greater Kailash
and Kirti Nagar in New Delhi.
Eyewear brand Lenskart is using its
experience zones to create awareness about
the category. The company has so far
focused on building small physical stores of
not more than 200 sq ft in 30 smaller cities
and towns like Mangalore, Kolhapur,
Nagpur and Agartala among others. Says
CEO and co-founder Peyush Bansal, These
stores allow us to manage our pre- and postsales activities like building consumer confidence and after-sales services. This is
because in smaller cities people take time to
warm up to shopping online for certain categories of products. Each of its stores has
two touch screens on which shoppers can
place their orders after trying on the lenses
and frames on offer.
Lenskart, which started investing in
physical stores six months back, claims that
10 per cent of its overall orders come from
physical stores with an average ticket size of
~2,000.
>
PREPARING FOR
THE BIG
With the festive season underway, retailers

in the online and the offline world need to
prepare well to offer the best deals to consumers and earn trust
DEVINA JOSHI, ANKITA RAI &
SONALI CHOWDHURY
onday, October 6, 2014, was supposed to be Indias answer to

Americas Cyber Monday. It was
the day Indian e-tailing giant Flipkart
unleashed its Big Billion Day sale, promis-
ing unthinkably deep discounts across a

host of categories. The day ended up making history for all the wrong reasons the
websites server crashed frequently, there
were complaints of fraudulent pricing,
stocks ran out within seconds of the sale
launch, there were payment and delivery
glitches, and to top it all, an unsatisfactory
80
response mechanism from customer care.

In short, Murphys Law operated in full
force to Flipkarts injury and chagrin.
Founders Sachin Bansal and Binny Bansal
who had claimed to clock $100 million
worth of sales that day were forced later
to issue apology emails to their irate customers for not living up to expectations.
>
Juxtapose this against the success of
Chinese e-tailer Alibabas Singles Day sale
(hosted every November 11 since 2009 to
allow singles to pamper themselves). The
company earned more than $5.75 billion in
its 2013 sale a record for a single day anywhere in the world, almost three times the
sales of American Cyber Monday 2012.
Backed by impeccable logistics and technology support, Singles Day in 2013 witnessed 254 million transactions and 402
million unique visitors two-thirds of
Chinas online population, creating a benchmark for the world.
Like everything else in business, the
success of a sale of this scale boils down to
delivering on customer expectations that
you have set. In India, festivals and shopping go hand in hand several brands garner 20-40 per cent of their annual sales
during Diwali season alone. A retailer,
whether it is an e-commerce website or a
physical store, needs to be doubly careful
about what he promises during a festive
sale: the damages from a sale gone wrong
can be irreparable.
In Flipkarts defense, it isnt alone in
such a fiasco even physical retailers globally have witnessed property damage,
severe injuries, even deaths, due to unexpected crowd surges, as Devangshu Dutta,
chief executive at retail consultancy Third
Eyesight, puts it. Recently, Australian
retailer Targets website crashed during a
sale, and in the past, even Google and
Groupon have had website crashes during
peak sales.
What, then, should go into ensuring better preparedness during a discount bonanza in a bargain-frenzy market like India?
How should retailers both in the online
and offline world meet consumer expectations? What elements make for an ideal
shopping festival?
Inventory planning
The triggers for consumers to throng a sale
are many: frenzy, fear (of losing out on a
deal), vanity or plain parsimony.
Promotions that work well use the right
combination of these buttons. Take Big
Bazaar, which has year-round promotions
to create occasions of consumption,
whether one talks of Sabse saste din
(January 26 weekend), Maha bachat
(Independence Day weekend), or its sub-
Preview of products is important.

Find out beforehand which new
products/technologies are being
planned for launch during the
festive season
AJIT JOSHI
CEO & MD, INFINITI RETAIL
If you know that the spike in

orders could be huge, dont run
the campaign for the full day; run
it for a shorter duration
PRAVEEN SINHA
CO-FOUNDER & MANAGING DIRECTOR,
JABONG.COM
sales like Exchange Mela or Monthly
Bachat Bazaar. Once the consumer trigger
is established, inventory needs to be
planned on the basis of past experience
and predictive data analytics, as well as
81
considering macro-economic forecast

parameters: festival measures, community measures, mood measures etc. For
example, during certain festivals people
buy specific kinds of things, or communities buy certain items at some point in the
year. Next, Big Bazaar gets the best possible terms from suppliers, following which
items are moved into the store at a specific
speed. For Big Bazaar, the biggest satisfaction comes not from the quantity of goods
that moved during a sale period, but also
the velocity at which they moved.
For other retailers like Croma, the starting point is a conversation with brands,
two-three months in advance. We find out
which new products/technologies are being
planned for launch during the festive season, says Ajit Joshi, CEO and MD, Infiniti
Retail. We then ascertain what sort of
marketing support and display they will
need. The preview of products is very
important.
By this stage, Croma figures out each
brands fill ratio, which is the purchase
order issued versus the stocks received.
That efficiency varies from brand to brand.
Big brands have better forecasting and
hence better efficiencies. We are then in a
better position to ascertain the frequency
with which we will need the stock based on
volume projections, says Joshi. A new
phone launch in the country will obviously require a bigger inventory than a product
that has been around for some time. Croma
follows a strict new product introduction
or NPI process. This becomes especially
useful in the case of new products entering
India that do not have great familiarity to
fall back on and that may or may not do
well. Such a product is launched in select
stores. If the product does well, Croma is
then in a position to place a bigger order
and increase its spread to more stores. At a
chain level, Croma clocks an 8 per cent
inventory turn, that is, its total inventory is
rotated a minimum of eight times in a year,
while 12 per cent of its sales happen during
the festive season.
Take another technology retailer, The
MobileStore, which patronises seasonal
promotions instead of discounts, including
free accidental damage cover, theft insurance, extended warranty, free accessories
(screen protector, mobile cover, memory
enhancer) etc. Inventory planning is critical
>
in an industry where new products are
rolled out by the dozen almost every week.
Whether it is the iPhone 6 or something
else, we will ensure these phones are available first day first show, says Himanshu
Chakrawarti, CEO, The MobileStore. The
company uses algorithms based on demand
forecast inputs to plan inventory.
Online portal Fashionandyou uses data
analytics based on four years of sale history and performance of each category, brand
and price-point mix across 16 categories,
while FabFurnish takes into account the
past six months sales records and makes
forecasts based on demands in each category. Analytics technology is available far
more widely and at a lower cost than ever
before. Predictive analytics can be used by
retailers to create models for demand patterns, expected traffic, and even provide
dynamic pricing based on demand, says
Dutta of Third Eyesight. Remember the
accuracy of an analysis depends on the
input data, the robustness of the algorithms, as well as the companys ability to
apply the output effectively. (Read interview on Page 3 to understand how analytics
can
help
e-retailers plan these mega events better.)
Some retailers like Crossword, a popular
bookstore, run selective previews of a sale
specifically for their members, and then
open it up for a wider audience. This helps
them gauge demand and popularity of
products and also avoids the under-inventory issue. The online world can also learn
from offline retailers by deploying a timebound sale preview only for its loyal members. Also, if you know that the spike in
orders could be huge, dont run the campaign for the full day; run it for a shorter
duration, advises Praveen Sinha, cofounder and managing director of online
retailer Jabong. The idea is to avoid being
over-ambitious. As many marketers and
analysts have warned before, it is better to
under-promise and over-deliver than to
allow that big promise blow up in your face.
Dealing with traffic snarls

Traffic management is key to any sale
online, this translates into website visitors
whereas at brick-and-mortar stores, it spells
footfalls. In the physical world, jostling for
space can be as much a turn-off as server
jams on an e-commerce portal. Big Bazaar
sales are notorious for their serpentine

queues where customers have to wait endlessly to get in or check out. In fact, its yearly Independence Day sale has had to be
expanded from one day to a weekend over
time because of the huge demand. Now,
Big Bazaar is better prepared to handle a
disproportionately large number of people
to come in during big promotions. Traffic
management starts right at the entrance,
with barricades and security staff regulating the number of people who go inside at
a time. People are usually requested to wait
for some time and then they are let inside.
It doesnt stop at that. The retailer works
hard to create the right kind of ambience
and visual display at the point of sale.
The hero product of the sale will be displayed right at the entrance for example, so
that the minute a customer walks into the
store, she becomes aware that something
82
special is underway. In case of buy one

get one free or buy this, get that free type
of offers, the two items are placed together, possibly gift-wrapped as a package, to
make them look enticing.
Offline retailers ensure they decorate
their stores attractively during the festive
season and train the sales on handling such
huge traffic flows without getting frazzled.
Interestingly, Croma uses the time before a
sale, particularly the month of shradh, to
educate sales executives about brands and
upcoming launches so that they are ready
to answer consumer questions once the
sale starts. Ditto for The MobileStore, which
uses the period before the promotion to
train its shop-floor hands on how to give
consumers a live experience of handsets
and comparisons.
Anticipating footfalls is mostly about
experience and applying that insight to predict future demands. We have realised
>
over time that things like heavy policing
on some days, or the availability of parking
spaces etc, has a dramatic effect on footfalls, says Joshi of Croma. Also, it was
assumed earlier that on a long weekend,
people would flood malls for a sale, but in
big cities like Mumbai and Bengaluru, people react differently now by packing up and
travelling to, say, their second homes on
the outskirts or even in other cities.
To avoid queues on the dhanteras day
the day Hindus consider auspicious to buy
precious metal or expensive household
products The MobileStore allows consumers to pre-book upcoming launches.
Pre-booking is a great mechanism to manage traffic as one can anticipate how many
people will walk into the store.
Managing traffic is no less cumbersome
online. To improve customer experience on
the site, e-tailers should allow customers
access to information on inventory and how
long it will last right upfront may be on
the home page itself as some companies
like Amazon are doing. When designing a
campaign, you have to know at what time
the peak will come and how the flow will
continue, says Sinha of Jabong.
E-retailers should also provide timely
information to customers to earn their
trust, says Ankur Singla, CEO & founder,
Akosha.com, an online consumer forum
that aims to resolve customer complaints,
adding, effective customer communication becomes even more important during
a sale.
Depending on the SKUs on sale and discounts being offered, one can determine
the number of transactions that can happen during the sale. Based on the past history, find out how many conversions happen on a sale day, advises Pragya Singh,
assistant vice-president, retail and consumer products, Technopak. Design your
marketing campaigns keeping in mind the
objective, so that you invite only a certain
number of people and not the whole
world.
Logistically speaking
For an online sale, technology and logistics
is an added area for concern. The efficiency and scalability of Alibabas network
could be gauged from its handling of 156
million packages generated on Singles
Day in 2013, compared to a daily average
of 13.7 million packages generated from
transactions in China retail marketplaces
(in 2013). Alibabas cloud computing platform enabled it to handle the traffic volume generated and manage transactions.
The company also stirred demand by
sending out $50 million worth of digital
coupons prior to the sale. Some of these
were specifically designed to drive purchases through mobile devices or on social
networks. Free data was also offered to
customers in some areas so they wouldnt
exceed mobile data limit while shopping.
Strikingly, mobile sales made up 21 per
cent of the transactions.
We support our merchants to carry out
seamless delivery of their shipments
through our powership programme, says
Design your marketing

campaigns in such a way that you
invite only a certain number of
people and not the whole world
Shivani Dhanda, head, marketing, eBay

India. The service includes product pickups from an eBay merchants doorstep,
automated tracking of shipments and faster
deliveries by logistics service providers.
The logistics team needs to be prepared to
handle additional workload during a big
sale. This can mean hiring or outsourcing
more staff, getting temporary workers
aboard etc.
Sanjiv Kathuria, co-founder and CEO,
DotZot (the e-tail logistics arm of DTDC),
says, We assess what the business plan
means in terms of the number of shipments, orders sizes, weight of shipments
(whether the e-retailer is planning to sell
more microwave ovens or mobile phones)
and then align ourselves with the retailer
and accordingly book space in aircrafts.
Delivery is just one part of it; the logistics
partner also has to see how many pick-ups
83
and dispatches are to be done in a day. If in

a regular week, we pick the product from
the retailer twice a day, we have to build
capabilities to quadruple that for sale periods, says Kathuria. The staff has to be
incentivised to work longer hours or handle
more packages a day. Unless planned in
advance, one can expect a day-long sale to
end in minutes, leaving scores of people
dissatisfied.
Paying the price

Pricing can be fixed on the basis of the
SKUs selected for sale, category margins,
popularity of the product, past revenue
from same/similar brands during a sale
period and so on. Discounts offered by
competition need to be tracked as well.
Indeed, deals and discounts should be
thought of well in advance, after discussing
them with vendor partners. While offering
discounts, e-commerce portals usually get
approvals from the vendor. We provide
merchants of all sizes a level-playing field
to compete for the share of the buyers wallet, which leads to an automatic mechanism of competitive pricing so that the buyer gets the best deal, says Dhanda of eBay.
What is an absolute no-no for a retailer
is manipulating prices before offering discounts on them. For an e-commerce business, the combination of external analytics
showing an inconsistent pricing trend and
social media to spread negative messages
cause the quickest, biggest damage to the
consumers trust in the brand, opines
Dutta of Third Eyesight.
The intent has to be correct.
Perceivably false discounting was thedownfall
for
Flipkart,
opines
NChandramouli, CEO, TRA (publisher of
the Brand Trust Report). This is not the
information arbitrage age and one cant
falsify data. People search and compare
products on the internet before buying
them. To regain trust Flipkart will have to
tout honest prices, safe transactions and
exclusivity of its deals, say analysts.
Server capacity can be relatively easily
enhanced, merchandise availability and
service levels can be improved these
aspects have technical fixes, but repairs to
the reputation take far more effort and
involve factors that are outside the companys control, sums up Dutta.
>
DEMERGER
BLUES
A corporate demerger can be organisationally disruptive as it can
cause stress and broken bonds. Heres how organisations can
mitigate the potential risks
ROHIT NAUTIYAL & ABHILASHA OJHA
oday businesses and organisations

face relentless pressures to become
leaner. Such demands are the result
of global competition and rapid technology change. Many organisations have
responded by corporate restructuring and
downsizing, often spinning off divisions
originally part of the larger scheme of
things. The logic is, when you demerge
different units, each unit can focus on specific areas of business, sharply improving
their prospects in the larger marketplace.
And if the stock prices of the recently
demerged entities in the country are anything to go by, the market has definitely
given a thumbs-up to most demergers.
One of the more visible signs of organi-
sational restructuring is that many firms

have become flatter on the organisational
chart. In search of efficiencies, some of
them have removed entire layers of management to speed up communication and
reduce headcount.
So far so good. But what often ends up
roiling the water is the prospect of employee redundancy (HP, which is headed for a
split, may cut around 55,000 jobs globally),
redeployments and job separation as a company gets into the restructuring mode. A
review of literature on spin-offs and demergers seems to suggest that a split in business
can be organisationally disruptive as it can
cause stress and broken bonds between
employees who feel vulnerable and not in
control of their careers. Given this, experts
suggest corporate leaders must ask some
84
fundamental questions before embarking

on a demerger exercise: How can the company work to minimise the human impact of
a demerger while remaining competitive?
Indeed, how does the psychological contract
between the worker and the employer
change post a split? Above all, how can the
workforce be motivated to perform better
after the split?
It must be understood that regardless of
whether an organisation conceptualises
and designates its spin-off as re-engineering or re-organisation of business, the
adoption and implementation of workforce
reorientation strategies will inexorably produce considerable financial, organisational, and emotional effects. While some such
outcomes can be anticipated and are tangible, others have unexpected, long-term
>
LOOKBEFORE YOU SPLIT

Separation can be painful. When planned
carefully, the rewards
are huge. Here are six things to think about:
>> Use the demerger exercise as an opportu-
nity to address long-term problems. You

need to clearly understand why the demerger is taking place after all. Invest time in
assessing the impact on those who are
moved to the new entity, and the ability of
the organisation to serve its customers.
Answer questions like what systems will be in
place for the demerged company? What will
be the support from the parent company in
the initial phase of operations? What tools will
the HR use to communicate with the employees so that the best talent is retained and no
one feels shortchanged?
Before taking a final call on the split, ask
employees about their concerns and seek
their input. Never underestimate the value of
asking your employees for ideas. Even if their
ideas do not make good business sense and
cannot be put into action, you, as the
employer, will have demonstrated to your
workers that they matter. Make special efforts
to solicit the input of star employees or
opinion leaders within the organisation, for
they can help communicate the rationale for
the impending restructuring to their fellow
employees and promote trust in the restructuring effort. Involve the HR team right at the
outset, ask for their inputs in developing the
>>
consequences that are difficult to measure.
Back to basics
Speaking to The Strategist recently, Wayne
F Cascio, who has written extensively about
employment downsizing and restructuring, had said that corporate restructuring
exercises (including demergers) have deep
psychological scars on employees (existing and the outgoing ones). Cascio, who is
a professor of Management at the
University of Colorado, says that to mitigate
the risks companies must begin by asking
a simple question: Are we facing a shortterm crisis or do we think that our business needs to undergo fundamental struc-
communication that would

eventually filter down to employees.
Keep the channels of communication open while retaining
focus on both the employee and
the customer. Make employees
understand why a new entity is being
carved out, or why a division needs to
have its own identity instead of being seen
as a liability. Explain to customers why a
separation from the parent company is
important. Communicate in a variety of ways
in order to keep everyone abreast of new
developments. Executives should be visible,
active participants in this process, and be
sure that lower-level managers are trained to
address the concerns of victims as well as survivors.
If layoffs are necessary, make decisions in
a consistent manner to ensure that employees perceive the process as fair. Before laying
off employees, be sure that you have looked
at all the options, including asking your
employees whether they would be willing to
make small sacrifices for the good of the
company. Employees can show surprising
loyalty and flexibility if they perceive their
employer to be fair. Try to retain your best
performers, and provide maximum advance
notice to employees whose services you need
to terminate. Ensure that management at all
levels shares the pain and participates in any
>>
>>
tural changes in that we need new plans

and new strategy, a complete overhauling
to move forward? In other words, to make
the move successful, the organisation
needs to set out the goals clearly before
embarking on a demerger or any other
manner of restructuring exercise.
Once the business leader is clear in his
mind on what the objective is, the expectation from the employees becomes easier
to set. According to Sridhar Ganesan, country head, Hay Group India, while the
demerger mandate is always clear most of
the time to grow the business in a completely independent landscape it is the
mindshift of employees that needs to be
85
sacrifices employees are asked to bear.
>> Keep the communication going even after
the demerger is complete. It could be an

idea for HR teams, among other teams, to
continue communicating with the people till
both the companies achieve stability. This
will minimise disturbances to both the parent and the demerged company and reduce
speculation.
Examine all systems and processes in the
light of the change of strategy or environment
facing the firm. Train employees and their
managers in the new ways of operating.
There is enough evidence to show that firms
in which training budgets are increased following a restructuring are more likely to see
improved productivity.
>>
With inputs from Sridhar Ganesan, country

head, Hay Group India
plotted carefully before the restructuring

takes place. Employees can be concerned
about their roles in view of the talent movement that will take place. The accountability of the new company also goes up with
the pressure to perform better, he adds.
The best way to deal with this scenario is
through communication. Crystal clear communication, to be precise. This means the
HR has to be taken into confidence early on
in the process so that it can chalk out a communication roadmap for the people who
stay back, for the people who move on, and
for those who must go.
See how Future Group managed its
demerger exercise. In 2012, Pantaloon
>
Retail India and Future Ventures India
decided to demerge their lifestyle fashion
businesses into Future Fashion. Given the
speed at which the company was restructuring (it further demerged its businesses in
fashion, hypermarket and food) even altering its business model time and again, it
was natural for the employees to feel
uneasy. Looking at the growing restlessness and uncertainty among employees,
the company management took two key
decisions pretty early on its course first,
that it had to talk to the people; and second, that all communication had to flow
from one common source that would filter
down to the last employee, even those operating from the shop floor.
To this end, the company announced a
special-purpose telephone number, dialing
which any employee could get in touch with
Future Groups founder Kishore Biyani.
Additionally, every Friday Biyani addressed
and updated the employees on the companys plans. Videos were shot specifically targetting the shop floor staff, in which Biyani
briefed his employees about the latest developments at the company. The whole exercise was orchestrated in a manner that people felt they knew what was going on leaving
little room for speculation. We constantly
sought feedback from people, tried to
understand how we could add value to the
employees role in the restructuring phase,
says Kaustubh Sonalkar, head, people office,
Future Group.
Planned meticulously over five quarters,
the demerger process left very few casualties
in its wake. The best part, according to the
company, was that there were no lay-offs,
zero attrition. The HR team had so much
data that it could distribute roles and job
opportunities within the organisation, says
Sonalkar who agrees that many Indian companies still need to refine the systems and
processes to make a demerger smooth. The
spotlight cannot be only on the shareholders; you have to understand that value erosion can happen when employees are dissatisfied or asked to leave, he adds.
According to independent HR consultant Gautam Ghosh, A corporate spin-off is
not necessarily bad news for employees. The
problem is that many organisations do not
communicate a demerger strategy to their
employees proactively. In fact, in my experience, even some MNCs, known otherwise
for their professional management practices, fail to share a clear roadmap with their
country or regional offices making the whole
process painful and fraught with risks.
Ghosh warns communication that is oneway is not good enough. A company that
runs a global business should consult the
leaders of all the countries to assess the HR
implications of tough business decisions.
This will help them avoid bad press, adds
Ghosh.
Analysts say that companies that have
split businesses successfully in recent years
such as Marico, Crompton Greaves,
Polaris and Wipro have planned well and
have been rewarded handsomely. Some of
them have even helped outgoing employees
via out-placements with the promise that
they can return at an appropriate time in the
future.
That said, the communication strategy
has to be more refined. Gurprriet Siingh,
country head, YSC India, an HR facilitator,
points out that some organisations tend to
procrastinate on breaking the news relating
to far-reaching changes in the organisation
by design. Demergers can create confusion among employees and affect the companys performance at the stock market.
Responsible companies must know that it is
the employees who have to finally bear the
86
impact of such decisions, some of them may

have to pay a heavy price if things go offtrack. So it is best if the people know the
facts before the shareholders do.
Rajiv Kapoor, chief people officer at
Fortis Healthcare, adds, Not informing
employees timely about demergers could be
a ploy to get rid of some part of the workforce. This includes employees who will
start looking for opportunities outside the
organisation at the sign of trouble. This will
ease the downsizing drive.
Clearly then, the success of a business
split boils down to transparency and clear
conversation between the employer and
the employees. The secret sauce is to tick all
the boxes relevant for any restructuring
exercise: preparing early, putting together
a transition team, focusing on clear communication and knowing that engagement
(even with outgoing employees) wont be
over even after you have gone through the
legal routine.
>
File photo of
Nissan Motors
Micra on the
assembly line at
its plant in
Chennai
A bumpy ride
With a 2.2 per cent market share since its launch in India a decade
ago, Nissan is clearly struggling to get its act right in the country.
Heres what other marketers can learn from the Japanese
automakers mistakes
DEVINA JOSHI
valia is probably the most obvious

example where we took frugality to
mean cheap, and it doesnt. You
cant sell a van in a passenger car market,
Andy Palmer, executive vice-president and
chief planning officer at Nissan Motors told
The Strategist during a recent interview.

Palmer went on to explain how the Evalia,
designed for Europe, failed to realise that
skimping on space at the rear of the car
acceptable in Europe when commuters
tend to stock travel gear for long weekends
is a terrible idea in the Indian context, as
the owner of the car tends to sit at the back,
87
driven that he usually is by a chauffeur.

A dismal performance, missed sales targets and customer feedback led to a refurbished avatar of the Evalia within a year of
its launch. The seven-seater MUV, priced at
~7.2 lakh (ex-showroom, Mumbai), was
reconfigured to suit the Indian market with
reclining captain seats in the middle row,
E X P E R T TA K E
More than meets the eye

There are three classes of products:
Products that fit into my normal routine where the
brand needs to find a place in my home. If you try
and persuade me that I am a junglee if I dont use your
product, it wont go down well. Pomposity cannot be
there. Such a brand is not visible to the world and fits
into what I already do.
1
ANAND HALVE
CO-FOUNDER &
DIRECTOR,
CHLOROPHYLL
The second class has products that are visible, with

high brand prestige value but are also
changeable, like Lacoste, Benetton, Nike etc. The world
is aware of the brand I use which, in a way, speaks of
who I am. In a lot of such product categories,
people dont have a singular brand preference. There
may be a Nike T-shirt in your wardrobe, along with a
Lacoste one. The same holds true for restaurants. I
wont eat only at McDonalds; I will eat at other places
too it is about getting me to include the brand in that
favoured basket. Here, the brands challenge is to get
into a consumers cluster of consideration and
to stay there.
sliding Euro windows on rear doors and

greater room at the back, among other
things. But it wasnt just the Evalia
Nissan Indias sedan Sunny and hatchback
Micra are also guilty of a series of execution
and marketing gaffes. Then there was
Nissans unsuccessful distribution partnership with Hover in India, which ended
in a bitter divorce earlier this year.
It is worth noting how the formidable
Japanese car maker responsible for masterpieces like the Infiniti series globally
has underperformed in India and is now
trying to correct itself on virtually each of
Kotlers four Ps. Hidden somewhere in its
mistakes are crucial lessons for other global brands looking to prise open the Indian
market. Lessons that can help them stay
smart and relevant in a market that will no
longer tolerate a one-size-fits-all approach.
An insightful lesson
It really boils down to the nature of the market and the categorys mental models. A car
is not a car in precisely the same way across
different markets. For instance, in India,
The third class of brands involves serious

investment, which is where auto comes in.
Globally, people owning a BMW do not sit in the rear
because BMW was designed for the pleasure of driving.
In India, it is the drivers joy to be driving it, but youre
still happy in the passenger seat. This is because when
you get out, people notice you getting out of a BMW. So
that is an example of the culture of a country. The
numero uno rationale for Indians buying a car is
fame/status. If you want to bring in product features,
make them so different that it stands out at that price
point. Nissan has to be your third car. The Renault has
done this well with Duster. At a basic price point, it was
a pseudo SUV that made a consumer feel good about it.
In India, cars arent simply about luxury or joy. Even if a
customer goes to a Maruti Suzuki showroom
to buy an Alto, why do we see a pooja thali with
agarbatti and mithai there? Why do you not do
that for a washing machine, which is a functional
product too?
car safety is currently not of paramount

consideration the way it is in developed
markets. Indians, besides expecting fuel
efficiency and value for money, look at the
size of a vehicle and its outward appearance while making a purchase decision, as
it is a social status-driven category. Indeed,
if SUVs are sold on ruggedness and capability in the Western markets, in India, it is
more about the looks and the size. The
Mahindra XUV 500 was a success because at
that price point, it allowed people to get a
sense of bigness, says Santosh Desai, MD &
CEO, Future Brands.
Why this quest for status in a car? That is
probably because Indias current auto buying generation has not grown up with an
automobile in the house. A lot of these buyers probably got their first car as an office car
in their late 30s or early 40s and hence, these
are high status products. While todays children are growing up with cars and will probably be minutely discerning about engine
capacities, power steering, automatic windows etc, the previous generation may not be
so nuanced in their car knowledge. For a
88
farmer in Punjab, there is no difference

between a BMW and a Mercedes; they are
both just symbols of wealth, says brand consultant
Anand
Halve
of
chlorophyll. So, whether an auto major likes
it or not, auto products cant get away from
that association of status in India.
This was also the most important consumer and category insight that Nissan overlooked and hence, the brand never really
became a status symbol. Zero status is perhaps a problem shared by Fiat: the brand
name immediately evokes memories of
Mumbai cabs and the old Premier Padmini.
No matter how many Lineas are launched,
Fiat first needs to wipe out that old impression, Halve sums up.
Kelloggs is a brand that comes to mind
as one talks of not tailoring ones strategy
according to the demands of the local market. Culturally, Indians like their breakfast
hot, and also seek variety in their meal;
across households there are discussions at
night on what should be had for breakfast
the next day. Kelloggs offered neither of
the two. The American corn-based cereal
>
worked best with cold milk, and expected

Indians to significantly change consumption habits simply because it was a superior breakfast item from the West. But
Indians didnt take too kindly to a perceivably elitist, soggy product for breakfast.
Kelloggs change-your-habits-so-thatyou-can-appreciate-me strategy bombed
and it took quite some time for the company to come back on track. A classic mistake
in having too much faith in what you have
to offer, says Desai. The brand eventually
introduced variants in Indian flavours and
in the form of chocolate snacks, managing
to correct its entry-point mistake somewhat. Over the years, its growth has also
been propelled by increasing relevance,
with the emergence of working couples and
the resultant need for food that can be prepared in a jiffy.
If changing habits was a difficult process,
why did Maggi succeed where Kelloggs
failed? Two factors, say brand analysts
Maggi didnt position itself as a
breakfast/lunch/dinner mainstay, nor did it
compete with the main meal. The anytime
snack was delivered on taste which gets
disproportionate importance in India
thanks to its masala tastemaker. India didnt become a noodle-eating nation, neither
did our habits change because of Maggi.
Maggi made the change seem like an extension of our current eating habits, along the
axis of tradition, says Desai.
Or take the example of teabags, a still
underpenetrated category in India. Some
feel they still dont fit in with the prevalent
tea drinking behaviour of the huge majority of Indians, who prefer to boil tea leaves
to fully extract the flavour out of it. That
is Indian frugality at play, says Pranesh
Misra, CMD, Brandscapes Worldwide.
Also, the whole premise of teabags is built
on convenience a proposition that may
be relevant to a certain section of the market but not for the vast majority. Which
brings us to the next lesson: customisation.
With you, for you, always

Nissan made quite a few errors in product
design in its early days. Take the Nissan
Micra, a fabulous performer in Europe. But
in India, the interiors were not on par with
competitors like the Maruti Suzuki Swift or
the Volkswagen Polo, says automotive
89
expert Amit Kaushik, principal analyst, IHS

Automotive. The Micra fell short on the
quality of plastic used in its interiors and the
comfort and stature of seating positions.
That apart, the use of expensive imported
AV systems made the newbie a tad more
expensive than what people would have
liked. On its part, Nissans Sunny also left a
lot to be desired, which meant it would lag
behind the Maruti Suzuki Dzire and the
Honda Amaze. To give it credit, Nissan has
been quick to launch a revamped version of
the Sunny some time ago, with a clear
attempt to make it look more premium.
Here one can draw an analogy between
the Nissan Sunny and the Honda Civic. For
any car to run smoothly on Indian roads,
ground clearance (distance between the
lowest point of a vehicle and the road) is a
deciding factor, as India doesnt boast of a
good road infrastructure. Civic, because of
its low ground clearance, didnt meet with
expected success in India initially. One
cant dump a product made for a developed
market here, says Kaushik. Honda got the
packaging right at the first shot with the
Amaze which had higher ground clearance.
Sometimes it is the little things. General
>
Motors Chevrolet Optra and Aveo, for
instance, challenged the habit of drivers,
who would end up activating the wipers
while trying to signal a turn. Simply because
the levers were placed differently. Or take
the Ford Escort, which was launched in 1997
and had power windows next to the front
seats only. This essentially meant that the
driver on the back seat had roll-up windows
while the chauffeur had power-up. It took
the company some time to identify the problem and fix it.
Some global brands think, says an analyst, that India is an emerging market
where habits can be taught or changed. So
when consumers see something better,
they will switch. The thinking goes like
this: so you are emerging, let me pull you up
on a road to a better future, says Desai.
But in India it doesnt work like that
because the Indian consumer doesnt grant
any brand that right. It is a very difficult
lesson to learn.
So customisation is a big deal in India.
Even a behemoth like Nokia lost its plot in
the country by missing out on the dual
SIM revolution initially and then on many
other counts. Being largely a pre-paid market, Indian consumers often switch
between service providers in search of the
best deal. As they exhaust talk-time on one
SIM, they quickly switch to the other without having to change the phone. So the
value attached to a dual-SIM phone is
much higher than probably warranted.
Initially, Nokia innovated with products like the torch phone for
India, but one strategic mistake
not latching onto the dual
SIM technology led to a
stumble from which it never really recovered.
Gupta, managing partner at digital agency
Bang in the Middle and ex-planning head at
Grey Worldwide.
Another rule of marketing is if the product operates in the lifestyle category, the
communication must speak that language.
Again, Nissan failed to make an impression here. Its Caaaaar ad for the Sunny
didnt say anything about the brand or its
heritage. There are brands that have gone
the other extreme, assuming Indians will
shed a tear faced with emotion-laden
advertising and open their purses. One
would recall Chevrolets early communication which had a whole dip in the Ganga
sequence with a welcome to India type
positioning. Dont tell me youre more
Indian than I am, says Halve. If youre a
Lamborghini, by all means tell me about
design. But if you dont have that exceptional design which most brands dont
then please just appreciate the categorys
role in my life.
Even on the distribution front, Nissan
has struggled to form strong partnerships.
A flirtation with Bajaj as Palmer put it,
didnt work out, and its only long-standing
partnership with Hover failed miserably.
When you come up with an additional distribution partner, you need to pay a premium to him and that additional cost gets
passed onto the consumer, explains
Kaushik of IHS.
Not having a distribution network can
Marketing and
distribution must-dos
Needless to say reading
your audience well is
Rule # 1 in marketing.
But the task becomes
difficult if were talking
of audiences with different psychographics. A BMW
participating in a bridal show to
push the brand as the ideal bridal car, for
instance, will have repercussions that will
be damaging in long run, says Naresh
90
affect even the most prestigious brand.

Apple in India, while a great branding success, is a distribution failure, says
Siddharth Singh, associate professor and
director of the Fellow Programme in
Management, ISB. On entering the Indian
market, by tying up solely with telecom
companies like Airtel and Vodafone for distribution, the brand limited its reach. It
isnt a telecom companys core business to
push handsets as a majority of consumers
have pre-paid services. Just think if
Apple wants a significant share of the
smartphones pie in India, it isnt even available enough for purchase, says Singh. And
only so much of that non-availability has to
do with creating artificial scarcity.
Nissans Palmer has also admitted to
other key mistakes like not having its
own R&D facility in India which it corrected by launching one. As things stand,
Nissan plans on increasing its dealer network to 200 dealerships by FY 2014-15, and
is also putting greater emphasis on the after
sales support.
Mind you, Nissan is not the only one.
Many global companies that arrived before
and after it are guilty of making
assumptions about the Indian market that
arent backed by credible research. Some
wind up as fast as they land up thinking
India wont change as a market. But Indian
consumers have demonstrated they move
fast if they see a merit in that change. This
resistance to change is, in fact, more apparent in the developed markets, says Misra
recounting his own experience. The Nissan
story also illustrates that one mustnt
import ideas blindly into this country. Like
any other market, India is unique and
needs customisation. I suspect
Nissan has been a little cautious in
its approach to the Indian market. It is a highly successful
company and will get its
India act together soon,
says
MG
Parameswaran, advisor to FCB Ulka.
The point, clearly, is about how
quickly one identifies
ones mistakes and
fixes them.
>
THE BIG
LEAP
More and more traditional
consumer companies are
borrowing research skills
and tools from their online
counterparts
DEVINA JOSHI
ometimes, even the most mundane things can extend

some profound perspectives. There was this retailer
who noted a simple habit of one of his regular morning
shoppers while running through video footage: she would
walk into the store, pick up a pint of milk, follow that up with
bananas, and check out. Imagine her surprise when one such
morning she found bottles of banana milkshake stacked innocently along her shopping path. The retailer in the story, UKbased Tesco, started on the data analytics journey several
years ago and hasnt looked back it is famous for incorporating customer science into almost every aspect of business.
Globally, some QSRs (quick service restaurants) like
McDonalds employ quantitative video ethnography (trained
cameras) on drive-through lanes to determine what items
are to be displayed on its digital menu-board dotting the driveway. When the lines are longer, the menu features items that
can be dished out speedily; during low traffic, the menu is
promptly changed to reflect items that take longer to prepare.
In fact, McDonalds use of analytics is pervasive it uses
point-of-sale data fed into a global data warehouse from the
34,000-plus outlets worldwide, in addition to data unique to
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each restaurantsuch as demand, customer arrival patterns, in-store and drivethrough configurations, product mix,
staffing, layout, menu etc. As part of its
simulation modelling, the QSR uses a variety of technologies, including eye tracking
to study how customers move through a
restaurant and video analytics to track time
spent in the store and drive-through.
In the US, retail chain Macys adjusts
pricing in near-real time for 73 million
items on the basis of demand and inventory, using SAS Institute technology.
Why is all this interesting? Because
these companies arent the digital-bornand-bred variety. They dont possess the
advantages of, say, e-commerce giants, for
whom data analytics is pretty much a
hygiene factor. Increasingly, offline retailers and brands whose core revenues
arent from digital means are trying to
bring themselves up to speed on all things
big data, to push their business goals and
keep up with competition.
For many such companies, research has
moved from data based on survey to data
based on consumption. With greater access
to transaction data, rather than asking customers what is working for them, conclusions are being drawn on a proactive basis.
Disciplines like sales analytics/channel
analytics have now become de rigueur.
This particularly helps in promotions and
discounts; you can immediately tweak
them on the basis of market
feedback/trends, says Saurabh Mittal, vicepresident, client services, consumer packaged goods and retail, Fractal Analytics.
Big data in retail is doubling in India
every six-eight months. With single digit
margins, big data is most important for
retail, says D Shivakumar, CEO, PepsiCo
India. With over 100 million active social
media users today, location is slated to
become very important, and hence a focus
on smartphones is essential.
Clearly, technology is a key enabler of
a brands go-to-market strategy. Three
companies in particular stand out when it
comes to data readiness: Future Group,
which is using its loyalty data for increasing consumption and launching apt packaging; PepsiCo, for better operational efficiency at the ground level, and Nivea, for
its operations and product innovations.
With over 100 million active

social media users today,
location is slated to become
important. Hence, a focus on
smartphones is essential
D SHIVAKUMAR
CEO, PEPSICO INDIA
At the operational level

Every day, theres a huge amount of data
generated pertaining to sales, products, customer feedback etc. Based on the business
model and data requirements, you have to
figure out the best data mix. At Nivea, the
sales team gets daily, weekly and monthly
dashboards customised for each individual,
depending on which territory the sales officer is in, so that he is not overloaded with
data. He gets 10-12 critical data points/parameters relevant to him every 24 hours so
that he can manage his work better. There is
a hierarchy approach where his senior gets a
view of a larger territory, and in turn, his
senior gets a view of the complete zone and
so on. Giving executives actionable data they
can actually use is better than overwhelming
everyone with a full sales report. It isnt just
about the availability of data; it is about focus
on the right data points, explains Rakshit
Hargave, MD, Nivea India.
Nivea uses certain customised ERP
(enterprise resource planning) packages
for conducting historical trending on the
basis of inputs given by managers. Whether
it is for demand or supply planning, dispatch or inventory planning, this approach
helps in managing a larger system with
multiple SKUs and locations. Elements like
stock forecast accuracy have become much
better
compared
to
8-10 years ago where manual systems of
estimates would get collated, leaving in its
trail a higher possibility of error.
Operations is anyway a left-brain job:
process-led and scientific, says Sandip
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Tarkas, president, consumer strategy,

Future Group. The company uses data to
look at product adjacencies (a combination of products sold best as a package),
product display and the depreciation rate of
inventory. Carpets can either be stacked
horizontally on the ground in a pile or dangled from hangers vertically, for instance.
The Future Group uses algorithms to figure
out at what rate they are picked up under
each kind of display, thereby arriving at the
right kind of display for every category.
Now consider PepsiCo, which has a
four-fold objective for its sales automation
system: standardise, simplify, automate
and eliminate. The system enables frontline sales teams to streamline processes
and manage time better. We introduced
hand-held devices in urban markets three
years ago that capture market data that is
integrated with our back-office operation
software at the distributor point to manage
inventories and billing, says Sudipto
Mozumdar, senior director, customer
development, PepsiCo India. This has
helped us to move all the distributor claims
from manual to 100 per cent automated.
Lets start with the millions of retailers
that stock PepsiCos products. Through
hand-held devices, the company tracks
what each store is buying and selling
over a period of time. With this knowledge,
PepsiCo can tailor products to specific
stores based on their needs and consumption. For example, if a big store caters to an
affluent clientele in the vicinity, PepsiCo
can target/tailor its new premium launch to
the segment that frequents this store
instead of launching the offering simultaneously across all stores. This sort of launch
is sharper and targeted, and the company
can garner quick feedback before going the
whole hog.
PepsiCo is currently working on developing modules where it can help the salesman push particular SKUs that a store
finds easy to move off the shelves. So it
will be like a prompt that will remind the
sales executive that the store that he is visiting sells x products, and since he hasnt
sold x to them for a while, he needs to
push this product, says Mozumdar. In a
sense,
we
will partner with retailers, because we
dont want to end up selling things to him
which he doesnt sell further on, thereby
>
blocking his inventory. From just using
data to create targeted programmes, this
will help the company get into proactive
selling.
PepsiCo also equips its sales force with
tablets that enable them to get role-based
reports on their KPIs. That apart, PepsiCo
aids distributors when it comes to their
working capital. Software tracks how much
he is selling, how much of credit is going
into the market, which are the stores he
caters to, etc. Now, as he has visibility on
what his stocking norms are, the orders
that get generated and driven to him can
actually be tailored to replenish what he
has sold. So, the distributor becomes more
efficient.
PepsiCo funnels all this information into
dashboards that gives the company a good
sense of how it is doing on a particular initiative. The companys advertising can be
played on these tablets to showcase before
the retailer the companys upcoming products, making it a coaching tool. This way,
the whole interaction moves a notch higher than the standard product brochure
familiarisation process of the pre-digital
world.
The product is the hero

A conventional consumer company works
in a different manner than digital-led companies. From a personal care consumer
companys perspective, I would define certain technical variables in terms of numbers based on past records or what competition does, says Hargave of Nivea, talking
about the relationship between product
development and big data.
Data also helps Nivea do a lot of claim
testing. Says Hargave, For example, if you are
looking at certain levels of moisturisation or
dark spot correction, there is a guidance data
system that the product has to do x correction in y time. So numbers play an important role because unless you quantify things,
you cant develop products.
The genre of whitening deodorants is a
result of data analytics, says Nivea. While
the segment is prevalent in the West, feedback from deodorant users in India on
social media led Nivea to conceptualise
and launch the whitening deo range in the
country in 2012.
Data from loyalty marketing
permanent address for loyalty membership, it is often a long-distance one. These
customers have larger ticket sizes, but their
frequency of visits is lower. Many such customers arent quite sure if they can get a T24
recharge in their own town which they
can so they end up recharging for ~3,0005,000 at one go just in case they cant come
back for a while.
It isnt just about the

availability of data; it is about
focus on the right data points
Market demand projections
RAKSHIT HARGAVE
MD, NIVEA INDIA
Even until a decade ago, retailers would fall

back on focus groups for data because transactional data was never mapped the way it
currently is. Now we know which customer
comes at what frequency, purchases what
kind of items, her average ticket size, her
family size based on what is purchased, and
her geographical footprint which outlets
she prefers to shop at. All this information can
be extracted from loyalty cards. The customer drops a lot of cookies on you, quips
Tarkas of Future Group.
While its customer loyalty card
Payback maps shopping occasions and
profiles its customers accordingly, one of
the groups loyalty programmes goes
beyond that. In 2010, Future Group
launched its telecom brand T24 in partnership with Tata Teleservices to provide
additional loyalty benefits to its customers. With T24 the company got into a
customers life. We know who she banks
with and where she fills her cars petrol
without violating privacy, of course, says
Tarkas. We can get to know which customer is roaming a lot out of her city based
on her mobile usage, and hence what sort
of travel products should be targeted at
her.
Which brings us to distance mapping:
how far a customer is willing to travel to
reach, say, a Big Bazaar outlet. A lot of our
stores reflect a very high long-distance customer profile. We call these our feeder
stores, explains Tarkas. For example, the
LIC Road store in Kolkata, close to both
Howrah Station and Sealdah Station, is one
such feeder store. Shoppers at the store are
found to commute from nearby towns to
Kolkata for work when they share their
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For any marketer, predicting demand or

forecasting the size of a potential market is
a tough task. But with ammunition like big
data, PepsiCo considers itself market-ready.
Depending on why you want to enter a
particular state in India, certain numbers
(of stores) will be thrown at you from our
data system, says Mozumdar. There are
models to predict how many stores a product needs to get into. For instance, the model will tell you if you get into 200,000 stores,
you would end up selling to the tune of Rs
x.
Future Group too is gung-ho about predictive analytics. For one, it does life-stage
segmentation of customers to get a sense of
her future buying patterns. Say, when a
customer starts buying diapers, you get to
know that there is an infant at home. There
on, you can predict the childs development and the kind of things the mother
will buy along the way. A lot of people buy
apparels for their kids from hypermarkets
because kids grow very fast, and parents
may not wish to spend big money on top
labels, observes Tarkas.
Marketing mailers at Future Group are
based on the RFM (reach, frequency and
monetary value) model. The company evaluates the merchandise that is picked up and
comes up with the next logical offering.
We have done this in a lot of categories and
gained traction with several customers and
often we get the aha moment, where customers feel we understand them, says
Tarkas. This is similar to how online players
like travel sites use cookies to track you while
you are browsing other sites, to remind you
of unfinished transactions. In fact, there is
more information available offline. The
potential is vastly unexplored, Tarkas sums
up.
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RECREATING THE
MAGIC
As more brands flock to

online marketplaces, the
challenge will be to
recreate the differentiated
experience offered in
physical stores. Heres
how brands can
move towards
that goal
ROHIT NAUTIYAL & ANKITA RAI
ompetitive clutter at the point of

purchase is intense today, thanks to
brand proliferation, extensions, private labels, me-too products and copy-cats.
Given that, brand salience the extent to
which a brand stands

out from its competitors is
vital in competing on the shelf, and
more so in the online marketplaces where
the entire experience is orchestrated by the
host website.
In other words, its a goal not easy to
achieve in practice.
But then you cant ignore digital retail. At
`18,000-20,000 crore, it represents about
10 per cent of the organised retail market,
and is estimated to grow to over 15 per cent
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of the organised
retail market in five years.
Easy to why companies are
flocking to online marketplaces with
their product listings. While companies
like Xiaomi, Motorola and American Swan
are selling exclusively online, after testing
waters across online marketplaces traditional retail players such as Nike, Puma,
Raymond, Big Bazaar, Hidesign and Nokia
among others are developing customised
solutions to present their brands in nearperfect shape in the virtual world. So how
can corporates stand out in online marketplaces without cannibalising their offline
sales or brand equity? Most importantly,
how does a brand recreate its imagery and
>
experience on online platforms where they

cant deploy the tropes available in physical
stores?
Keep it uniform and simple
Vijay
Basrur,
head,
ecommerce,
Raymond, says, The identity of a brand
needs to be retained while selling on a portal, any portal. They (shopping portals)
cant play with brands identity. Indeed,
no brand would knowingly want to confuse patrons by presenting themselves in
different avatars in the online and in the
offline markets. Unfortunately, they end
up doing so because of the way most product listings are done in online marketplaces.
Broadly speaking, product listing of a
particular brand on an e-commerce portal
can be divided in three categories: the first
set of listings are made directly by a company, next comes listings made by the
authorised resellers followed by the ones
made by sundry stockists and unauthorised
resellers (who may have permission to sell in
a particular territory and can register online
to sell across India). For obvious reasons
the last set of listings are found short on
appropriate content and presentation. Such
listings could sully the image of a brand and
can end up being a bone of contention
between the brand and the online marketplace. But they are not uncommon.
Just some months back, Raymond discovered that some unauthorised resellers
were listing its products on various marketplaces. On its part, German sportswear
company Puma is gearing up to crack the
whip on unauthorised resellers. Many other companies are restructuring their reseller
contracts to include guidelines to sell online.
Argues Ankur Bisen, senior vice-president, retail and consumer products,
Technopak. Many leading brands in
mature e-commerce markets across North
America and Europe have tried to put
checks on unauthorised resellers in vain.
That said, incremental sales are in the interest of both, the brand as well as the marketplace, and so the two should collaborate to
create a place for unauthorised resellers in
the existing set-up.
Amit Maheshwari, vice-president, fashion, Snapdeal, contends that even a reseller
can be made accountable through stringent
quality checks. One of the biggest things
The identity of a brand needs to

be retained on a portal. They
(shopping portals) cant play with
a brands identity
VIJAY BASRUR
HEAD, E-COMMERCE, RAYMOND
One of the biggest things brands

want is to position themselves like
they are offline
AMIT MAHESHWARI
VICE-PRESIDENT, FASHION, SNAPDEAL
brands want is to position themselves like
they are offline. It is important for us to
showcase them in the same way. To enable
salience, we create joint business plans with
brands. Snapdeals account managers and
brand managers work together to plan activations and co-marketing for clients, he
explains.
Throw in an online SIS
To avoid confusing online shoppers with a
disconnected picture of a brand, fashion
portal Myntra collaborates with brand
owners to devise mirror images of their
physical stores. This is achieved by creating an online shop-in-shop (SIS) which is
similar to any SIS in a multi-brand store
such as a Shoppers Stop or a Westside. For
instance, the faade of the Nike Shop on
Myntra has a scrolling banner ad which
keeps moving to show the companys comprehensive range of footwear available on
the website. Similar to the brick-and-mortar architecture of a Nike store, its online
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SIS on Myntra is organised into categories

such as running, fitness, and basketball
and so on.
Myntra shares its websites wireframes so
clients can assess how their online shopin-shops will shape up. Says Myntras chief
operating officer Ganesh Subramanian,
While we provide content templates to
clients, we respect the fact that they must
have full control over content and brand
imagery.
To keep a tight handle on shopper experience online, leather goods manufacturer
Hidesign has built SISes across major shopping portals like Myntra, Jabong, Amazon
and Flipkart and encourages them to follow
strict selling guidelines. The company
allows e-tailers to offer discount coupons on
products priced below `3,000 and actively
discourages them from selling its high-end
products at a discount. Currently, a team
of eight professionals including relationship managers, graphic designers, and conceptualisers keep a track of Hidesigns presence across various ecommerce platforms.
Dilip Kapur, president, Hidesign, says it is
crucial for the company to keep a hawk-eye
on the brands performance across e-commerce platforms. In its evolution Hidesign
has reached a juncture where it needs to
enhance its experiential side to the consumers, he says. Since everything today is
discussed in the virtual world we would like
to keep our brand intact in its true imagery
and value proposition, he adds.
But why should e-tailers take the trouble? Simply because it is worth their while.
E-commerce portals either charge an
upfront payment to set up online SISes or
negotiate a time-based fee. If a fashion portal makes 30 per cent margin on an ordinary
apparel listing, it can make 5 per cent more
on an online SIS.
Easy to see why in recent months most
shopping portals have added shop-in-shops
to their repertoire. While Myntra and
Jabong have 50 and 30 SISes respectively,
Amazon has over 15.
Snapdeal claims that the main objective
behind launching the SISes is to give full
freedom to brands to showcase the right
merchandise, and to create the best look
and feel, content and imagery. With its
soon-to-be-launched brand store version
2.0, the marketplace plans to give more ownership of its SISes to clients by providing
>
them customised tools to manage their

stores. Interestingly, SISes have given shopping portals a big sales boost because companies dont skimp on technology or other
tropes to draw customers. After creating an
online SIS for a footwear brand, Myntra saw
a 50 per cent jump in its average order ticket size.
Define your online strategy
Even if you are a brand that jumped to the
online bandwagon in a jiffy, it is still not
too late to define your ecommerce strategy. To begin with brands must understand
that online marketplaces are not meant for
them if they see it as a channel to get rid of
distress inventory. Puma Indias managing
director Abhishek Ganguly has a word of
caution against this approach. He says,
When a company decides to sell everything everywhere it triggers an undesirable price differentiation. Not to mention,
this could have long-term brand ramifications.
Puma has a global team responsible for
designing its content and brand imagery

for online portals. Its product strategy is
aligned with the distribution strategy, which
means different products are pushed
through different channels. To put together its online marketplace calendar, Pumas
marketing team conducts meetings with etailers six months in advance.
Kumar Rajagopalan, chief executive
officer, Retailer Association of India
(RAI), says consumers are suspicious of
products/brands that appear inconsistent
in their dealings with consumers. For
instance, if a particular brand or product
of a company is available on deep discount in a virtual marketplace and is sold
at full price offline, consumers are bound
to feel cheated. So brands must be clear in
their thinking and follow-through. What
most brands are doing today is sell the
latest and exclusive offerings on their website and exclusive physical store to ensure
there is no cannibalisation in sales as a
result of their presence in marketplaces.
Such segregation becomes easier to pull
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off if brands keep track of consumer-generated data and look out for tell-tale insights.
But this is a dark area even now. While all
major portals know whats selling on a
minute-by-minute basis, not enough data
on what they call meaningful actionable
insights is generated or shared. Rues Kunal
Mehta, vice-president and marketing head,
Mandhana Industries, the exclusive
licensee of Being Human, Since we work on
a buy-hold-sell inventory model with all
ecommerce portals, we do not have access
to sufficient consumer insights to enhance
the online experience of Being Human. As
a way out, Mandhana Industries, is planning to launch its own ecommerce platform. Praveen Sinha, managing director,
Jabong, says sharing relevant consumer
insights can help e-commerce companies
monetise their SISes far better than it is
done today.
>
THE RIGHT FIT
As finding talent
becomes
increasingly difficult,
corporations look at
recruitment partners
to come up
with innovative
ways to search,
source, screen and
hire employees
ABHILASHA OJHA
wo years ago, CenturyPly, a

~1,300 crore-plus company and one
of the leading names in the plywood business in India, was faced with a
tough situation. Having established a corporate identity far removed from its earlier family-run business tag, CenturyPly
wanted to expand fast but found it difficult filling up key roles in the sales division. Not only was the company losing
out on precious time, travel costs with
the companys HR executives travelling
all over the country to conduct interviews
were shooting through the roof. Worse,
preoccupied as they were with the task
of finding the right people for the right
jobs in double quick time, the HR team
was in danger of overlooking its primary
task managing its existing people and
figuring out ways to keep them motivated
during a down economy.
Thats when someone in the team suggested the company outsource its recruitment process. The top bosses felt that was
the best way to get the job done under
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>
the circumstances while an outside
agency would handle the whole process
of identifying candidates, the in-house
team would step in only at the final stages
to negotiate salaries and taking the candidates through the on-boarding drill.
Now see what was happening at HCL
Technologies, the offshore IT and software development company (sales
turnover: ~16,498 crore as of June 2014),
around the same time. The company was
facing a sort of talent leakage that was
leading to a high percentage of renegade employees. Though many of these
were entry-level employees, the churn
ended up stalling some key work processes. While many of the people who quit
were hired through employee referral programmes, some senior team members felt
the company needed a more robust
recruitment process.
The expert and the rescuer for both,
HCL Technologies and CenturyPly,
turned out to be recruitment process outsourcing (RPO) companies, which
ensured both these organisations
achieved their recruitment targets at a
much lower overall cost. Thiagarajan
Suryanarayanan, global head, talent supply chain, HCL Technologies, explains,
The renegade employee rate came down
significantly as RPO partners came in
with experience and customised solutions for speedy action. The cost saving
was a bonus.
For CenturyPly the result was equally spectacular: the company was able to
meet its hiring targets in six months flat
and cut down recruitment related costs
by 20 per cent over the two quarters. Our
concern was to ensure that the cost lines
were controlled even while the top line
continued growing, explains Sugata
Halder, country head, HR, CenturyPly.
Till about a few years ago, RPO was
just another acronym being thrown
around. Although many of the first
adopters of RPO were global giants (like
Kelloggs and Hersheys), the protracted
slowdown of the last few years has kindled new interest in the industry, especially in India, point out various industry
surveys done in recent months. The signals are clear: More companies are taking
the plunge and are outsourcing some or
all of their recruitment processes. Many
EXPERT TAKE
Choosing the right RPO partner

Six things to keep in mind when looking for
a recruitment partner
1
2
3
4
Look for a company that is known

for good corporate governance so
that theres transparency
A good RPO
company will
MOORTHY K UPPALURI
look at the
CEO, Randstad India
three important
fits: job, boss
and company. It will be attentive to detail
such as the background of the company,
the job profile and the personality of the
people who will have to work together
An RPO company should offer all four

flavours of an RPO: recruiter on demand,
project RPO, process RPO and end-to-end
RPO. They must approach each recruitment
outsourcing opportunity differently. A good
end-to-end solutions can help clients
incur cost savings of 50-60 per cent.
Opt for exclusive tie-ups so

competitors dont use the
same partners
Find a company that has a track
record of recruiting good sets of
employees while keeping the
turnaround time low
A good RPO should be able to sift
through the clutter both offline
and online and promise a
geographical footprint to get the
right talent for your organisation
more HR and recruiting companies are

broadening their repertoire to offer endto-end recruitment services; and HR professionals are establishing associations
such as the RPO Alliance to develop
benchmarks and best practices to grow
the business.
But why this sudden interest? Experts
say conducting recruitment in-house can
prove burdensome adding between 20
and 35 per cent to the overall HR bill. Says
Rajiv Menon, head, innovations and new
products development at MeritTrac,
which offers recruiting services to companies, RPOs are sort of diagnostic labs
that are created specifically to offer endto-end recruitment solutions to companies. These solutions not only save time
but they also have a better bit rate (in the
case of MeritTrac, the success rate of hiring for companies is 80 per cent) given the
intensive search processes, customisation and checks, including the mammoth
filtering and sifting processes.
As the economy shows signs of bouncing back, companies large, small, and
those in between are desperately trying to
locate the right people as quickly as possible to kick-start growth. Many of these
companies would like to get rid of the
headaches associated with finding qual-
98
ified candidates and simultaneously

keeping a check on the time and money
involved. So they are turning to RPOs
that are known to save time, money, and
reduce the possibility of bad hires.
Getting started
Outsourcing recruitment is not yet a big
deal in India, but the trend is fast picking
up. Some reports peg the present value of
RPO industry in India at around $2.5 billion, and say it will grow at 30-40 per cent
over the next few years. In general, companies follow either of the two models of
RPO. Under one model the RPO provider
offers support services to on-shore
recruiters to enhance their productivity
and
organisational
effectiveness.
Otherwise, the RPO could provide cycle
recruiting. In this model, the RPO
provider performs the entire recruitment
function from scratch, including sourcing, screening, interview scheduling,
appointment execution and even onboarding for permanent and temporary
positions. The second model has better
potential in that it helps companies
reduce the overall cost of recruitment and
also frees them up to concentrate on their
core competencies.
In fact, it makes sense when a compa-
>
Why outsource recruitment

To cut down the overall cost per recruitment
Especially for bulk hirings or for entry-level, recruitments RPOs are known to
save costs to the tune of 40 per cent
Q
To focus more on the core business
Studies show that almost 70 percent of the work involved in the
recruitment process is non-core to your business. Thus, by entrusting the
burden of recruitment to a specialist, you can focus more on your core
business activities
Q
To build a competitive edge
Corporations looking to build large talent pools in a short period of time
may not have the bandwidth to select the right talent by tapping passive
candidates. RPOs can help given their network
Q
To get the best value for money
A domain specialist is likely to bring in process experts and researchers
with in-depth knowledge on the subject to identify the right
candidate from a bunch of folks
Q
To use resources efficiently
If your team is spending most of its time doing work that is prima-facie
non-core, you could be sure you are wasting precious resources
Q
ny is hiring at the entry level or for the

short term. Recruitment at the entry level is a short term phase and outsourcing
is more cost effective than hiring people
fulltime and then wondering how they
can create value, reasons Chaitrali Singh,
director, HR, ZS Associates. The company uses the services of its RPO partner
for campus recruitments and is now considering ways to leverage the companys
RPO partnerships to fill up some midmanagement and senior positions complete with online assessments, interviews
and even background check.
Some of the newer sectors in emerging markets e-commerce, for instance,
need to hire swiftly. For them speed to
market is key and thats something only
an RPO company can provide, says YV
Verma, who has served as chief operating
officer at consumer products company
LG and runs an HR consultancy firm currently. The cost-benefit for companies
is lucrative given the intense competition
among RPOs to bag contracts for recruitment. Since it is a volume game for both
companies and RPOs (with some companies hiring 2,000-3,000 people at one go
for expansion projects), there is brisk
negotiation at this point and there is definite value addition in the long run given
that RPOs study

the profiles of people minutely
and manage the whole process extremely efficiently, adds Verma.
Looking at the potential benefits, companies are now trying out different combinations and permutations to make
recruitment outsourcing more effective.
Take MindShift Interactive, a digital
outreach company. Instead of using the
services of an RPO to hire entry-level
employees as is common currently
the company uses the service purely for
mid to senior-management-level recruitments. Our core strength is digital and
many of the entry-level hires are already
digital savvy. But when we were looking
for senior people those in their mid40s and mid-50s we couldnt find too
many people who were that savvy digitalmedia-wise. Thats when we decided to
get two RPO partners and outsourced the
exercise completely, says Zafar Rais, CEO
of MindShift Interactive. Today, roughly
70 per cent of the recruitment for seniorlevel positions are done by the companys RPO partners. Given the rich assessment done by RPOs, we are considering
outsourcing 100 per cent of the hiring in
the mid- and senior-management level
in the near future, Rais adds.
99
While MindShift and some others

remain gung-ho about the recruitment
outsourcing after quite a few hits and
misses, experts reckon that it is not advisable to take a plunge in haste. People are
the bloodline of a company and though it
is necessary to infuse fresh blood, it cannot be a hasty process, says Rajesh Save,
global head, HR, Syntel Inc. When Syntel
was looking to engage an RPO, it made the
selection process very rigorous. It shortlisted RPO companies after assessing
their track records, then senior managers
from its HR team met the potential partners to appraise them of what the company expected, and after several such
meetings zeroed in on the RPO partner.
The process allowed Syntel and its partner to be on the same page as to what
they expected from each other and what
returns Syntel envisaged for itself.
Finally, what is the key to a successful
recruiter-RPO
relationship?
TS
Krishnakumar, COO, Ikya Human
Capital Solutions, a leading services
firm which handles recruitment for a
whole range of companies in the IT sector, sums up the formula: First, the
recruiter has to be clear what he wants
and has to be honest with his RPO partner. Second, the job of an RPO doesnt
begin with understanding the hiring
needs of a company or end with finding
the best fit. A good RPO company will
understand the philosophy of the company and accordingly find a candidate.
Also, the billing should be based on outcomes. An employee getting hired today
but quitting tomorrow doesnt serve my
purpose as an RPO company, he adds. It
is essential that the right person is hired
for a certain period of time so that the
employee becomes an asset in the true
sense, sums up Krishnakumar.
>
MALINI BHUPTA
THE GREAT
ONLINE WAR
Heres how e-commerce companies are
gearing up to win the mobile war
100
he ubiquitous mobile phone

is going to become the next
big battle ground in online
commerce given that 100 per
cent of Indias incremental
internet traffic is currently flowing
through mobile devices. Little wonder,
Flipkarts Mausam Bhatt, senior director,
mobile commerce and digital marketing,
Bengaluru area, believes mobile commerce is not in the future but right here.
Likewise, over the last six months or so,
a host of other internet-based companies
have seen a shift in the way consumers
walk in. Be it travel portal MakeMyTrip
or job portal Naukri, nearly half of the
total traffic inflow is happening over
mobile devices either through mobile
sites or via apps. Easy to gauge why these
companies are working overtime to
refashion their sales strategy around the
mobile.
Look at the potential. In a report on
the Indian internet market, titled Deep
Dive, Citi Research says 92 per cent of
Indias 252 million internet users are
mobile (using phone or dongle). The
report says the wireless internet subscriber base has grown 62 per cent year on
year in the quarter ended March 2014.
And millions of Indians who are getting on
to the internet for the first time are getting
there through their mobile devices.
Says Hitesh Oberoi, CEO of Info Edge,
the largest consumer internet firm in the
country by market value, which runs
Naukri.com, India is expected to be a
mobile first country and online companies will have to offer the full suite of services on the mobile device. Despite the
constraint of the screen size, consumers
want the ability to do all the things that
they do on a regular website. Every category has to create a unique value proposition for the mobile universe.
The fight for the consumers walletshare on this medium, however, is not
going to be a cakewalk. The problem for
merchants is that selling on the mobile
device isnt as easy as it is on the desktop,
where companies can trail the consumer
on social media sites and on email. In fact,
given that the mobile phone is a personal
device, the level of engagement has to be
>
much higher for companies to convert a
walk-in into a sale. Says Paras Chopra,
CEO & founder, Wingify, a visual website
optimiser firm, In the highly competitive e-commerce marketplace, even a
slight marketing misstep can be costly. To
win the conversion game marketers need
to ensure theyre optimising their websites. That apart, the consumer needs to
be pulled into the platform and stay
on longer, if visits are to translate into
transactions, especially if you want your
app development costs to pay off. Also
consumers who use the shopping app
rarely share on social media what they
have purchased making it difficult for other online firms to track the same consumers and keep a tab on his/her shopping behaviour.
Indeed, it is no longer enough to give
the consumer the option to download
your app. If online commerce firms have
to succeed, they have to become destination apps in their respective categories
because consumer preferences are constantly evolving in the online world. A
global survey done by Wingify has found
that 60 per cent of millennials who are
known to shop online have a shopping
app installed on their handsets, but 60
per cent of the app downloads are never
used.
Pull the consumer

How can brands make that leap? Flipkarts
Bhatt says, The mobile allows personalisation, it is amenable to one-on-one conversations. But if online brands wants to
develop destination apps, brand awareness would be critical. So how does
Flipkart plan to go about it?
To begin with, Flipkart doesnt try to
replicate the desktop experience on the
mobile. Like many other online commerce
firms, Flipkart has an in-app notification
system through which the company sends
details on new products and price drops to
consumers. This also extends to brand
launches.
That sort of push notification has
worked wonders for its fashion business
because fashion aficionados are constantly looking out for the newest collections on offer. People are making big ticket purchases, a far cry from the scene even
until a year ago. The enhanced reach has
Mobile allows
personalisation. It is
amenable to oneon-one conversations
The mobile interface

becomes important
as more professionals
enter real estate
Online companies
will have to offer the
full suite of services
on the mobile device
MAUSAM BHATT
SUMIT JAIN
HITESH OBEROI
SR DIRECTOR, MOBILE
COMMERCE & DIGITAL
MKTG, FLIPKART
CO-FOUNDER & CEO,

COMMONFLOOR.COM
CEO, INFO EDGE
also brought many more sellers on

Flipkarts marketplace.
The result? A year ago, less than 10 per
cent of Flipkarts traffic was coming from
mobile devices; now mobile transactions
account for more than 50 per cent of the
business. Consumers from smaller towns
have also joined the online shopping
bandwagon, largely through the mobile
app.
Make it personal
Some categories are not amenable to a
small screen but where there is scope for
personalisation, the mobile works very
well. So is the case with Naukri.com, a
job site and by definition, a prime candidate for personalisation. Today, 35 per
cent of its traffic comes from the mobile,
and the figure is expected to touch 45 per
cent in a years time. The traffic flows
equally through the mobile app and the
mobile site.
Its CEO Oberoi says, the desktop is still
very big for the job portal but the mobile
is disrupting the desktop and we recognise
this as an opportunity.
Naukri says it has three distinct sets of
users those who use the desktop only,
those who use the mobile and those who
use both. Anticipating a sharp increase in
mobile traffic, Naukri has not only made
its apps available on different platforms
101
like Andriod and iOS, but it has also

designed its WAP site in a manner that all
the offerings on the mother website are
available on the mobile site as well.
Not only is Naukri mobile ready, it is
also helping companies get on to the
mobile through its SAAS product to reach
passive candidates and job seekers in far
flung places where internet connectivity is
not smooth. Through the product, Naukri
manages the backend of portals of its corporate clients so that they can handle
applicants who apply through the mobile.
That apart the job portal has introduced a posse of features to connect the
job seeker with a potential employer
facilities like uploading resume through
the mobile or accepting resumes or job
applications through the mobile. Naukri
has a SAAS product called Career Site
Manager, which manages the career segment on the websites of employers. The
back-end of these sites are managed by
Naukri, which facilities mobile uploads
among other things. Says Oberoi, With
the SAAS product we power career sites for
companies. Such mobility allows companies to reach a much larger pool of talent through Naukri. Recruiting from
smaller towns is becoming easier now.
All these moves are showing up in
some positive numbers. About 18 months
ago, mobile traffic was 18 per cent and
>
now it has hit 35 per cent of total traffic.
Smart phones are the new entry point.
Naukri is convinced that if India were to
have 500 million internet users, more
than half could well be experiencing it on
the phone.
Facilitate the search
VITAL STATS
>
>
E-commerce sales in India are expected to

rise from $12 billion to $30 billion in 2016
92% of Indias 252 million internet users

are mobile
>
>
Share of mobile internet users in total

internet user base was 69% in 2012. It is
expected to rise to 87% in 2016
Today, 90% of all media interactions are
screen-based via smart phones, laptops,
television and tablets
>
Mobile sites and apps are driving

e-commerce. 91% consumers use apps
and sites during their purchase journey
>
Re-targeted mobile ads can boost ad

response by 6x
>
Share of mobile for leading

e-com players (%)
In travel: Yatra.com 35, ibibo 35

In e-tail: Snapdeal 60, Amazon 35
Others: OLX 75, Freecharge 80
Paytm 54
Source: Vserv & Citi
You know where to look online. But how

do you locate what you want offline?
That is precisely the question
CommonFloor is trying to answer with its
array of mobile services. The property portal uses GPS to make a property finders
life easier. Sumit Jain, co-founder and
CEO of CommonFloor.com, says, his companys mobile app seeks to become a property companion and not remain a mere
app. CommonFloor.com has about a lakh
projects/societies listed on it and
45 per cent of these properties are posted
by owners. The app helps facilitate interactions between the property owners and
tenants/potential buyers through phone
numbers provided on the app. The electronic model gives a virtual walk-through
into a property and helps consumers find
agents in a particular area.
Its experience shows that property
seekers now look for a variety of information and, more importantly, are willing to
pay for customised advice. Jain says, We
see investment advice as a future growth
business. More and more professionals
are entering the real estate business and so
we expect the mobile interface to
become even more important.
The CommonFloor.com has
also
seen
102
mobile traffic shoot up over the last one

year. Over 30 per cent of its traffic come
from the mobile, which was less than 20
per cent nine months ago.
Cut transaction time

The mobile is the best recourse in cases of
emergency a lesson Indias largest travel portal MakeMyTrip has learnt after
launching its app in 2011. The online travel company says nearly a fourth of its users
book flight tickets a day before they travel and nearly 50 per cent book hotels on
the mobile a day before they intend to stay
there. In other words, users are looking
for quick, hassle-free service.
Since the mobile is a personal device
and helps with identity management as
well, transactions on the platform are
amenable to customisation. A search on
the app tells MakeMyTrip whether the consumer is a high-end or a budget traveller
and accordingly, it sends suggestions on
hotels and trips to the consumer. Over
time, the firm hopes to make its services
even more personalised. MakeMyTrip also
offers travellers a language option (Hindi
and English as of now) as well as the option
of sending travel-related queries on SMS.
Seeing the success of the mother brand
app (the MakeMyTrip app), the company
has launched two other apps, TripIdeas
and RoutePlanner. The first offers travellers new destination options and the
second, RoutePlanner, is an app on the
Nokia Asha Platform, which allows a person to plan a trip across India on a bus or
a cab, on a flight or a train. Pranav Bhasin,
head
of
mobile
products
at
MakeMyTrip.com, says, Between 4,000
cities, there are 27 billion travel
options and we offer bus, train, cab
and flight bookings for all of these.
This is available on the Asha platform
as we wanted to tap mobile users in
Tier-I and Tier-II cities.
As is apparent, most online players
recognise the potential of the mobile
and are gearing up to fight the looking
battle on the platform. But most of them
point out that the biggest hurdle remain
the underdeveloped payment ecosystem.
While it is not such a big issue for players
offering cash on delivery, theres a dire
need to ensure security and reliability and,
thus, elicit wider acceptance.
>
LOOKING BEYOND
THE STATISTICS
Jettisoning traditional perceptions about Indian consumers,

multinationals are tweaking their research and product
strategies to get more out of India
ROHIT NAUTIYAL
ustomer understanding is a musthave, especially during hard times.
Today, the first thing a company that

considers itself truly global does is say
goodbye to the practice of dumping
products and services developed for
one market in its next. South Korean
automotive manufacturer Hyundai
Motor Company (HMC) is a case in
point. With an investment in the
region of `182 crore, the company
opened its R&D centre in India in
Hyderabad during the economic slowdown of 2009. The reason: strengthen
Indias position as an R&D and manufacturing hub.
Says Rakesh Srivastava, senior vicepresident (sales and marketing), Hyundai
Motor India (HMI), When we entered
the country the passenger car segment
was largely price-driven. This was the time
when owning a car was considered a luxury. Today buying a car is about making a
statement and when that happens leading
companies must bring state-of-the-art
technology and design to its customers at
the same time globally. HMI claims that
a large chunk of market research work is
conducted by its in-house teams.
For Hyundai there was no other alter-
103
>
EXPERT TAKE
Decoding the modern

Indian consumer
SIDDHARTH SHEKHAR SINGH

Associate professor, Marketing,
Indian School of Business
t is common to paint all

Indian consumers as valueconscious. Since economic
development has brought
about significant changes in the
lifestyle, aspirations, and
behaviour of the Indian
consumer, is it still justified to
consider them as valueconscious?
Government
controlled
economy, low incomes, limited
options, and a culture that

looked down upon unnecessary
consumption, all helped create
value consciousness among
Indian consumers. With economic growth and liberalisation
post 90s, both income and consumption have seen tremendous
growth and diversity leading to
the rise of many segments of
consumers in India. And not all
are value-conscious. For example, while Micromax has become
a leader in the value-conscious
cellphone segment in India,
Samsung still dominates the
higher-end smartphone market.
The Indian consumer is
changing fast. Diverse, sizeable,
and changing segments do not
allow easy characterisation in a
small space. While large segments of consumers remain value conscious, many other factors
are re-defining the Indian con-
native really.
For multinationals, the key to reaching the next level will be learning to do
business the Indian way, rather than simply imposing global business models and
practices on the local market, write
authors Vimal Choudhary, Alok
Kshirsagar, and Ananth Narayanan in a
McKinsey & Company article (How multinationals can win in India, March 2012).
Its a lesson many companies have
already learned in China, which more
multinationals are treating as a second
home market. In India, this trend has been
slower to pick up steam (the article
mentions). Yes, they have been slower but
it is happening nonetheless.
Coming back to Hyundai, the company
has a four-layer market research strategy
in place. It all starts with a brand track
sumer. Following are five important tones:

Large and young
population: Our young
population provides
opportunities to create new
brands. Young consumers
growing up with new brands
will create new market leaders.
Existing brands face the
challenge of becoming
irrelevant in the minds of new
consumers who think and act
differently.
Individualistic with high

aspirations: Consumers
today aspire high and are
willing to work for it.
Individualism is increasing and
traditional family structures are
threatened. High aspirations
mean being equally ambitious
for their society and country as
well. Therefore, Indian
consumers are more willing to
contribute to social causes.
Increasing confidence:
Dreams of earlier
generations were limited to
study which assesses Hyundais performance vis--vis other players on parameters like brand connect, product perfection, design finesse, driving pleasure etc.
This is followed by an acceptor and
rejecter analysis, which takes into consideration customer feedback on what
they think about a particular soon-to-belaunched car. In the last couple of years, as
part of this leg of research, HMI has paid
more attention to understanding customer
behaviour in Tier II and Tier III cities.
Finally Hyundai takes feedback from
industry experts and media on the
prospects of the new launch.
All these efforts seem to be paying off
handsomely. Today HMIs sales contribution to Hyundai Motor Company is 14.4
per cent. HMIs market share in the passenger vehicles segment has grown from
104
necessities. People generally

bought what they could pay for
in cash. Confident of their
country, their abilities, and
their future, the new
generation of consumers is able
and willing to work hard and
take risks for their aspirations.
Growing consumerism:
While consumerism
represented moral degradation
earlier, the new generation
aspires to consume more
without such inhibitions. Our
vibrant media and exposure to
the western culture has played
a key role in this change. The
growth in sales of luxury
products testify this change.
Tech-savvy: Indian
consumers are becoming
more tech-savvy. Even in
smaller towns and rural areas,
consumers are beginning to
understand and use new
technology. This has opened
opportunities to create value
even in hitherto difficult-toreach markets.
18.20 per cent in 2012 to 21.90 in 2014 (till

November). Indeed, the prolonged slump
in the automobile industry did not stop
the company from coming up with new
offerings for the Indian market. In the
last one year or so, HMI has launched
four vehicles, namely, Xcent, Elite i20,
Grand i10, and SantaFe. Of these, Grand
i10 has been developed especially for the
Indian market.
Back to basics
That said, setting up with a sprawling
research and development facility is not
the only thing that will help a company get
the most of a market. To quote from the
McKinsey article, To realise Indias
potential, multinationals must show a
strong and visible commitment to the
country, empower their local operations,
>
and invest in local talent. They must pay
closer attention to the needs of Indian
consumers by offering the customisation
the local market requires.
Nivea, which still sees itself as a challenger brand in Indias `3,400 crore skin
care market, follows research practices
borrowed from markets where the brand
is a clear leader. It conducts regular user
attitudinal studies across India to pick
up valuable consumer insights. So far
Nivea has come up with around eight
product innovations aimed particularly at the Indian marketthese include
Whitening Body Lotion, Men Dark Spot
Reduction face wash, Men All In One
face wash and Total Face Cleanup,
among others. In fact, Total Face
Cleanup, launched last year, is testimony to how serious the company is about
the Indian consumer. Research pointed
out that in India men and women in
urban areas visit salons for facial cleanups once a fortnight on an average. This
set of people wash their faces two to
three times a day with a face wash.
Niveas Total Face Cleanup is aimed to
take care of the scrubbing needs of this
target set in the interim period. Says
Sunil Gadgil, marketing head, Nivea
India, We are trying our best to customise our offerings for the Indian market. Going forward, we will leverage
social media platforms to gain more consumer insights.
Nivea, which doesnt have a manufacturing facility or an R&D centre in India at
this point, is looking to set up its first R&D
facility in Ahmedabad. Currently, all the
products marketed in the country are
imported from its manufacturing facilities located across Mexico, Germany, and
Thailand. Market research inputs gathered from India are filtered in Dubai
before manufacturing specs are laid down.
The onus laid on consumer research is
even stronger if the company is operating
in a category like food and beverages.
Around 1995, when McDonalds
entered India, quick service restaurants
(QSR) did not even exist as a category.
Amit Jatia, owner, McDonalds India (West
and South), recalls how focus groups were
conducted around that time. Focus group
participants then had no clue about the
architecture of a burger or the concept of
self-service. At the most burgers were perceived as a snacking item, not as something that can be consumed at the time of
lunch or dinner. Says Jatia, This perception has undergone a sea change since
then. Over the next 10 years, as consumer
confidence in the QSR format increased,
more people walked in to try different items
from our menu. We also introduced the
burger to many new people by organising
birthday parties and family gatherings at
our outlets.
The QSR chain realised early on that
localisation will be key in India. One of
McDonalds early efforts in this area was the
introduction of the hugely-popular Mc Aloo
Tikki burger in 1997. This was followed by
the development of the McPuff, Chicken
McGrill, McVeggie and most recently
McPaneer Royale. Over the years many of
these local innovations have also been
introduced in many new markets. McPuff,
for instance, is now sold in West Asia, Aloo
Tikki is sold in Singapore and McVeggie in
Malaysia and a few European markets.
The latecomer is king

Ankur Bisen, senior vice-president, retail
and consumer products at Technopak,
says that over the last five years there has
been a steady increase in the number of
pilots undertaken by multinationals and
homegrown companies to get a complete
picture of the Indian consumer. The
main reason behind this is a change in
the attitude of senior leadership of some of
the leading organisations who now step
out of their offices more often to bond
with their Indian customers, says Bisen.
Recently when Miami-based QSR chain
Burger King launched its first outlet in
Delhi, the companys entire leadership
team including the CEO, CIO, CMO, and
key investors, among others were seen
managing queues and helping customers
selecting food items from its menu.
While McDonalds took advantage of
the lack of competition in its early years,
Burger King entered Indias `5,500 crore
(as of 2013) QSR category at a time when
every third street-corner eatery proudly
boasts of being the best burger-maker in
town. To get its pre-launch homework
spot-on, the company roped in global consulting firm McKinsey to conduct a comprehensive market assessment exercise.
105
The burger chain was pleasantly surprised

to discover that India still has one of the
lowest eat-out rates in the world with consumers stepping out only four times a
month. In Singapore, a market not far
removed from India, consumers eat out
almost once every day. Burger King also
found out that burger QSR chains account
for only 2 per cent of the overall QSR pie in
India, which is 17 per cent of the largely
unorganised foods business.
Says Uma Talreja, chief marketing officer, Burger King India, Rather than focusing on how we can outdo the competition as
part of our market research, we chose to
invest in understanding what taste means
for Indian consumers. A user attitude study
was conducted in eight markets across the
country by focusing on 35 groups of
prospective customers. A common thread
ran across all these groups: they like their
burger spicy. At one level this may seem
obvious, but understanding what spicy
food means made the research worth every
penny spent on it. For instance, spicy could
mean hot or with loads of spices or a mix of
both. Burger Kings food scientists worked
on these insights to come up with the right
flavour. Today consumers can differentiate
between whats cheap and whats value for
money, adds Talreja.
Similar to the path followed by
McDonalds, Pizza Hut and Dominos in
India, local innovation will be crucial to
Burger Kings expansion strategy in the
country. For instance, Burger Kings signature hamburger sandwich Whopper has
been modified here by replacing beef with
lamb patty to suit the Indian palette. That
apart, Chicken Tandoori Grill and Kings
Melt are two new items on the local menu.
A group of food technologists, external
chefs and vendors came together to create
the new recipes over a period of nine
months. The final nod was given by the
regional headquarters.
The next big challenge for Burger
King is to see if customers who are sampling its entry-level burgers would try
the other items on its menu. This will be
done by following those who walk in with
great loyalty programmes and neat
rewards things that have stopped paying off in the Western markets but are
just beginning to gain momentum back
home.
>
Itis difficultto talkof

value when you cannot
measure the value you
are delivering
Rohan Murty
The IT services industry in India faces two key challenges today. One, creating differentiation in an increasingly
commoditising market. Two, managing scale and growth while improving quality and productivity. Against this
backdrop, measuring the output produced by software engineers must become the core organising principle for
how this industry delivers value to clients and how companies compete in the marketplace, said Rohan Murty,
a junior fellow at the Harvard Society of Fellows and, until June 2014, executive assistant to his father, Infosys cofounder NR Narayana Murthy. He was speaking at the 50th anniversary symposium of the computer science
department at Cornell University. Here is an excerpt from his speech where Murty addressed some key questions
relating to employee productivity: How does one measure how much output a software engineer produces? How
does one scientifically determine how many software engineers one needs to solve a problem? How then does one
pick people to form a team to solve a given problem?
y primary area of
research has been in systems and networking.
However, today I have
decided to speak on
another area that has not received much
attention from researchers in computer science industrialising IT services.
Today I wish to talk about a key theme
across work over the past year how do I
measure how much output a software engineer produces? How do I scientifically determine how many software engineers do I
need to solve a problem? How then do I pick
people to form a team to solve the problem?
I seek to find a systematic measurement
methodology and scientific basis to address
these questions.
Therefore, I will primarily speak on the
problem of estimating individual produc-
106
tivity of a software engineer and briefly

mention its potential to reorganise the
entire labour force in this industry.
This idea of measuring individual productivity is a topic that I have got to know
fairly well in the recent past when I have
been on leave from Harvard to spent time in
India working at Infosys. When I refer to IT
services in this talk, I will restrict myself to
Indian IT services since this is a geography,
>
THE ABILITY TO MEASURE INDIVIDUAL PRODUCTIVITY CAN BECOME

AN IMPORTANT DIFFERENTIATION IN A HIGHLY COMPETITIVE MARKETPLACE
culture, and industry I understand reasonably well. My goal is to highlight some key
technical challenges in this industry and
the potential ramifications of addressing
these challenges.
The core value of the Indian IT industry
is providing the best value for money in
bespoke software development, software
maintenance, infrastructure management,
large-scale software testing, big data analytics, and business process management
(BPM).
The industry was born in the late sixties
in India but gained global recognition only
after the Indian economic reforms of 1991.
Indian IT services and the BPM Business
Process Management (BPM) companies
generated around $100 billion in 2013. That
is roughly 8-10 per cent of the estimated
global IT services market. The industry
employs about 3.1 million people and has
around $30,000 of per capita revenue. This
is roughly 20 times Indias per-capita GDP of
$ 1,500. These 3.1 million jobs are high disposable income jobs, the kind that India
had not seen before its economic reforms of
1991 in such large numbers. Subsequently,
the growth of this industry has played a key
role in the rise of the Indian middle class.
This year alone, the industry is expected
to hire around two lakh engineers, which is
approximately 20 per cent of the graduating
engineering population in the country.
This industry forms a key part of the
technology strategy of most global companies. Consequently, almost every one of you
in this room has benefitted from the value
addition of the Indian IT services industry.
You have received better value for money in

the clothes you wear, the food you eat, the
cars you drive, your bank transactions, airplanes that you fly, drugs that you take and
the insurance cover you get, thanks to the
Indian IT services industry.
The IT services industry faces two key
challenges today. First is in creating differentiation in an increasingly competitive and
commoditising market. Second is in managing scale and growth while retaining culture, customer focus, employee aspiration,
quality and productivity of its diverse, global talent base. For example, IT companies in
India add between 20,000 and 55,000
employees each annually to a base of
100,000 to 300,000 employees. This is like
adding a new Google or six Facebooks every
year.
The closest analogy we have to these
two challenges comes from the manufacturing world, which has managed to
achieve scale, differentiation, and quality at
the same time. This was predominantly
fuelled by a series of innovations in industrialisation, which included creating the
assembly line, division of labour, rigorous
processes, decomposing work into discrete
tasks that were measurable and a focus on
both quality and cost control, among several others.
When the likes of Ettore Bugatti crafted
beautiful cars, car design and manufacturing were treated as a work of art. But at the
turn of the 20th century, Henry Ford, turned
car manufacturing from an art-form to a
mass production industrial activity. In the
process he lowered costs, made cars more
107
accessible, and enabled a mass production

and adoption of cars. Thus the term
Fordism was born.
There are lessons here for the IT industry, which is today at the cusp of a similar
transformation. Software architecture and
design are considered to be highly creative,
imaginative and an art form much like the
first set of hand-crafted cars. There are also
no established formal methods available in
practice for architecting and designing
large-scale software applications. Thanks
to the work of people like Bob Constable at
Cornell and his students of the NuPRL
group, in time that art form is likely to
become science in the years to come.
On the other hand, I believe activities
such as programming, testing, maintenance,
infrastructure management, and some
aspects of business process management are
becoming increasingly mundane, repetitive,
and are therefore ripe for industrialisation.
These mundane activities represent a significant fraction of the industrys revenues.
At the scale that this industry has begun
to operate at, I believe we have no choice but
to start treating the metaphor of software
factories as a reality. But to do so we must
first fully embrace the idea of industrialisation, much like several other industries have
done. Industrialisation in this context has
five facets: (1) standardisation of processes,
(2) a clear division of work or componentisation of the final product, (3) measurement
of output produced and productivity, (4)
optimisation of processes, and (5) augmenting human effort with machines (software, in this case), where possible.
>
Of these, I believe the industry has so far
implemented the first two facets reasonably well. They have adopted the Capability
Maturity Model (CMM) enunciated by the
Software Engineering Institute at CMU for
process orientation.
They have introduced componentisation for enhancing work quality, productivity for specific software systems, built
knowledge management systems to enable
component reuse. However, there appears
to be very little headway in the area of measuring the output produced by software
engineers and, therefore, the productivity of
an individual or a team.
To put it another way, though human
effort is the key ingredient in delivering
value to clients, today, we are as yet unable
to clearly quantify the output this very
same human effort delivers. Our best bet
so far has been to quantify effort merely in
terms of time (the input). This is insufficient.
What do I mean by measuring individual
productivity? In the abstract it is the output
produced per unit time.
But why is individual productivity necessary and important from the perspective
of industrialisation? Measuring the output
produced by software engineers must
become the core organising principle for
how this industry delivers value to clients
and how companies compete in the marketplace. Measuring individual productivity forms the basis for ensuring mass production of software. After all, without
measuring productivity, it is impossible to
ascertain inefficiency lurking in a team or in
an organisation. For example, it may be the
case that you really do not need 100 people
to solve a problem but you only need 80
people. But to realise this truth you must
first instrument and measure individual
productivity. As Lord Kelvin said, you cannot improve unless you measure.
Moreover, this industrys edge the
best value for money argument will disappear if you dont find inefficiencies in
your own system and improve on them.
Today, there is hardly any serious mention of productivity in discussions between
clients and the software industry. This has
to change. There is zero discussion or effort
being made to measure individual productivity.
Here is a sample format of the data we
THIS INDUSTRYS EDGE

THE BEST VALUE FOR
MONEY ARGUMENT WILL
DISAPPEAR IF YOU DONT
FIND INEFFICIENCIES IN
YOUR OWN SYSTEM AND
IMPROVE ON THEM
are able to measure based on the individual
productivity measurements performed at
Infosys
over
the
last
year.
(See box). This is the typical format of the
data that we are able to generate for several
teams in the organisation. It is a table that
displays the individual productivity of each
member of a team, in comparison to the
overall teams performance. This is perhaps
for the first time in this industry that anybody is able to generate and view productivity with such fine granularity. It is impossible to expect every individual to operate at
108
the top end of the productivity curve. There

will always exist a variation of productivities
in any team. However, we took steps to
improve the productivity of individuals by
targeting specific training, enhancing the
process via which work was distributed to
members of the team, or even construct an
all-star team (much like the NBA) consisting
of high productivity individuals across the
organisation to solve specific problems for
urgent needs for clients.
But this measurement of individual productivity is far more powerful since it has
the potential to affect several important
aspects of this industry. Here are a few
examples of the changes we were actively
pursuing:
Human resources management: Such
measurements provide mechanisms to
appraise software engineers on an objective basis rather than on a subjective basis as
is done by most companies today.
Proactive interventions: Such measurement systems help a project manager
to proactively step in and figure
out how to improve the productivity of
individuals with low productivity. For
example, in certain cases we can target
training towards individuals with lower
productivity.
Team composition and better work
allocation: Managers start taking into
account the productivity of individuals
when allocating work to the team members
based on their productivity. Invariably, the
most productive people appear to get the
most complex task.
Better supply chain management: The
supply chain function in a software company must take into account the productivity of individuals when forming project
teams. The complexity of the project, the
criticality of the applications to the client,
and the elapsed time of the project must
form the input for optimal composition of
the project team. Such optimal composition helps in eliminating resource underutilisation and waste.
Sales differentiation: The ability to measure individual productivity can become
an important differentiation in a highly
competitive marketplace. Such a measurement system allows a company to focus
more on fixed-price projects and enhance
margins. Today, most of the projects undertaken by the Indian IT services industry are
>
on
a
time-and-material
all? Can we then infer that, in general,
(T and M) basis. In T and M projects, most of
Python programmers are more productive
the productivity gains go to the client.
than Java programmers? And does this arise
However, even in such projects, higher indidue to the inherent design and syntax of
vidual productivity methods translate to
the respective languages? Imagine dealing
higher quality and reduced total cost of
with this problem in the enterprise where
ownership. Such high productivity also
we see a cavalcade of languages in the code
means companies can take up complex probase from COBOL to Ruby. There are simjects, which can provide premium pricing to
ilar such questions when we think of softthe IT services company.
ware testing, maintenance, and business
Today, individual productivity is not perprocess management tasks.
ceived a big deal yet because people dont
But this then raises several other interseem to worry about what input goes into esting questions. When building software
meeting customer SLAs (service-level
applications should we think of the producagreements). The industry predominantly
tivity of the end user who uses the applicaappears to sell on price rather than value.
tion? Would we then build and optimise softBut it is difficult to talk of
ware applications in a
value when you cannot
different way if there was a
Individual productivity
measure the value you are
heavy focus on the endwhen compared to the
delivering. The client CIO
users productivity? And
mean productivity
is somewhat happy
how about teamwork?
of the team
because the industry conHow do you compare the
Employee
Productivity
tinues to find some way to
productivity of an individ1
25%
give them semi-regular
ual in taking up a stand2
15%
price cuts and still mainalone task versus working
tain healthy margins.
as part of a team where the
3
12%
However, this cannot conproductivity depends on
4
0%
tinue forever.
the complexity and laten5
-10%
As late as June 2014, we
cy
of
interactions?
had a plan to roll out these
Professors Eva Tardos and
measurements to cover 10,000 software Jon Kleinberg would worry about creating
engineers at Infosys (about 7 per cent of the
appropriate incentives to balance the indipopulation). I do not know of its current
viduals interest with those of the team. On
status. We built models to measure producthe other hand, Fred Schneider would wortivity of engineers focused on ticket-orientry about the possible relationship between
ed work. We faced challenges in scaling this
productivity and security whether a highup from measurements, better modelling of
ly productive programmer is necessarily prothe work done by the humans, to effectiveducing more secure code than a programly changing the culture in the organisation
mer who is far less productive?
to focus more on productivity.
Ultimately, I believe, beginning to
But this problem of measuring individaddress individual productivity will require
ual productivity is non-trivial. I believe it
a serious research agenda that is at the conwill require addressing some hard comput- fluence of programming languages, syser science problems. Several crucial issues
tems, software engineering, mechanism
come into discussion.
design, and security.
Let us consider programming as an
There is no single silver bullet for indiexample. Is a person who writes 100 lines of vidual productivity. We will need different
code in unit time more productive than a
models for different kinds of work in the IT
person who writes 50 lines of code in the services industry. But any model for prosame unit time? We can make the argument
ductivity will need to have one important
go both ways. Similarly, if Engineer-1 proproperty: it must permit us to add up the
duces 100 lines of Java code in unit time,
productivities of individuals and give us a
how do you compare him/her to Engineercomposite measure of the teams produc2 who produces 100 lines of Python code in
tivity. This will ensure that such models
unit time?
form the very basis for re-organising the
Should we think about lines of code at
labour force in this industry.
109
It is true that function point analysis

introduced in the late seventies is still used
today to measure software development
productivity. The truth, however, is that this
is rather antiquated work that very few people on the ground understand or are willing
to accept. It does not answer the kinds of
questions that I have raised thus far in my
talk.
Finally, I believe that quality and productivity are duals of each other. Our measurements thus far have shown that those
individuals at the top of the productivity
curve tend to produce work that has fewer
bugs or client escalations. Customers appear
to be happier with the work done by these
individuals. Therefore, it is necessary to first
recognise, measure, and improve productivity at an individuals level if an IT services
company wants to produce high quality
work.
There are several other important problems that come up when attempting to
industrialise IT services but in the interest
of time I shall end here. There are, of course,
sociological issues that we must grapple
with. Such measurements must form the
beginning of truth, not the entirety.
I have often found a bias that innovative
work can only be done in product-oriented
software companies. However, I hope I have
given you a sense of why this is merely a bias
as opposed to a fact. The problems I have
mentioned in this talk demonstrate that
there do exist several deep and hard problems in computer science in the software
services industry in India and solving these
can have a big impact on society. They present a tremendous opportunity for
researchers in systems and theory to transform how technology is delivered and consumed.
>
DEVINA JOSHI
BACKTO
ne would usually associate data

mining and loyalty programmes
with consumer marketing, with the
benefits accruing to the end customer.
Home-grown fast moving consumer goods
maker Marico has turned the model inside
out to make its back-end operations more
cost effective.
At Marico India, life begins with copra
the biggest and the most important commodity purchased by the FMCG company.
With coconut-based products like
Parachute, Parachute Advansed, Nihar, Oil
of Malabar and Parachute Advansed Body
Lotion in its portfolio, its production capacity can be optimally utilised only on the
back of a steady supply of copra.
Around 10 years ago, Marico was faced
with an acute shortage of copra, which led
to its capacity lying fallow. In the words of
Jitendra Mahajan, chief supply chain officer, Marico India, There is no bigger crime
an FMCG company can commit than to
BASICS
Smart IT infrastructure and data
analytics are powering Maricos supply
chain and back-end operations
110
>
< A salesman using a handheld device to relay information from the field to the
distribution centre; a Marico copra collection centre; machines being used to
convert nuts into copra; a Marico salesman taking an order on a handheld device at
a retail store
have a demand and being unable to supply.

Traditionally, Marico bought its much needed raw material from the markets of Kochi,
Kozhikode (Kerala) and Kangayam (Tamil
Nadu). But consistency in supply was a
problem, along with a long chain of middlemen, which kept Marico away from
direct access to farmers. Thanks to market
inefficiencies, arbitrage was the order of the
day.
The only way to source copra under both
bullish and bearish cycles sustainably was to
reach out to the lowest end of the supply
chain the farmer. Further, Marico wanted to widen its sourcing base beyond terminal markets to break the cycle of ad hoc
pricing. But that was not easy: Farmers were
situated at diverse locations and had strong
ties with local middlemen and local distributors. The attendant costs would have
been difficult for Marico to absorb.
The solution to these challenges
appeared moving its buying centres closer
to the farmer. Thus, emerged the idea of
setting up copra collection centres. That
was back in 2006 and today, Marico has 25
copra collection centres in Kerala and Tamil

Nadu. Two years ago, Marico sourced 25
per cent of its copra requirement from these
centres; today, that figure stands at 50 per
cent.
Marico launched these centres with the
prime objective to source raw material as
and when required, and to pass some benefits on to the farmer (save his freight cost of
shifting goods to the terminal market as
opposed to Maricos buying centres located
closer). Marico still gave the farmer terminal
market rates, which improved his remuneration. Another issue the centres
addressed was transparency. A typical problem the farmer faces in the open/terminal
market is unstable price realisation (realisation was lower if the moisture content in
the copra was higher as that yields less oil).
Marico started incentivising the farmer
paid better, provided him with a weighing
scale with calibrated weights to ensure he is
satisfied that he is paid for the right quantity and offered an open inspection process.
Furthermore, Marico loosened its criteria
for a minimum supply quantity Marico
111
centres would buy quantities as small as 50

kg. Above all, the farmer received his payment on the spot as opposed to credit systems prevalent at the terminal markets,
helping him manage his cash flow better.
What started years ago as an experiment
has led to a movement of sorts at Marico
India, helping it make its supply chain more
efficient.
Loyalty marketing for farmers

Till date, the concept of a loyalty programme has been consumer-driven at
large or trader-driven at best. Marico has
taken it one notch higher with a loyalty
programme for its farmer community.
Marico has formed a network of 25 service
providers or entrepreneurs to manage its
collection centres. The chosen ones had to
be individuals who were respected by the
local community, and had knowledge of
the processes. These entrepreneurs have
several mandates: to transfer the knowhow and best practices for farm management to farmers, work with engineering
firms to create mechanised conversion (of
>
nut to copra) models and transmit that
knowledge to farmers, conduct training to
enhance the conversion process, and so
on. These entrepreneurs are also managers of the loyalty programme (which was
first tested in 2011) to reward farmers for
their loyalty to Maricos copra collection
centres.
The transactions at the centres are incidentally connected to SAP systems, so data
is entered on the system real-time.
Christened Kera Ratna (kera means coconut
in Malayalam), the loyalty programme uses
data to assess every farmer on three parameters: the quantity he supplies during
every transaction, the frequency of supplies
in a month, and the achievement of monthly targets given to him on the basis of historical records in order to qualify for loyalty points.
Once a farmer is registered after document verification, he gets a vendor code,
and his points are added to that code. These
points can be redeemed at the end of the
financial year. There were years when
Marico redeemed the points through a gift
catalogue. Depending on the points, a
farmer would be given gifts like a television
set, a refrigerator etc. Marico also works
closely with the Coconut Development
Board to propagate government schemes
to farmers. As part of Kera Ratna, it facilitates interactions between farmers and
experts for knowledge sharing. Currently,
Marico has 4,700 farmers connected to Kera
Ratna. What began as an initiative to
streamline sourcing has now become a fullfledged farmer outreach programme.
Improving production and sales

Sometime back, Marico upgraded its IT
backbone to remove the possibility of time
overruns. Now, the company gets real-time
data and is better able to analyse collection
centre-wise quality variations, farmer-wise
performance over the years etc. Through
data analytics, we can actually identify
which farmers need to improve to meet our
quality requirements, says Mahajan. Data
also ensures credibility as the farmer, at the
time of transaction, gets a payment voucher as well as a quality voucher thereby
ensuring he is always in the loop.
IT has also ironed out the pricing and
transparency issues for Maricos farmer
community. Marico defines the rate for
BEYOND INDIAN SHORES

Parachute is among the leading brands in the
branded coconut oil segment in Bangladesh.
Traditionally, the copra needed for
manufacturing oil in that market was exported
from India. But with demand in India growing,
Marico couldnt meet its export demand. It
identified an alternative supply source in
Indonesia. But the country doesnt use copra
the way Indians do (for chutneys, flavouring
etc). So, it is not a priority to harvest/pluck the
nut at the right time. The challenge, therefore,
was to train people there to produce the quality
of copra that Marico does in its home country.
Another area of concern was that Indonesia
gets more rainfall than Tamil Nadu.
Uninterrupted sunshine, needed to dry copra,
was a problem. Marico developed microwave
ovens in coordination with an engineering firm
to convert the nut into copra. Today, Marico
buys 70 per cent of its copra requirement in
Bangladesh from Indonesia. This reduces
Maricos need to export copra from India, thus
freeing up a vital raw material for domestic use.
copra every morning (depending on

demand and supply position, terminal market prices) and communicates it to the collection centres. The entrepreneurs who are
not Marico employees are expected to convey the same to farmers at the centres. But
how do we determine they are doing so honestly? Mahajan muses. The solution was
discovered as recently as last year, when
the company provided electronic panels at
all the centres, so that the farmer could read
what that days price was. The panel is akin
to a moving ticker/indicator that you find on
a railway platform.
Then, how does Marico ensure that even
a remote farmer gets the right price?
Farmers register their mobile numbers with
Marico and the moment the payment
voucher is generated, they get a text message about the transaction. This creates
transparency. Data analytics is also being
used for research to improve yield. Says
Mahajan, We are working with private
research institutes to develop hybrids and
test them for yield deliverability.
That apart, Marico has adopted the use
of handheld devices to shorten the stock
replenishment cycles. It has equipped its
on-field sales teams with smartphones and
tablets for faster relaying of sales data and
information from the field to the distribution centres. The upgraded process now
takes only two days as opposed to a week
112
under the erstwhile manual system. So,

rather than have 8-10 days worth of stock
lying with the distributor and then wait for
the stock to drop down to a certain level
before replenishment, Marico has a proactive stock replenishment cycle based on
market orders, says Samardeep Subandh,
chief sales officer, Marico India.
Over the last few years, Maricos portfolio has expanded in the metros, Marico
salesmen sell more than 150-200 active
SKUs per market. With the use of handhelds, the fill rate has gone up to 90 per
cent, and the closing stock at the distributor
level goes down.
The benefit at the front-end is bigger.
Once a salesman starts handling 150-180
SKUs, there are different promotions every
month where the price varies, and doing
things manually is complicated. The teams
there find it easier to work with an ITenabled system. Second, it enables faster
billing at the distributor level, faster loading
and unloading of stocks, planning of the
routes etc, as it all gets automated. Marico is
making use of Google Maps and geo-tagging for distribution. On obtaining an accurate location of stores, one can do route optimisation, increase market reach etc. This
year, an important project for the sales function, named Project One, was rolled out in
association with Nielsen. It involved
increasing Maricos direct coverage significantly. As a result of the project, Marico
added 60 per cent new stores in the top six
metros.
Mahajan says unavailability of skilled
labour conversion of coconut to copra is
a fully manual process has been a nagging issue. Over time, Marico has developed
a prototype of a production line, which cuts
down manpower requirement by 80 per
cent, while the time taken shrinks from five
to two days. Started last year in one collection centre, this production line is also ecofriendly. In the traditional way, when you
break the nut, the water unfortunately is
drained on to the ground. Under a mechanised process, the water is used for creating
biogas, and the workers based in the centres
can use it for cooking. We are working on
optimising the cost of operations and reaching the benchmark level in a years time,
says Mahajan, post which we will take this
prototype to all centres. This can revolutionise the whole process.
>
BEATING
THE SLOWDOWN
WINNING IN A
ASLOW-GROWTH ECONOMY
A good way to navigate a downturn is to take the slow in, fast out
approach. Smart companies set up early warning systems, which help
them plan better and emerge stronger
ndias troubled economy seems to be

slowly gathering some strength. After
two years of growth in the 4 per cent
to 5 per cent range, the gross domestic
product is expected to increase more
robustly in 2015, growing to an expected
6.4 per cent.
Undoubtedly, it has been a rough ride
across many sectors of India Inc, and
even the recent economic recovery
aided by a few months of falling oil prices
has been bumpy. But certain companies manage to flourish in any situation.
As Indias economy continues to
improve, it is time to look at what companies did differently to thrive during
the slowdown and to position themselves for growth in the revived economy.
Conventional wisdom advises us to
conserve resources to ride out the downturn. But winning companies think dif-
ferently. The situation is not unlike a

racetrack: Curves in the road provide an
opportunity to break away from the pack.
Similarly, downturn-upturn cycles afford
companies the chance to make big moves
in their respective markets. By making
strategic investments during downturns,
companies position themselves well to
outpace the competition when the economy improves.
In the US, Southwest Airlines is a wellknown example of a company that used
a sour economy to gain momentum.
During the 2001 recession, Southwest
surged ahead of its rivals. With a clean
balance sheet, a clear cost advantage over
its competitors and adroitly hedged fuel
costs, the discount carrier grew at the
expense of rivals. As others eliminated
capacity and jobs, Southwest lowered its
fares to gain market share. It also
113
increased advertising to trumpet its price

advantage and built solid relations with
labour by avoiding layoffs.
Similarly, a number of Indian companies steered themselves through the last
three years of economic turbulence into
a position of strength. IndiGo airlines,
for instance, increased its market share
from 12.5 per cent to a market leading 32
per cent over the past five years an
impressive feat.
When we analysed total shareholder
returns in six diverse industries, in each
sector we saw one player beating the
market by a wide margin, even during
the slowdown period (See Chart: Winners
use downturns and revival periods to outdistance competition significantly).
Interestingly, this positions such
players even better to race ahead, when
the slowdown comes to an end. While
>
these companies thrived, one leading
real estate player in India didnt handle
the downturn well. It invested heavily in
non-core segments, a move that failed
to pay off and led to significant debt for
the company. Even after selling its stake
in the non-core businesses, the company
is still recovering from the impact: Its
stock price has dropped nearly 75 per
cent over the past five years. So the question is what does one need to do and
avoid doing, to capture this strategic
advantage?
Why do some companies get it wrong?
From our experience with clients in India
and the rest of the world, we see executives making common mistakes when
managing their companies through economic turbulence and slowing markets:
They struggle to differentiate between
core activities and the less vital functions.
Managers look inward rather than
outward, and miss the early signs of consumer-sentiment revival.
Decisions are hampered by a loss of
concentration, diminished creativity and
an inability to learn from new information.
What do winners do differently?
A better way to navigate a downturn is
the slow in, fast out approach. The best
companies set up early warning systems
to get indications of the road ahead.
These systems enable them to plan and
then enter the curves of the racetrack
in such a way that they come out roaring
and poised to take full advantage of
emerging opportunities.
Based on our experience, winners
make a few specific moves both before
and during the downturn:
They clarify strategies and shift
resources to core activities they choose
where to play and how to win, protect
and grow customer loyalty and seek to
strengthen the organisation.
They increase revenues and margins
they turbocharge sales and pricing for
both today and tomorrow.
They aggressively manage costs and
cash flow they manage internal complexity, streamline general and administrative costs to cut out flab and closely
manage cash flow even as they conserve
fuel for the investments that matter.
Winners use downturns and revival periods to

outdistance competition significantly
Comparison of annualised TSR* across industries (FY 10-14) (All figures in %)
COMPANY
INDUSTRY
Delta in performance
TELECOM*
21
IDEA
-6
27
TWO-WHEELER*
27
TVS
19
IT
TCS
30
12
31
22
18
BANKING
INDUSIND
9
PERSONAL PRODUCT**
GCPL
36
20
16
CHEMICALS
41
BERGER
22
20
Note: *Total shareholder returns. Industry average based on average of top 10 players in BSE 500;
**Average based on all players from the industry listed in BSE 500. Source: CapIQ data; Bain analysis
They dont lose sight of bold moves and
pursue game-changing acquisitions and

partnerships domestically and abroad.
Lets look at some winners that
emerged stronger from Indias downturn
of the past three years and examine their
actions.
IndusInd Bank is one company that
used a focused strategy to ride the downturn and come out stronger. It concentrated on its core businesses, such as
commercial vehicle financing, while
partnering with others to distribute a
diverse product line. For example, due to
its relative lack of scale, IndusInd decided to market home loans from HDFC
Bank rather than launch a competing
114
product. Even while pursuing its growth

objective, IndusInd stayed targeted, concentrating on establishing a high-density network in 20 to 25 cities. The bank
also aimed to increase its share of lowcost segments such as current
accounts and savings accounts to
bring down the interest pay-outs.
Additionally, IndusInd kept an eye out
for strategic investments and purchased
Deutsche Banks credit card business in
India in 2011. This enabled it to provide
a complete product offering for the consumer segment.
Through these initiatives, IndusInd
was able to achieve strong growth over
the last few years, as reflected in its stock
>
price.
Hovering
around tributes about 47 per cent to
~180 in March 2010, the companys stock
the companys topline, up
price rose more than fourfold to approxfrom 15 per cent in 2010, has
imately ~770 in November 2014 and grown mostly through
the company delivered industry-leading
acquisitions. Among others,
total shareholder returns over the FY10these acquisitions include
14 period. The past four years have also
Issue Group in Latin
been a period of substantial revenue and
America, PT Megasari
margin gains for IndusInd: revenue grew Makmur Group in Indonesia
at an average annual rate of 36 per cent
and four acquisitions across
over the FY10-14 period, while net
the African continent. The
income grew 42 per cent annually in the
growth has been achieved ANANT BHAGWATI
same period. Meanwhile, the companys
following the 3x3 strategy
PARTNER, BAIN &
market share in the vehicle-finance space
focusing on three busiCOMPANY, MUMBAI
increased from 7 per cent in FY10 to 9.7 ness categories in three geo- OFFICE, & MEMBER,
per cent today, according to a research by
graphies. GCPL has also INDIA STRATEGY
Ambit Capital.
made a concerted effort to PRACTICE
For its part, IndiGo airlines managed
cross-pollinate ideas and
complexity to help it thrive in the downinnovations across borders. One example
turn. The airlines single-minded focus
of a recent innovation by the company is
on delivering market-leading on-time
the Good knight Fast Card, which is nothperformance and running a no-fuss, lowing more than a piece of paper that when
cost-carrier model helped it rise to the
burnt is an effective format for repelling
top of an industry at a time
mosquitoes.
of great turbulence for everyAs these companies
one.
show, it is important to press
IndiGo has grown its fleet
the gas a few seconds before
size to around 100 aircraft,
the competition when shiftand it operates a single-fleet
ing out of a downturn. Most
model (Airbus A320) in order
companies tend to wait for
to optimise its spare-parts
certainty,
but
leaders
inventory and training
will take an educated guess,
expenses, as well as to genand
act
quickly
erate additional efficiencies.
and decisively.
All this has helped IndiGo
Companies that are
increase its market share
thoughtful and consistent in
from 12.5 per cent to nearly PARIJAT JAIN
their investments during the
32 per cent in five years. And
downturn can gain from a
PRINCIPAL, BAIN &
even in turbulent times, COMPANY, NEW DELHI
run of breakaway growth
IndiGo is making money, OFFICE, & MEMBER,
once the market revives. In
with margins of 3 per cent in STRATEGY PRACTICE
India today the question is
FY14. No surprise, then, it is
not about when to upshift;
popular both with business and leisure
we believe impending winners have
travellers and seen as a benchmark for its
already stocked up on fuel and are pressindustry.
ing the accelerator as we speak.
Another great example is Godrej
Consumer Products (GCPL), which
aggressively pursued growth through
acquisitions and partnerships throughout a turbulent economy since 2011. The
growth is evidenced by the 3.5-fold
increase in its share price over the FY1014 period. Additionally, GCPL has
increased its topline around 27 per cent
annually in each of the last three years.
Its international business, which con-
115
>
Corporate
philanthropy is
gaining traction in
India, especially after
recent amendments
to the Companies Act.
But what are the
challenges involved
in making CSR
investments
genuinely impactful?
A practitioners guide
MAKING
CSR WORK
KANIKA DATTA
ow that corporate social responsibility (CSR) has acquired a statutory mandate, an activity that was
hitherto informal and voluntary has
become a formal imperative for some companies. The fact that CSR now has legal
sanction suggests that many more companies, including those that do not fall
within the ambit of the new law, will feel
obliged to start programmes of their own.
Corporate philanthropy is hardly new to
the Indian scene but the expansion of business activity over the past two decades has
seen CSR as a concept gaining traction and
becoming a more structured activity. But
what are the challenges involved in setting up credible CSR programmes that go
beyond the letter of the law? What should
companies do to make their investments
genuinely impactful, as the law intended
to achieve? What are the typical mis-steps
they make? Here are some thumb rules
culled from practitioners and experts in
India.
Cheques and balances

It starts with the basic approach to CSR and
116
>
that is linked to decisions on how to spend
the money. It is important that the corporation should not be a cheque-writing institution that donates to, say, 10 different programmes it is better to channel resources
to ensure a huge positive impact, says
Rakesh Mittal, co-chairman of Bharti
Foundation, the philanthropic arm of the
telecom giant.
Part of the reason for the cheque-writing
proclivity, says Srimathi Shivashankar,
associate vice-president, Diversity &
Sustainability, HCL Technologies, is that
many promoters confuse CSR as charity
rather than a long-term investment for the
future. So occasional donations to, say, the
Prime Ministers Relief Fund and sundry
other good causes, while useful and well
within the legal criteria, rarely translate
into plausible example of a companys CSR
commitments, beyond the occasional photo ops for senior executives. If CSR is
undertaken as a public relations exercise, it
tends to get marginalised within the system, says Ingrid Srinath, CEO, Hivos India
Advisory Services, which provides programme management services for private
sector CSR initiatives.
This was precisely the discovery Bharti
Foundation made in its early days before it
chose rural primary education as one of its
primary mandates. Mittal admits that
before 2000, Bharti Foundation went on a
cheque-writing spree. Soon we realised
that this served no purpose; it was not the
reason for which the foundation was set
up, which was to give back to society. Till
about 2006, Bharti set up schools of technology and scholarships in two IITs as an
extension of our core business. But our real
journey began when Manmohan Singh
talked about the importance of primary
education, he recalls. Today, Bharti
Foundation runs primary, secondary and
senior secondary schools in villages
in six states.
Framing a focused CSR programme
with coherent deliverables is vital in terms
of a companys reputational value too, especially in India where even large corporations are largely promoter-driven. If private charitable instincts of key executives or
promoters are sought to be fulfilled through
corporate resources, it almost amounts to
corporate mis-governance, says Nachiket
Mor, currently an external member of the
It is important that the

corporation should not be a
cheque-writing institution that
donates to, say, 10 different
programmes
RAKESH MITTAL
CO-CHAIRMAN, BHARTI FOUNDATION
Many promoters confuse

CSR as charity rather
than a long-term investment
for the future
SRIMATHI SHIVASHANKAR
ASSOCIATE VICE-PRESIDENT, DIVERSITY &
SUSTAINABILITY, HCL TECHNOLOGIES
Reserve Bank of Indias Central Board who

helped establish the ICICI Foundation in
2008 that focused on various inclusion initiatives for the rural poor. He cites the
example of industrialist Azim Premji, who
has leveraged his personal wealth to the
cause of primary education and related
social infrastructure through a separate
personal foundation, as a good CSR governance model.
Cause and effect

So how should corporations go about
choosing a CSR mandate? There are two
117
related issues. First, says Shivashankar,

the philanthropic cause should be aligned
with the corporations values and philosophies. It is an obvious point, but often
overlooked by promoters eager to jump on
the CSR bandwagon for reasons other
than philanthropy. The varied and heavily
publicised philanthropic activities of promoters facing push-back from local communities are examples of how CSR can
detract from corporate reputation, even if
some of the programmes do deliver tangible value.
In HCL Technologies, for example, CSR
is one element of a wider, declared corporate commitment to the Triple Bottom
Line, the accounting of a companys activities on social, environmental and financial
parameters. Thus, HCLs CSR programmes
form part of an elaborate annual
Sustainability Report. This approach insulates corporations from the common stigma of tokenism, which could be a particular risk now that the rules under the
Companies Act mandate specific activities
that qualify as CSR.
Second, theres the issue of whether CSR
should be related to a companys core competency. ICICI Bank is considered a good
example of a sound strategic link between
its objectives as a fast-growing bank and a
mandate to promote greater financial inclusion. HCLs youth education and skill development programme, for instance, focuses
on promoting digital literacy for less privileged youth.
Extending core capabilities to CSR has
been a traditional strategy for several multinationals and it has worked well for them.
The Britannia Nutrition Foundation (BNF),
which, among other things, provides fortified biscuits as part of a major school midday meal scheme, is one example. There is
an obvious connection and it gels with the
Bangalore-headquartered companys credo
of Eat Healthy, Think Better.
BNF started under Vinita Bali when she
was Britannias managing director and she
is considered its moving spirit. It began as
an involvement with the World Food
Programme for which Britannia made specially-formulated biscuits as part of a special package. The insight was, if were
doing it for the rest of the world, what about
doing it for the people of India who have
equally great nutrition needs, she told
>
e?
Much ado about littl
rather than dissipating funding on

Business Standard in an interview in
administrative costs.
2011.
certain size need to
a
of
The less is more approach also
There are, however, risks to an overt
s
nie
pa
com
From April 1, 2014,
for the
average net profit
informed Bharti Foundation when
corporate linkage. Procter & Gambles
its
of
t
cen
r
pe
2
st
spend at lea
years on
it decided to tie in with the prime
Shiksha educational programme in coling three financial
immediately preced
Section 135 of the
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tie
ivi
act
ministers rural sanitation prolaboration with CRY in 2009 is cited as
lity
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po
corporate social res
pany
cut off: Every com
gramme via Swachh Bharat. Since
an example of how desisting from leverthe
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lat
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Companies
crore or more,
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nd
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toilet-building requires speaging CSR for brand promotion can be
fiv
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rup
a
having net worth of
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an
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cialised domain expertise, Bharti
useful. The programme involved eartho
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s
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or turnover of rup
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or more during an
Foundation is working through
marking part of the sale proceeds
re
cro
e
fiv
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rup
net profit of
Social
Bindheshwar Pathaks Sulabh
from P&Gs detergent and personal
stitute a Corporate
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cia
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consisting of thr
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sanitation NGO.
tion though the multinational also
ich at least one dir
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Partnering with NGOs can be
committed funds irrespective of
ector. Data compil
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tricky,
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sales. Importantly, recall those
rch
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s
Business Standard
l within
choose the right one, especially
involved with the programme,
s, only 140 would fal
nie
pa
com
ed
list
4,000-odd
in India where there are 2 to 3
P&G did not overwhelm the
the CSR definition.
million of them? Mittal says one
agenda with branding or logo
way would be to focus only on
use, a fact that enhanced both
those that have at least three-year track
its and programmes credibility.
record, though this too could be a risk. He
In contrast, Hindustan Unilevers extenDIY versus partnerships
suggests the creation of a national NGO
The VH-Pradan tie-up points to another
sive Shakti Amma programme has attractdatabase for companies to access.
critical factor on which all practitioners
ed some criticism for linking a CSR objecagree: the importance of working through
tive to a corporate target. The programme
partnerships. There is a tendency, espewas designed to enhance the livelihoods
The bottom line
cially among promoters of big companies,
Ultimately, as with anything else in busiof rural women by making them salesmen
to want to set up their CSR projects by
ness, a CSR project requires some element
of Unilever products in their villages. There
themselves, says Joshi, who is now an of accountability and audit of the process.
are case studies of how the programme did
independent consultant. The notion is
Again, though this is a clear need, Srinath
actually empower many women but the
that since theyve managed to build a huge,
of Hivos says, The contrast is striking.
objective was also to promote rural sales
complex company, they can as well develWhen planning even the most minor proand some questioned the propriety of marop their own CSR programmes. This may motion, companies go through a high levketing expensive fast moving consumer
work for some agendas like education or
el of diligence and demand for actionable
goods to populations with poor access to
healthcare, but larger community develstandards. The same thing does not happen
basic infrastructure.
opment and livelihood projects involve
in the case of a CSR programme.
Although the late CK Prahalads Bottom
much more complexity and require experPart of the problem is that there is no set
of the Pyramid business model, as exemtise from NGOs on the ground, he adds.
metrics to measure the success of CSR proplified above, held a certain attraction for a
There are practical reasons for this, as
jects. Hard numbers and targets tell only
while, evidence suggests that, on the whole,
Bharti Foundations Mittal points out.
one part of the story. But, as Joshi points
programmes without the profit motive
Companies that develop CSR programmes
out, setting rigid Key Performance
work better. For instance, some years ago
by themselves could end up seeing multiIndicators in the nebulous world of comVenkateshwara Hatcheries (VH) helped a
ple corporations doing the same thing,
munity development can be problematic.
small farmers cooperative in Jharkhand
which defeats the purpose of the exercise.
The CSR rules themselves focus on spendset up a hatchery. The hatchery bought
The DIY route can also limit the ambit of ing. This is the easy part in a country like
hatchable eggs from VH and sold day-old
a corporations CSR programme. For
India. The real challenge for organisations
chicks to poor people who were helped by
instance, says HCLs Shivashankar, while
queuing up for CSR in the future could lie
Pradan, an NGO that focuses on enhancing
the youth digital literacy programme leverin assessing whether their investments are
the livelihood capabilities of the poor, to
aged a core competency, the Foundation
really making a difference to Indias
take up small-scale poultry. As Deep Joshi,
did not have the in-house expertise to
human development indicators.
co-founder of Pradan, pointed out in an
extend the capacity to operating, say, bridge
article, The choice before VH was to set up
schools for youth and women, so partnera hatchery itself to get better margins
ships with experienced NGOs was a logical
which would have been much easier to do.
step. For community development alone
Yet they chose to not only sacrifice a bit on
HCL works with eight or nine NGOs. This
the bottom line but also walk the extra mile
approach, she adds, also makes it possible
to work with an unconventional business
to maximise delivery to real beneficiaries
partner.
118
>
CHASING
THE LONG TAIL
The spread of online retailing has spawned many internet

entrepreneurs hawking obscure or regionally known products. So
when is the long tail market viable?
MALINI BHUPTA
ndias e-commerce story is no longer

limited to billion-dollar valuations
and discount-crazy consumers
thronging shopping websites. The
online marketplace has now become
an incubator for entrepreneurs who are
hawking rare, obscure or even unpopular
products. The shift was inevitable. The

search for differentiation in an environment
of cut-throat price competition has taken
marketplaces like Snapdeal, Myntra,
Pepperfry and Fashionara to the doorstep of
many small, regional brands and makers of
niche products, who are now able to sell
their products across the country without
worrying about managing logistics or mar-
119
keting. Says Sandeep Komaravelly, senior

vice-president, marketing, Snapdeal, The
online platform enables this transaction
between sellers and buyers at zero upfront
cost, and hence, the size of the business is not
a pre-condition. This is how the online marketplace model democratises entrepreneurism and business growth by giving people more options.
>
Brand: Fabdeal
STARTED BY: AKSHAY JUNEJA, KISHORE AGARWAL
YEAR: 2011 (SURAT)
>>PRODUCT: The brand focuses on Indian ethnic wear dress materials,
readymade kurtis and saris. The brand has partnered with Myntra
and Amazon among several other large e-commerce platforms
>>GROWTH STORY:The duo used to sell 50 pieces a day, which has now
gone up to 200-300 pieces a day. During festive season they can
handle up to 600 pieces a day. The founders expect to grow three fold
by 2016. Online commerce platforms provide them with banner ads
on their website as sales growth has been strong
>>BIG MARKETS: Tier-II and Tier-III and south India
So while analysts continue to question

the sustainability of a model driven by
heavy discounting, some marketplaces are
already chasing the long tail, tapping
demand that is unarticulated and translating it into incremental sales. And since the
internet makes distribution easier and uses
state-of-the-art recommendation techniques to help consumers become aware of
more obscure products, niches that werent
popular are now being discovered by consumers.
The simple truth is, the long tail makes
little economic sense in a physical world
because stores only have so much shelf
space and any brand/product stocked needs
to justify its presence on the shelves by selling a requisite amount. On the other hand,
it costs a Snapdeal nothing to put a rare,
not-really-top-of-mind product on its catalogue, and sell a couple every week. Sure, it
may never become a smash hit, but some
sales in the long tail do add up to a significant market size.
In that sense, e-commerce has the
potential to queer the pitch for the short
head large-volume, mass market products. Says Sudhir Voleti, assistant professor, marketing, ISB, The long-tail model is
about finding demand that is latent and
players who find this latent demand will
succeed.
Product is hero
At the end of the day, says Ganesh
Subramanian, COO, Myntra, the hero of
this story is the product, which is offered at
a good price. He believes, online platforms
are a great opportunity for sellers since
young buyers are willing to experiment. In
terms of value, a third of our business comes
Brand: Joker & Witch

STARTED BY: SATISH SINGH,
MAYA VARMA
YEAR: 2014 (NEW DELHI)
>>PRODUCT: Kitschy accessories, apparel
and handbags
>>GROWTH STORY:Starting off with just 19

orders in October 2014, the brand has
closed December 2014 with 200 orders. It
plans to clock 1,000 orders per day by the
end of 2015
from small-and medium-sized brands. We

help with marketing support but success
hinges on the product, he says adding that
while building scale to keep pace with growing demand can be tricky for a small producer, it is not impossible one of his
regional partners, for instance, has scaled
~50 crore in revenue in two years.
Indeed, there are many such stories of
internet entrepreneurs who ditched their
120
jobs to sell fun products online. Some started for a lark, but now have credible businesses and are now building scale. Rahul
Khullar, CEO & founder, Style Homez Inc,
for instance, decided to sell bean bags from
his home in 2013 in Delhi. His relationship
with Snapdeal began in November 2013.
From 30-40 pieces a month, Khullar now
sells 3,200 pieces. Says Khullar, We grew
100 times in one year and the branding support that Snapdeal provided through newspaper inserts and via Google ads drew customers to our website and urged them to
check out our products. The brand today
services more pin codes in the country than
it had hoped for in 2013. The team has also
grown and stands at 35 people right now.
Anupam Barman, a silk sari retailer
based in Varanasi, has seen his sales jump 25
per cent in 2014 compared to the previous
year, after Snapdeal approached him to sell
his products on the portal. Not only has
Barman found a new audience for his
woven silks, he now gets to connect with the
consumers directly and gets feedback on
what products sell well and which ones
require a bigger push.
Khullar of Style Homez says that since his
venture was self-funded, it did not have the
required financial muscle to invest in brand
building. But its relationship with Snapdeal
gave it instant visibility. What has worked to
his advantage is the payments cycle, which
coincides with a sale.
Kitsch is king
One visible trend is that most marketplaces
are reaching out to people who either manufacture or deal in kitschy products. Arun
Sirdeshmukh, founder of Fashionara, says
unusual products that are not found in
>
physical stores do well on online channels.
Unusual gift items or trinkets are known to
attract millennials who tend to shop more
frequently online.
Given that most of these merchants are
not really bred-in-the-bone merchants they
need support in product selection and in
showcasing them online. Most marketplaces help merchants build their e-catalogue and in listing them on the platform. In
many cases even the product descriptions
and photo shoots are facilitated by the ecommerce platform.
Even when it comes to inventory management, the shopping portals give inputs
to the sellers on the minimum inventory
they need to hold at any given point in
time according to the category. Akshay
Juneja, founder of Fabdeal, an ethnic wear
brand from Surat that sells on Myntra, says
that Myntra gives his team a heads-up on
how their stock is doing and how many
pieces of which design they should they
hold. Says Juneja, The advantage of this
relationship is global reach. When we were
offline we could only sell to local customers; now we reach overseas audience as
well. From 50 pieces a day, our sales have
gone up to 200-300 pieces a day. During
the festive season, Fabdeal had to organise
delivery of 600 pieces a day.
That said, some analysts are wary of
the long tail theorys implicit challenge
to the Pareto principle or the so-called
80-20 rule, which would make it
appear that there was a greater
importance of the hit products and warn the long
tail theory may not be universally applicable. In a
working paper titled, Is
Tom Cruise Threatened?
Using Netflix Prize Data
to Examine the Long Tail
of Electronic Commerce,
Wharton Operations
and
Information
Management professor Serguei Netessine
and doctoral student
Tom F Tan contended
that while the long tail
effect holds true in
some cases, mass
appeal products retain
their importance when expanding product
variety and consumer demand are factoring
in.
There are companies based on the
premise of the Long Tail effect that argue
they will make money focusing on niche
markets, says Netessine. Our findings show
it is very rare in business that everything is
so black and white. In most situations, the
answer is, It depends. The presence of the
Long Tail effect might be less universal than
one may be led to believe.
According to Netessine, The Long Tail
effect may be present in some cases, but
few companies operate in a pure digital distribution system. Instead, they must weigh
supply chain costs of physical products
against the potential gain of capturing single customers of obscure offerings.
Companies must also consider the time it
takes for consumers to locate off-beat items
they may want. (Source: Rethinking the
Long Tail Theory: How to Define Hits and
Brand: Style Homez

STARTED BY: RAHUL KHULLAR
YEAR: 2012 (NEW DELHI)
>>PRODUCT: Bean bags
>>GROWTH STORY: Company clocked
revenues of ~58,000 soon after
launch. Achieving MoM growth of 15
per cent. By October 2013, it has
clocked ~2, 20,000 in sales. After
partnering with Snapdeal in
November 2013, it has clocked sales
worth ~3, 21,000 a month, a 25 per
cent
increase in revenues
>> BIG MARKETS: Tier-II and

Tier-III apart from towns in
Tamil Nadu and Assam
121
Niches, Knowledge@Wharton)
Also the task before the curated marketplaces is far from easy. They have to
evaluate the products for their quality
and the vendor for his reliability to be
able to make a difference in the market.
Most of the marketplaces have separate
quality teams to monitor products, quality and catalogue. Mind you, this is not a
one-time effort but has to be done continuously. That apart, the onus of distribution also lies with the marketplace. On
receiving an order a marketplace will connect with the relevant vendor and take
care of the packaging and delivery within the promised time. Managing reverse
logistics ferrying returned products
is also handled by the concerned marketplace.
Handholding new entrepreneurs might
be a wonderful thing and the long tail might
earn e-commerce players rich dividends,
but is the model sustainable? Most sellers on
these marketplaces are growing at breakneck speed and if this growth continues,
they will have to scale up rapidly to meet
demand. Failure to meet demand or quality expectations would not only harm the
vendor, it has the potential to hurt the credibility of the marketplace as well.
Fashionaras Sirdeshmukh, however, does
not believe it is an issue. Most marketplaces
use advanced predictive analytics to get a
sense of future demand. If they sense that a
vendor cannot meet the demand, the easiest thing to do is to remove the vendors
catalogue from the site.
Subramanian of Myntra says, The
growth of these smaller brands will be determined by their ability to scale up. They have
to invest in infrastructure.
Most e-commerce portals believe that
this trend will play out in two ways. Some of
these brands will emerge as strong standalone brands in their own right. If and when
they do, they would want to migrate to their
own websites. On the other hand, some will
remain niche and only cater to an audience
their inventory allows them to service.
However, maintaining quality and managing the time-to-consumer-doorstep will
continue to be the biggest challenges
on their way.
>
Making
a difference
As more global QSR chains target India as
their next big market, the battle for
supremacy will be won by delivering a
unique customer experience
122
ROHIT NAUTIYAL
n September 2013, right at the beginning of his training period at Pita Pits
headquarter in Kingston, Canada,
Anun Dhawan, director at Mentor
Hospitality (master franchisee for
Canadian QSR chain Pita Pit in north and
east India), figured out the significance of
creating great customer experience.
Recalling an incident in his first training
session, he says, The session started with
a seemingly idealistic question: how do
you train store staff to deliver the right
customer experience in a country where
theres a huge economic disparity between
them and the customers?
That is where the problem really starts,
he says. The other issue that compounds
the challenge of creating a great customer
experience is language. First, each market
within India speaks, or rather under-
>
QSR: 2015
and beyond
The Indian organised QSR industry is
a ~7,000- crore market dominated by
chains like McDonalds and Subway
In the organised eating-out market, which includes cafes,

casual dining, frozen dessert, pub/club/bar/lounge etc, QSRs
will lead with a projected growth rate of 21 per cent till 2020
Increased spends on eating out activities, exposure through

international travel and media and evolving palate of the
Indian consumer are the key demand drivers in QSR
stands, a different language. Therefore, a
store staff must know at least two languages English and Hindi. This is quite
different from any other market where the
restaurant is present be it South Korea,
France, Australia, Brazil or the US. After listening to Dhawans concerns the trainers
told him that it all boiled down to building
confidence and that to instill confidence is
his team Dhawan had to lead by example.
So when Pita Pits first store was opened
in November 2013, Dhawan along with the
leadership team of Mentor Hospitality,
rolled up their sleeves to manage some of
the key aspects of the stores operations
such as noting down orders at the front
counter and managing the workflow in the
kitchen. All along, the companys cofounder Nelson Lang, who was present at
the store, kept a keen eye on the goings-on.
While the store staff was intimidated by his
2015 will see leading international burger

chains like Fatburger, Carls Jr., and
Burger King battling to win the trust of
the evolved Indian consumers
presence initially, they understood what

the management was trying to convey.
Over the next five years, Pita Pit will
open around 50 outlets across the north
and east of India. Its training calendar
comprises induction sessions for new
employees besides weekly manager meetings. Most of the training happens on the
job. The area manager is mainly responsible for maintaining the score cards of all
the employees from store managers
down to the cleaning staff. With a little
more than one year of operations, Pita Pit
India is already trying hard to cut down the
turnaround time for orders, especially the
ones placed during the so-called rush
hours. The company claims it can serve a
sandwich within 2.5 minutes of receiving
an order. We understand that delivering
the right customer experience is actually
about staying on high alert and adjusting
123
your operations to consumer demand from

time to time, adds Dhawan.
Pita Pit is not alone. With competition
in the ~7,000-crore quick service restaurant space hotting up, most players feel
they have to conjure up fresh ways to
attract and keep guests coming back. And
if you are a relative new-comer, you have
to work a lot harder to attract new customers or simply to maintain a steady
stream of patrons to keep the cash boxes
ringing. This is sometimes accomplished
with inexpensive marketing initiatives,
but other times more elaborate and expensive approaches are in order. The fact is, in
addition to getting customers in the door
you have to ensure that they have a positive in-store experience. From promotions
to web advertising, from vouchers to
social media, a QSR has to attempt to stay
ahead of the competition through a vari-
>
ety of methods. But the first point of
human contact, or the store itself, has now
emerged as the field where the battle for
the customer is being fought.
Timing is everything
Popular for its charbroiled burgers, US fastfood chain Carls Jr. has done its homework well ahead of its scheduled store
launch in April this year. Interestingly, the
company has taken three years to re-engineer its menu for India. Since Carls Jr.s
main objective is to serve fine-dining
food within three minutes of getting an
order, it has devised a unique consumer
engagement strategy. Says Samir Chopra,
chairman and founder, Cybiz BrightStar
Restaurants (Carls Jr. franchisee), The
distinction between the experience at a
fine dining restaurant and a QSR is made
on two grounds: the quality of the food
and the time taken in delivering the service.
To understand how Carls Jr. is reworking the serving time, we have to first look
at the amount of time customers spend on
an average at a fine dining restaurant. After
walking into the restaurant the customer
tends to spend three to five minutes in getting a table of her choice. The next 5-10
minutes is spent on placing the order followed by another 15-20 minutes of waiting
before the food arrives at the table. At the
end of the meal it takes around 5-10 minutes to settle the bill. Put together, the overall turnaround time for any order at a fine
dining restaurant is 40-50 minutes. If we
take that much time in processing an
order, customers will never revisit us, adds
Chopra.
He says that today many QSR chains
end up on the wrong side of the customer,
especially during rush hours, because
theres little to do to kill time while they
wait for their food. In that situation, even
a three-minute wait seems harrowingly
long. To keep its customers engaged, Carls
Jr. will introduce the concept of partial
service. After they place an order at the
counter, customers will be asked to fetch
beverages from a vending machine.
Initially, the company will place one staff
member to help the customers at the vending junction. To some extent, this is expected to reduce the workload of the serving
staff. By the time the customer reaches her
table, the food would have been served by
a staff member. All this in three-and-a-half
minutes.
A strong training process and the handling capacity of in-store equipment will
play a major role in cutting down the turnaround time per order. All the training is
undertaken by the Carls Jr. Star Academy,
known to provide MBA-style leadership
training, in tandem with a web-based instore learning management system.
Currently Carls Jr. India is setting up its
training calendar for 2015. This will include
off-sites for general managers, sessions for
the leadership team at the master franchisee premises, classes on business planning, time management and other things
related to store operations. By the end of
this month a team of seven general managers from Carls Jr. India all with more
than eight years of prior experience will
fly down to California for a 10-week training programme. This team will be responsible for training the rest of Carls Jr.s India
staff.
The show must go on

Uma Talreja, chief marketing officer at
Burger King India (BKI), is of the opinion
that service is faster and better when a
restaurant gets crowded. Otherwise low
footfalls spread lethargy among the store
staff. On an average weekend, BKI makes
5,000-6,000 burgers, more than double
the number it does on weekdays. Talreja
says, Going forward, right training will be
the key differentiator in ensuring the best
customer experience. Talreja, who has a
background in fashion with stints at
Westside, Aditya Birla Retail and Shoppers
Stop, went to Miami to receive functional
training for her role at BKI. The first part of
her induction had begun in India when
she was introduced to the hygiene principles adhered to by the chain so that she is
better prepared to assimilate the second
part of her induction in the US. In Miami,
she spent a week understanding every
aspect of store operations. Marketing-related training sessions included lessons on
innovation, research and the brands visual imagery.
As part of her training, Talreja was
required to visit competing QSR chains
like Wendys, Johnny Rockets, Chipotle
Mexican Grill, among others, to under-
124
stand what they have to offer and what are

some of the things that Burger King could
adopt in its format. She says on a lighthearted note, One day in my week-long
training calendar was assigned for restaurant visits only. Besides observing the best
practices followed at these restaurant
chains, I was also expected to try their
food. Honestly I did throw up the next
day.
For Burger King, store managers are a
key cog in the wheel because they carry customer feedback to the companys leadership team. One thing that BKI has learnt is
that consumer expectations vary from market to market. For instance, in Singapore
consumers expect robot-like efficiency. The
store staff can have a conversation with customers, but without ever stopping their jobs
behind the counter. Such efficiency is
respected in Singapore. On the other hand,
an average customer in India who is equally interested in experiencing a new brand,
like it if the store staff pays extra attention
while helping them select items from the
menu. So on every new restaurant opening, while the store staff is responsible for
efficiency, Burger King Indias leadership
team spends more time interacting with
customers, adds Talreja.
In order to receive Burger Kings certification, every crew member and store
manager has to work in the kitchen. For
training purposes, BKI has a fullyequipped test kitchen in Mumbai. Under
the companys training system, when a
country opens a new restaurant and
expands operations, it earns credit points.
Before the opening of its first three restaurants in Delhi and Mumbai, the BKI crew
was sent to Sri Lanka for training. Before
that, BKIs regional heads along with the
countrys training head went to Bangkok to
undergo a month-long training programme.
The QSR industry is a tough business to
be in. It isnt a secret that a majority of new
restaurants shut down within five years.
Some of the ways to attract new customers
are extremely affordable, but others may
require imagination. If youre on a tight
budget in an overcrowded space it would
be a good idea to start with your people.
>
Winning in the
aftermarket
You may choose to
outsource it or bring it
under your own roof,
but keeping a keen eye
on after-sales service
will ensure
consumers come
back for more
ABHILASHA OJHA
here is such a massive

supply of goods and services nowadays both on
the internet and on the
high street in practically
every industry that looking after customers and keeping them
happy has become almost a hygiene factor in business today. Most companies
understand that and many of them are
continuously tweaking their aftermarket
strategies to cut costs and make customers come back for more. Some have
outsourced part or the whole function of
after-sales to a third party; some others
are consolidating them under one roof to
make them more efficient. Here we look
at the experiences of three companies
Philips, Micromax and Volkswagen
that have made radical changes in their
after-sales service models over the last
two years or so and are seeing the results
pouring in.
The experiences of the three companies were different the first two decid-
ed to outsource part of the service function while

the last decided to spruce up its act by
throwing in its might for more in-house
work. But all three realised that it would
be fatal to let things be.
Take Philips, for instance. A little over
two years ago, the management noticed a
growing number of complaints by customers on social media on how the company managed its aftersales. The customer care department, the management
felt, was not equipped to handle the aftermarket queries and the resultant delays in
handling customer complaints was
putting off many prospective consumers.
We struggled with our service centres,
customers were dissatisfied with the
products and we realised we needed
processes that could effectively to address
this issue, says ADA Ratnam, president,
Philips Consumer Lifestyle India.
Additionally, even while the customer
base in Tier-II and Tier-III cities was growing, the management noticed, repeat cus-
125
tomers were few and far

between simply because
there were no service stations to repair the kitchen
appliances that were sold
in those markets.
Given the mess, the top
management at Philips felt it
would be wise to outsource a major
chunk of its aftermarket activities while
it took time to create a more robust and
strong distribution network/centres,
complete with after-sales service facilities for the customer. In 2013, it inked a
deal with HCL Care, an aftermarket service provider, for pan-India support for its
consumer lifestyle products. We understood that we needed a much wider reach
and network to address the growing concerns of the customers, says Ratnam.
HCL Care currently handles the distribution and service of spares of Philips consumer lifestyle products across India. The
service team is jointly trained and developed by HCL Care and Philips. The company has a different service partner to
cater to complaints specifically emerging from Tier-II and Tier-III markets. In
fact, when Philips acquired Preethi, the
south Indian home appliances brand for
~350 crore three years ago, the idea was to
amass both manufacturing and aftersales facilities of the company. For any
company looking to rope in a customer
for the long haul, after-sales is key, adds
Ratnam.
>
While it is too early to start counting
the fruits of Philips move, aftermarket
experts reckon that the results may
already be showing the companys consumer lifestyle division that comprises
domestic and kitchen appliances (also
the area where after-sales service was relatively weak compared to the companys
other divisions) has become profitable
after struggling with flat to low growth
till about two years ago.
After-sales service is a key influencer

that can make or break companies
Partner for progress

As experts will tell you, it is good for companies to innovate and bring out newer
products and models, but it is then even
more crucial for them to have a robust
after sales/aftermarket strategy, especially if you are operating in a market that
seems to have hit a speed-breaker.
See how Volkswagen, the German
automaker, is now learning from its mistakes and making after-sales an integral
part of its growth strategy in India. When
Volkswagen entered India in 2010, it had
an ambitious aim of grabbing around 20
per cent market share in the country by
2018. But the automakers travails began
soon after and it noticed that sales were
slipping as customers were complaining
about the unavailability of parts.
Volkswagen, it appears in hindsight, had
forgotten one crucial thing: putting the
customer in the front seat. In an earlier
interview to The Strategist, Michael
Mayer, director of passenger cars in India
for Volkswagen, admitted that while a
market like India with its complexities
posed a challenge to the automaker,
Volkswagen didnt realise how critical
after-sales service was for the customer.
After-sales becomes a critical factor for
the customer in deciding which car to
buy next, Mayer had said, admitting that
the auto maker desperately needed to go
back to the basics, think deeply and
emerge with a solid after-sales service
strategy.
Over the last year or so, Volkswagen
has been working on decoding the Indian
customers expectations. For starters,
Volkswagen needed to deliver genuine
parts to customers, especially in south
India. Though a part distribution centre
(PDC) was operating out of Gurgaon, near
Delhi, (it was set up in 2012, two years
SACHIN TAYAL
MANAGING DIRECTOR, PROTIVITI
IT HASBEEN GLOBALLY
ACKNOWLEDGED that after-sales service
strategies are used as a tool to
consolidate sales and enhance customer
experience. It helps stakeholders get a
better understanding of customer needs
and aids clearer positioning of an
organisations brand in the market.
Enhancing an after sales-service
experience is much more than focusing
on marketing tools such as brand
ambassadors, logos, packaging and
unique propositions of product/services.
After-sales service is a key influencer in
the purchase decision of a consumer.
While the customer is getting
empowered, companies are spending
big bucks to manage their public image.
Negative publicity of brands or
products spreads much faster today as
customers increasingly share their views
on social media platforms. That said,
after the auto major entered India), customers were fed-up with the time taken
for the required parts to be delivered to
the authorised service stations of the
company.
That problem would be sorted to an
extent, hopes the company, when the
companys part distribution centre in
Bangalore becomes operative from mid2015. This centre is being set up to expand
the companys after-sales and spare parts
infrastructure in the country, especially
in the southern region, while also reduc-
126
feedback can be used as a tool to help

decision making and point out subtle
tweaks that may benefit a product. It is
also essential in the assessment of the
satisfaction level of customers who may
have engaged with the brands aftersales service team.
After-sales can also be a burden on a
companys bottom line due to the
increase in operational expenses if it is
not planned in an efficient
manner. Company should plan the
exercise in such a manner that it is well
aligned with the core
customer problem.
To reduce investments in service
assets and cut operating costs,
companies should consider the
following steps:
9 Identify which products to cover
9 Create a portfolio of service products
9 Design and manage an after-sales
service supply chain to optimise

location of resources, utilisation and
planning for contingencies
9 Monitor performance continuously to
get
customer feedback
9 Resolve issues immediately and
provide reasonable assurance for
better and improved product/services
9 Have a customer complaint study to
evaluate complaint patterns: This
serves as
an excellent base for data analytics
9 Monitor the after-sales service
initiatives of competitors and market
leaders
ing the current lead time to reach genuine parts to dealers and service centres.
With this development spare parts will
reach in 24 hours flat (and not days as
was the case earlier) to improve customer
satisfaction.
Decreasing service time

If Volkswagens aftersales strategy is
geared to ensure the company has a better second innings in the Indian market,
see what its competitor, and the number
one player in the Indian auto industry,
>
Maruti Suzuki, did recently as part of
its after-sales strategy. When Kashmir
valley was hit by floods last September,
the company stationed 900 technicians
from different parts of the country to
quickly restore damaged cars. As part of
its dedicated aftermarket customer care
initiative, nearly 6,000 vehicles were
repaired in a jiffy and a huge cache of
spare parts, supplies and equipment
were rushed to the state to cut down
time taken to repair the damaged vehicles. Pankaj Narula, executive director,
service division, Maruti Suzuki,
explains, Our experience suggests that
a key determinant in the car buying
decision is the after-sales network, its
accessibility, service costs and the availability of spare parts. Our big goal has
been to run a robust service network
that also supports sales.
Heres how Maruti Suzuki has got its
aftermarket strategy spot-on. As we grew
our business, our network kept pace with
the spread. The company has a network
of over 3,000 service touch points capable
of servicing 15 lakh vehicles every month.
Then there are concepts like Maruti
Mobile Support, under which the customer gets door-step services; Express
Service, that aims to complete a service in
90 minutes. Experts say that the most
critical part of a good aftersales strategy is
addressing the customer complaint in
time at Maruti service centres, workshop service advisors with handheld
devices have already reduced the service
initiation time from 15 minutes earlier to
less than 10 minutes now.
According to Sharad Talwar, head,
HCL Care, two of the biggest challenges
that make or break an aftermarket strategy for companies is, one, how quickly a
complaint is addressed, and two, how
quickly spare parts needed to repair products are made available. To be sure, HCL
Care, a business unit of HCL Services, has
one of the largest and most extensive service networks across the country and provides support services across a range of
product categories. According to Talwar,
as product categories grow, a good after
sales strategy is intrinsic not just to industries such as automobiles and electronics
but also to several others, including consumer health care, appliances, telecom,
durables etc. The customer portfolio is

changing and though the failure rate of
products has gone down considerably
with companies investing in R&D and
innovation, competition has increased
and so has the complexity of customer
demand, he adds.
Think about it: a smartphone company, for example, acquires a customer for
the first time when she is in her teens but
can retain her for the next few decades if
it plays the cards right. The cost of customer acquisition, according to analysts,
is typically 40 per cent of the value of the
brand. However, if the customer is a
repeat one, the costs come down significantly.
A sure shot way for a brand to get recommended is by having a great after-sales
strategy and ensuring that each customer and her complaint is important, says Talwar. He adds that outsourcing service to an expert might be a
good idea simply because they have
stronger data analytics, better facilities
to train and equip people and address
customer complaints.
Talwar cites an example: For one of
our smartphone companies we saw that
while two specific models were made
obsolete, many customers still came to
us requesting us to repair those specific
models that they had purchased. We
informed the company to give us original
spare parts of the old models, we kept
those with us for the next two years and
that allowed us to service customers well.
This step also bode well for the company
that realised that innovating didnt mean
127
abandoning what was old.

Staying with handphones, consider
the experience of Micromax. While its
phones sold like hot cakes, the company
realised where it tripped was aftersales.
Thats when the company decided to
increase the number of its partner-managed service centres from 436 in 2013 to
1,250 in 2014. The company also painstakingly put together processes (building its
spare part inventory, for example) to
reduce the turnaround time to less than
seven days from 15 days earlier.
So there you have it: Whenever consumer spending is slowing down, you
need to defend your market position and
maintain your competitive edge. And one
great way to do that is by looking after
your existing customers. They will be
your competitors' target market.
So offer better support by being more
responsive to their needs and expectations. If possible, through in low-cost benefits such as discounts or loyalty schemes.
Remember, it's cheaper and easier to keep
customers than to find new ones.
>
Moving up
THE VALUE CHAIN

The truck industry is considered a commodity market with price
generally topping the list of buying criteria. Heres how Tata Motors,
Ashok Leyland and BharatBenz have created a premium image for
their offerings and triggered intense brand loyalty
DEVINA JOSHI
magine sitting in a plush air-conditioned vehicle with soft reclining seats,

generous space, power steering,
GPS/GPRS systems, steering mounted controls, noise-free engines and sleek design.
Chances are, the dream vehicle you just
conjured up doesnt remotely resemble a
commercial truck. Think truck and one
pictures giant gas guzzlers chugging along
Indian highways with a cryptic Horn OK
please scrawled on the back panels. But a
reality check might be in order as the traditional Indian trucking industry is slowly
but surely creating leg room for a new subsegment that of the high-end, swanky,
premium truck.
So far, the basic Indian truck (politely
dubbed low-cost by analysts) has been a
frugal vehicle mostly sold as bare chassis
with customised cabins and load bodies
mounted on them.
Indeed, Indian customers were not used
to the concept of a fully-built vehicle (FBV)
until about three years ago. Used to buying
the cheapest available, buyers faced frequent maintenance issues, leading to higher overall cost. The concept of total cost of
ownership or TCO (cost of the vehicle plus
128
servicing cost estimates) was absent, and is

only now gaining traction. It is predicted
that as India moves towards e-tolls, wider
roads and an infrastructure boom, a onesize-fits-all approach may have to be shown
the door, and customised, high-end trucks
could surge in demand.
Premium trucks are typically priced 1012 per cent higher than their run-of-themill counterparts, providing more power,
speed, hauling capabilities, operator comfort and overall performance built to
travel the distance. They target large captive users, miners, transporters and fleet
operators.
>
With gradual shifts in preferences for
these trucks, three leading commercial
vehicle manufacturers, Tata Motors (with
its Prima range), Ashok Leyland (with UTruck, Boss and Captain ranges) and
Daimlers BharatBenz, are going all out to
modernise the Indian trucking segment
one customer, one dealership, one truck at
a time. How are they doing it? And why
does the premium end of the truck market
warrant such differentiated treatment?
Rules of the game

The first layer of premium trucks are typically bought by customers who a) after buying a chassis, do not wish to wait two
months for the body and cabin to be built,
b) can make more profits by operating at
slightly higher speeds, and c) want to provide their drivers with safe cabins. The second layer represents those who can pay
more for better conditions (yes, long distance drivers do eat and sleep in the truck).
The high-end buyer wants a premium
reception at the point of purchase and,
hence,players are innovating to roll out better customer service. Tata Motors and
BharatBenz have built test tracks for customers while the former even has a museum.
In other words, for this customer, the purchase and post-purchase experience has to
match the product.
Typically, premium trucks/FBVs entail
less wait time, faster delivery, more stable
vehicle performance, faster serviceability,
better resale value, longer vehicle life and
easier financing. They particularly find
patrons in application-based professions.
A premium truck allows for long driving
hours the cabin is roomy, with enhanced
features, pneumatically suspended seats,
adjustable steering wheel and so on.
Premium trucks are well-designed, and this
is important for a customer who doesnt
buy a commercial vehicle for just the functional value it offers.
A different recipe
When BharatBenz set base in India in 2006,
the team travelled across the country to
understand the market and found surprising
insights. It took us three months to figure
out why a windshield in a truck breaks even
when a small pebble hits it, says a Daimler
India Commercial Vehicles spokesperson. A
cracked windshield, a common sight on
Signs of a future-ready truck

Premium truck makers are working on
features that could be game changers in the
near future, including:
Q
Remote diagnostics: Taking care of issues on
the go, reducing overall vehicle downtime
and enhancing both, driver and operator
control is done by systems being programmed
with a set of instructions. For example, if the
oil level in the tank depletes faster than it
actually should, the system sends out an alert
via the GPS system informing the operator so
he can communicate with the driver to have
the vehicle checked for its leakages etc.
Q
Remote prognostics: Under prognostics, an
operator identifies issues much before an
actual breakdown, via pre-programmed
instructions to the system. For example, early
signs of brake pad wear-and-tear can be
identified, helping the operator understand
the timeline to replace these. Likewise, the
Indian trucks, is a result of problems in the

manufacturing process. Trucks travel for long
distances and with high speed and heat generated, even a small pebble hitting the windshield can cause poor quality glass to crack.
BharatBenz tackled the problem at source by
using a multi-layer, high octane, heat-proof
glass for its windshields. Air-conditioning, a
passenger seat next to the drivers, bucket
seats etc which were not part of the regular
truck game became hygiene for BharatBenz.
With 80 per cent localised production, the
company currently stands at number four in
the overall Indian trucking segment.
Now take Tata Motors, whose technology-rich Prima range comes fitted with the
Tata FleetMan offering for data connectivity through GPS. The FleetMan box in the
truck has a GPS chip and GPRS modem,
enabling connectivity by transmitting loca-
129
trucks maneouvering on roads at high

speeds can be monitored for early signs of
suspension wear-out, thereby prompting the
fleet owner to understand replacement
cycles.
Q
Remote immobiliser: CVs fitted with these
protect vehicles even if they get stolen. If a
thief switches the engine off, he will not be
able to start it again. A coded cellphone signal
will tell the unit (control box fitted to the truck
incorporates a miniature cellphone, a
microprocessor and memory, and a GPS
satellite positioning receiver) to block the
vehicles engine management system.
Q
Advance driver assistance systems: These
include adaptive cruise controls, autonomous
emergency braking and other active safety
systems.
Based on inputs from Tata Motors
tion data to the Tata FleetMan server via

GPRS. Similarly, the Primas ECU (electronic control unit) connected to the
FleetMan box, enables transmission of vital
vehicle data (braking, fuel tank capacity,
oil levels, and engine performance) to the
server. For a future possibility of remote
prognostics and diagnostics (which will be
made available at a slight premium), the
company has tied up with UK-based telematics company Microlise.
Ashok Leylands Boss and Captain too
offer electronic instrument panels to pass
information about the truck to the driver
(telematics). Boss also features automated
manual transmission, which eliminates driver fatigue.
Beyond the purchase

It doesnt stop at offering a great product
>
though. Special treatment needs to be
doled out at every touchpoint. BharatBenz,
for instance, has mapped its network of 76
dealerships with the entire highway network in India, where no location is farther
than 250 km from one another and the
response time to any breakdown is under
four hours. We have also achieved an 84
per cent record of putting vehicles back on
the road, says the companys spokesperson. Furthermore its customer services
function has been branded as ProServ,
while dealerships have a 24x7 enabled
workshop manned by qualified Daimlertrained engineers and equipped with high
productivity tools, advanced guided diagnostics and mobile service vans. The dealerships provide a host of value-added services like rest quarters for drivers, cashless
zero-depreciation insurance, full maintenance contracts, extended warranty, roadside assistance, vehicle tracking systems,
driver training and express/on-site service.
The average maintenance interval of
BharatBenz trucks is around 50,000 km,
resulting in fewer visits to the workshop.
Tata Motors has followed a similar strategy, revising its showroom design and standards to meet customer expectation, offering round the clock service touch-points
(every 50 kms on major highways) through
dedicated container workshops, mobile service vans, driver and mechanic training,
and quicker service with authentic spare
parts through the Tata Authorised Service
Stations across the country. Some of the
key services include an assistance programme on national highways called Tata
Alert, triple benefit insurance, priority
desks for Prima customers at the call centre,
and a loyalty programme called Tata
Delight (for retail customers) and Tata
Emperor (for large key customers). For
instance, Tata Emperor member Siddhi
Vinayak Logistics in Mumbai recently
redeemed its points for a new Land Rover
FreeLander.
Furthermore, Tata Motors recently
introduced a campaign under Tata
Genuine Parts against the sale of spurious
spare parts. As part of this, it conducted
nationwide raids to expose sales of duplicate spares. The enforcement team, including the IPR enforcement, copyrights protection agencies, Tata Motors TGP team
and the legal team, works to identify both
Leyland has also re-worked its order fulfillment process: premium trucks are builtto-order and transported to dealers on tractor-trailers. Customers are assured of
receiving mint-fresh trucks with zero km on
the odometer.
Lasting relationships
Tatas Prima range (top) and Ashok Leylands

U-Truck
manufacturing units and selling outlets of

counterfeit products across cities.
In Ashok Leylands case, premium truck
launches led to a simultaneous upgrade of
its 200 branded parts stores and 500 dealer outlets and authorised service centres,
where each dealership has to comply with
a 15-point checklist to be eligible to retail
these trucks. Traditionally, trucks are not
purchased from the dealer outlet sales
executives complete transactions at customer premises. But this is changing, particularly in the smaller range, says Vinod
K Dasari, MD, Ashok Leyland. Customers
are increasingly walking into showrooms
for a first-hand look at vehicles. Therefore,
dealerships have built showrooms or external display pavilions. Dealerships also offer
demo vehicles.
It is interesting to note that customers
have opted for low-cost trucks in the past
due to the difficulty in accident repairs of
cabins supplied by manufacturers, leading
them to replace these instead, pushing up
cost of ownership. Ashok Leyland opened
up the first cabin repair facility for trucks,
says Dasari, and 16 of these are either operational or under advanced stages of construction across India. These facilities
enable speedy, inexpensive repair of cabins
rather than replacement, and put damaged
trucks back on road in 72 hours. Ashok
130
A great product and after-sales strategy

would bomb if not supported by the right
people. Tata Motors has mitigated all such
risks with the appointment of 48 Dronas or
specialist trainers for sales teams. There is
a LEAP (Learn and Engage for Augmenting
Profitability) programme organised for
channel partners (dealership teams), where
plant visits, financial and operations management etc are coordinated. So far, six
programmes have been completed at different plant locations covering over 120
dealer principals, says R Ramakrishnan,
senior vice-president, commercial vehicles,
Tata Motors.
Ashok Leylands customer engagement
process, too, has undergone transformation over the last two years. Today, sales
executives have the knowhow to make specific vehicle recommendations based on a
customers requirements Theyre not
making a sale; theyre facilitating an appropriate choice, says Dasari. The sales teams
are equipped with tablet computers to facilitate these tasks.
At BharatBenz, mechanics have to
undergo three levels of training classified as
basic, advanced and expert. So far, over
1,700 mechanics have been trained for
medium and heavy duty trucks at the
Oragadam (Chennai) training facility. Every
dealership has an online technical information platform called Aftersales Centrl,
which is a touch-enabled, animated, multi-lingual single interface system that provides information on all aggregates used
in BharatBenz trucks.
Here too, sales personnel dont shy away
from making best-fit truck recommendations. It is important to understand that
customers for premium and value trucks
are not necessarily different, but they do
have vastly different needs. With advancements like those in the premium end of
the spectrum, players are confident these
applications will eventually percolate to
the lowest end too, with time and market
maturity.
>
THE DEMISE OF
A STAR BRAND
When the time comes, a company must kill its
star product. Heres how to go about it for maximum
impact, little damage
ROHIT NAUTIYAL & SONALI CHOWDHURY
f you dont make your market

successes obsolete, someone else
will, says author Josh Linkener
in his latest book The Road to
Reinvention. What he means is
that smart organisations must unshackle
their thinking from the past and its restrictions to explore newer pastures.
In todays volatile markets, companies
are under constant pressure to upgrade their
offerings to keep pace with the ever-changing technology and consumer demands.
The complexity of this challenge increases
manifold when a company is faced with the
task of killing the goose that laid the golden
eggs or, to put it simply, ending the run of its
star product. Hyundai Motor India (HMI)
did exactly that a couple of months ago by
stopping production of its compact car
Santro. It is important to note that this decision was not the outcome of dwindling
sales. HMI was selling around 30,000 units
of Santro every year. An HMI spokesperson

was recently quoted in the media saying
that every part of the Santro was outdated
now and its presence in Hyundais portfolio
went against the carmakers fluidic design
philosophy.
Well, Hyundai is not the first company
in automobile industry to execute a tough
decision like this one. In the past, Maruti
Suzuki and Toyota Kirloskar Motor have
swallowed the bitter pill of discontinuing
their star products the Maruti 800 and
the Qualis respectively. While Maruti
Suzuki rebadged the fast-selling Alto as the
Alto 800, Toyota replaced the Qualis with
the Innova, which even after a decade of
presence still rules the multi-purpose vehicle (MPV) segment in India.
It is important to understand that as
valuable as brands are to companies, they
can become a strategic liability over time.
The reasons are many: the consumer might
have moved on; a new technology might
have come to threaten the very existence of
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that category; or the decision might be driven by the exigency of generating financial profits for shareholders. In such situations, companies face the touch task of
choosing between trying to revive a brand
so that it becomes a cash cow or to kill the
brand to ensure that the rest of the portfolio and the corporate brand remain intact.
Today Maruti and Hyundai are multistarrer companies with many products
being market leaders in different segments.
So the decision to phase out one brand may
be relatively easy. But way back in 2004
Toyotas decision to stop the production of
its largest selling product would have come
across as an audacious move. Toyota could
do that because of the confidence it had in
its next product. The decision to discontinue the single largest-selling product was
a high-risk high-return gamble which paid
off for Toyota, says VG Ramakrishnan,
managing director, South Asia, Frost &
Sullivan.
So what is the best time to kill a brand to
>
EXPERT TAKE
Things to remember when

killing a star product
the right time.
ensure losses due to cannibalisation are kept

to the minimum, otherwise incremental
gains in sales and profits during the
transition is low.
2
RAMENDRA SINGH
ASSISTANT PROFESSOR OF MARKETING,
IIM CALCUTTA
Watch the PLC: Companies should keep

a close watch on the product lifecycle
(PLC) stage of their star product. If the
product is in the late maturity stage of the
PLC, innovation is the only option as the
product will soon enter the decline stage
where it will lose market share. So firms
should focus on continual innovation which
keeps track of the PLC stages of existing
successful products. Also, companies must
ensure minimum damage? How does a corporation sell the idea to the various stakeholders? Above all, what is the best way to
undertake the job to derive maximum
impact?
Have a Plan B
To minimise the impact of killing a star
product on customers, companies mostly
bring a replacement product in the market
so that consumers have a choice and the
company does not lose out on the market
and the goodwill it has already created.
Coming back to the Santro, HMI is happy
bidding adieu to its first launch in India
because, over the years, the company has
strengthened its position in the compact
car segment with the Eon, the i10, the i20,
the Grand i10 and the Elite i20, which
cumulatively offer it a strong 21.8 per cent
Move faster than your competitor:

Companies should kill or replace their
star products before competitors do the
same. In the latter stage the loss is bigger. So
replacing star products is hardly an option.
The level of innovation of Yamaha twowheelers is to the extent of a dozen new
models each year that replace many star
variants with even better vehicles. With
customers seeking variety, it is important to
reduce time to market and constantly
innovate to stay ahead.
Number-crunching is crucial: Watch

the cash flows of your start products as
you initiate the process of replacing them.
You should start innovating much before the
cash flows are going to peak. In fact when
the start product reaches the peak it is the
time to launch a new product. Its about
timing the market with exciting products at
market share (as of the January-October

2014 period) in the compact car segment.
Says
Abdul
Majeed,
partner,
Pricewaterhouse Coopers (PWC), Brands
like Maruti 800 and Santro had a long run
because back then there were not many
auto players in the small car segment and
competition was comparatively less fierce.
But today the new age brands are not able
to sustain beyond three to five years.
A products life is shortened anyway
when it becomes too familiar in the mind
of the consumer or when a better product
hits the market. Says management and
market research consultant Rama
Bijapurkar, If a company claims to have
a star product in its portfolio, it means
that it thinks of that product as the best
available option in the market. In future,
the decision of killing this star product
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Dont confuse new with the old:

Maruti Suzuki replacing a star product
like Maruti 800 with Alto shows us that the
positioning of each variant must be highly
differentiated. As Maruti 800 and Alto
variants increased in numbers their relative
positioning became less clear to customers, it
was time to upgrade the 800 to next higher
version of the Alto.
Customer service should never

suffer: Marketers should realise that
there is a service in every product and a
product in every service. So when they kill a
variant, would they kill the service inside
that variant too? What happens to the
existing consumers of the star product that is
being killed? Remember Matiz from
Daewoo? So where do you expect the owner
of Matiz to get paid service from? A good
option for firms would be aligning the
service of the killed star product to that of the
service for the next-upgrade product. For
instance, this means providing Santro
customers with the option of getting their
cars serviced in the same facility that services
the Eon and the i10. But in many cases the
customers are left high and dry when their
once-a-star product gets killed.
will be spooky as the company wont be in

a position to assess the success rate of its
new/replacement offering.
With competition heating up in the
market, the reaction time for incumbents
has also become shorter. If companies wait
for inventories to finish and delay the
launch of a new product, it could result in
an inevitable loss of market share with
consumers gravitating to better options.
If Maruti Suzuki had to upgrade the Maruti
800 to comply to Euro IV norms, it would
mean significant investments. Says
Ramakrishnan, If Maruti had to follow
Euro IV norms and also upgrade the safety components in the product, the company would have ended up designing a
new car altogether. Since it was launched
almost three decades ago and is not exactly the car even an entry-level buyer would
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consumer durables space, customers buy
into the mother brand. This is quite different from the behaviour one sees in the
automobile market where different brands
from the same company have different
levels recall and different levels of acceptance. This makes it easier for us to kill
our star offerings, replace them with new
ones and communicate these changes to
customers, he adds.
It took three years for Godrej to make
transition from Pentacool to Eon. While
premium customers warmed up to the
change in a year of the Eons launch, the
strong segment loyalty and the brands
association in the direct cool refrigerators space made communication challenging. A 360-degree communication
plan focusing on point of sale promotions
ensured that all consumer segments
knew about the transition within two
years of the new launch.
As is evident, a transition is never easy.
Brands become institutions in their own
right with communities made up of loyal
customers and their own meaning systems
for these brands. So irrespective of the reason
for killing a brand, companies should tread
this path carefully. The thing corporations
ought to remember when killing a brand is
that they need to ensure they dont lose loyal customers but transition them to a different brand in the portfolio.
aspire to today, the company decided to go

ahead and stop production.
Change is inevitable
For some organisations, innovation is about
incremental improvements, not reinvention. To manage the lifecycles of its products, Godrej Appliances has a multi-generation portfolio planning system in place.
This system keeps a check on the performance of a platform on which a product is
developed over the years and assesses the
right time for phasing out what is fast getting obsolete.
There are broadly two ways in which a
company would make changes to its product portfolio. First, cosmetic changes, that
involve modifications in colour, design and
the overall look and feel of the product.
The second one is platform change as part
of which the structure of a particular offering is overhauled. Since the main objective
here is to upgrade technology, this requires
huge investments. In the consumer
durables industry, while a company could
churn products out of a particular platform
for six to eight years, today a platform
becomes obsolete in four to six years. While
earlier the capacity of an entry-level refrigerator was 165 litres, today it is 190 litres. In
washing machines the average entry-level
capacity has changed from 4 kg to 6 kg.
Because of all this, today a company has to
kill its star products and come up with fresh
offerings more often.
In two years of its launch in 2002, Godrej
Appliances Pentacool range of single and
double-door refrigerators became a star
product in the companys portfolio. By
2003, the companys overall market share
in the refrigerators segment stood at 9 per
cent. In 2006, the Bureau of Energy
Efficiency (BEE) introduced the National
Energy Labelling Programme for electrical
home appliances, which meant that consumers could choose them based on performance. Under the programme, electrical
appliances are rated on a scale of one to
five, with the most efficient product getting
a five-star rating. Energy-efficiency
labelling is an informational instrument
that is widely used across the European
Union to raise awareness of environmental
issues, such as global warming. Experts
feel that energy labels have an impact on
consumer behaviour and their acceptance
Brands like Maruti 800 and

Santro had a long run
because competition was
less fierce. New age brands
are not able to sustain the
tempo beyond
three to five years
ABDUL MAJEED
PARTNER,
PRICEWATERHOUSECOOPERS
In the consumer durables

space, customers buy into
the mother brand. This
makes it easier for us to
kill our star offerings,
replace them with
new ones
KAMAL NANDI
BUSINESS HEAD & EXECUTIVE
VP, GODREJ APPLIANCES
of clean technologies.
Says Kamal Nandi, business head and
executive
vice-president,
Godrej
Appliances, Since the rating is revised
every two years, the labelling system creates a pressure on all players in the
durables space to upgrade their products
for energy efficiency. In 2006, the
Pentacool range was replaced with the
Eon. Nandi goes on to explain how, in the
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>
NOT JUST
A QUICK FIX
In a globally competitive work

environment, with high
attrition rates and continuous
fight for talent, long-term flexibility
policies can step in to
save the day
SONALI CHOWDHURY
or Tata Communications, 30 per cent

of its 7,700 employee resides overseas
while 77 per cent of its revenues are
generated beyond Indian shores. About a
third of its employees have a remote manager. In fact, the top leadership team,
including its CEO, works from eight locations. Most of the meetings take place
virtually and we probably meet physically three or four times a year, as a
team, says Aadesh Goyal, global head,
human
resources,
Tata
Communications. The company has
completed a large number of cross-functional projects in the last three years that
involved people from different functions,
levels, and locations.
For a company employing people from
different geographies, demographics and
sensibilities, it is crucial to offer flexibility
to employees not just to motivate them but
to empower them as well. "It is a natural
progression in this glocal world were living in and conduct business in," adds
Goyal. In other words, to meet the needs of
an increasingly complex business environment across a diverse set of regions, flexi-
bility at the workplace is not just important, but also unavoidable. It is no more a
question of choice but is a necessity.
There are two ways to look at it really
first, flexibility as a business imperative or
as a productivity enhancing tool, and second, as a talent retention tool. Many organisations view workplace flexibility as a
134
strategic move to get the best out of their

talent, keep employees engaged and at the
same time attract and retain talent. It is a
good balance of both a strategic move as
well as an employee benefit. It is a benefit
made available to the employees to ensure
higher productivity, morale and interest,
says Dedeepya Ajith John, knowledge and
research consultant, SHRM India. Such a
policy gives employees the liberty to execute a task according to their convenience
of place and method but without compromising on time and quality.
So how does the concept of flexibility
really work? And how can companies
ensure it is a win-win for both the employer and the employee?
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When is it useful?
Researchers and HR professionals say there
will never be a one-size-fits-all plan for flexibility and companies need to figure out
their own plans based on resources on
hand.
Introducing the culture of flexibility in
PWC India wasnt that easy for Mark
Driscoll, who joined the India team as leader,
human capital, in 2011. Driscoll found
around 80 per cent of its employees belong
to the Millennial Generation (or Generation
Y, people whose birth years range from the
early 1980s to the early 2000s). Before the
flexibility policy was announced, the senior
level management teams were sensitised
about the need for the policy. It had to communicate that flexibility is not about working less, but working differently.
Today of its 10,000 employees, more
than 60 work on a part-time basis. The
company has under 20 per cent attrition
rate, which, according to Driscoll, is much
lower than the industry average. Around 25
per cent of employees have availed of the
flexibility option at some point in 2014. The
company has also done away with the
attendance system. If you give them such
options, then employees also take the onus
of where, when and how to work within
the culture and stay productive, adds
Driscoll, who has completed his tenure at
PWC India in January this year.
In organisations such as Quintiles India,
where 50 per cent of the workforce comprises women, offering flexibility is a prerequisite of sorts. The company has several
doctors across various streams of medicine
on its rolls, who have the flexibility to continue their professional practice, while being
engaged in a career at Quintiles. This is a
win-win for both as the exposure of these
practitioners to the latest research enhances
their professional practice, while their experience adds value to the work they do at
Quintiles. The firm claims to have an
employee referral rate of over 30 per cent.
Medical professionals are either full-time
employees who practice after office hours
and are paid like regular employees or as
part-time consultants, who are paid based on
the number of hours they put in every week.
When flexible working is commonly
associated with the services sector, some
manufacturing companies have systems
and processes in place to enable employees
Flexibility matters
What goes into it
Flexibility at the workplace primarily consti-
tutes three elements flexible hours (start

and finish time, breaks, compressed weeks);
flexible pattern (part-time work, shifts/job
sharing) and flexible location (working from
home/other locations or telecommuting)
Companies are also looking at career
flexibility, which addresses career development at various stages like career customising,
work in retirement
They can also offer phased retirement,
where employees reduce the schedule and/or

responsibilities prior to full retirement
There can be flexible time-offs or
arrangements for employees for higher studies, leave during examination time, to attend
classes for certain certifications and trainings
That apart sabbatical policy, adoption policy
and maternity/paternity leave are common

in organisations
ees can avail of flexi-timing, work from

home choices, take sabbaticals or even have
career flexibility. For a manufacturing company which survives on continuous
process-led productivity it was a challenge
to introduce a policy around flexibility. In
many ways we wanted to demonstrate that
within this industry, we could give choice.
We had to do a lot of fine balancing and in
some instances, plant locations had to communicate clearly to employees where it was
not feasible, says Rajeshwar Tripathi, chief
people officer, automotive & farm equipment sectors at Mahindra & Mahindra.
Around 50 per cent of its employees have
availed of the flexi-time option. The company also offers sabbatical of up to six
months where the employee is entitled to
50 per cent pay but on the condition that
the employee will not take up any alternative employment during this period.
How does it work?

How HR can drive flexibility
Showing how workplace flexibility can
engage and reward employees while also

improving business outcomes
Supporting workplace flexibility not just as
a series of specific programmes or policies, but

also as a strategic business decision
Educating and training employees, teams
and managers on how to implement flexible

work arrangements to improve job performance
Conducting needs assessments to select and
adapt flexibility policies that best fit business

needs
Serving as consultants and fine-tuning
policies to ensure effective implementation

Identifying and tracking workforce metrics
related to the effective use of flexibility

Ensuring systematic adherence to regula-
tions governing leaves, comp time and work

scheduling across locations
Overseeing the pilot of a workplace flexibil-
ity initiative and collecting feedback and

modifying as needed
Source: Leveraging Workplace Flexibility for Engagement and
Productivity Report 2014, Society for Human Resource
Management Foundation
to work with a flexible work schedule. For

instance, automobile and farm equipment
sectors at Mahindra & Mahindra offer
many options under the work-life integration policy crafted in 2012 wherein employ-
135
If a flexible-work policy has to work, it has

to be based on two pillars. First, there has to
be a clear and transparent policy established in the system so that those who do
not avail of the option do not feel shortchanged. Second and this flows from the
first there has to be clear and appropriate communication within the organisation so that everyone knows who it applies
to and what it entails. Introducing policies
and making an effort to publicise and internalise those policies within the system
gives people less leeway to misuse the policy, says John of SHRM India.
Most companies offer coaching and
guidance at the manager level to foster an
inclusive culture. We try to ensure that
employees working remotely are made to
feel part of the team through their participation in team meetings, conference calls,
town-halls, training programmes and so
on, says Intikhab Wani, vice-president &
HR head, Quintiles India & Sri Lanka. The
company also creates opportunities for
employees working remotely to visit the
closest corporate office so that they can
meet and network face to face with their
colleagues.
In some organisations, however, flexibility is not a standard practice; rather it is
an informal arrangement based on need
and subject to manager approvals. There
is no intention to create a policy or process
>
EXPERT TAKE
5
CASSIDY SOLIS
WORKPLACE FLEXIBILITY
PROGRAMME SPECIALIST,
SHRM
2
3
4
5
things to remember
while implementing
workflex
Position workflex as a business strategy: Identify your

organisations strategic priorities and business goals and
accordingly design workflex initiatives. Focus on how
business, and not just employees, will benefit from workflex
Customise your programme: Talk with your employees about what workflex initiatives
might work best. Use their feedback to design a programme that will
produce desired business results and satisfy the needs of employees
Incorporate change management strategies: Workflex is a different way of working and

requires changes in individual mindsets and in the culture of your organisation. Involve
key stakeholders, offer manager and employee training, and build communication
strategies to facilitate a smooth implementation process
Track metrics: Establish metrics that you will use to evaluate the effectiveness of your
workflex initiatives. Tracking metrics will help you understand the effectiveness of your
initiative, help you make course corrections if needed, and help build support among
management and employee
Continue to innovate: Ensure that workflex contributes to your organisations success
year after year by continuing to innovate new ways that workflex can help achieve
your organisations strategic priorities
around flexibility. Ideally, it should be a

defined process where employers create a
culture of trust, says Simran Arora, an
independent HR consultant.
The job profile or the nature of work
plays a pivotal role in designing the guidelines but companies need to track/measure performance and use at the same
time. Quintiles provide employees with
the necessary technology infrastructure
plus an allowance to set up their home
office. On its part, HCL formalised the policy in 2010, which was enforced to
acknowledge the lifecycle demands of the
workforce. Its flexibility guidelines clearly establish the eligibility; it also has a system in place to process requests based on
merit.
Think about it: Incorporating some
degree of flexibility is not difficult; what is
slightly complex is ensuring employees
deliver on their key result areas. As companies incorporate technology solutions to

manage coaching, learning and teaming
on the go, they are also helping in putting
the basic infrastructure in place to enable
employees to be productive and to enable
managers to measure their productivity.
From connectivity devices like mobile
phones, data cards and web-cam enabled
laptops to applications like webex, lync
chats, employees who work flexi time are as
efficient as any employee working from an
office location.
In fact, there is a software to measure
not only the amount of time put in their
jobs by flexible workers but also audit the
quality of work. Take Sapience, a productivity audit tool, where delivery becomes
more predictable and additional bandwidth becomes available for innovation.
The tool works in the background of a com-
136
puter system and audits the time used on

various software allowing managers to split
the computer time for each team member
between work and personal activity. With
Sapience, companies are better placed to
offer flexibility where policy such as work
from home could be made effective
because of the visibility of the employees
performance, says Shirish Deodhar, CEO
and co-founder, Sapience Analytics.
Having a system in place around flexibility can go a long way to ensure not just
wellness and a work-life balance for
employees but also prove cost-effective in
retaining and attracting the right talent.
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MAKING THE
MOST OF DATA
Predictive analytics is helping e-commerce companies improve

their conversion rates. Heres how
ANKITA RAI & ROHIT NAUTIYAL
ishad Sharma, a Delhi-based

entrepreneur, is a typical online
shopper who keeps a tab on the
various sales and promotional deals run by
e-commerce companies from time to time.
On the cool Delhi evening of February 4, he
opened online fashion company Myntras
app on his smartphone to see if there were
any deals on trousers. That day, Myntra

was running its Rush Hour sale in which
customers could avail up to 50 per cent
discount on select products. After filtering his search, Sharma decided to add a
pair of UCB trousers to his shopping cart.
But then he changed his mind. Perhaps
he could get a better deal if he logged on
into a sale on a weekend. To his surprise,
Sharma received a mail from Myntra next
137
morning, telling him what he presumably

lost by abandoning his cart the previous
day. The same product was now available
at a 100 per cent mark-up. To close the
sale, the company sent another mail to
Sharma a couple of days later, offering a
smaller discount of 20 per cent. Sharma
couldnt let it go waste a second time
round.
The systematic and gentle hounding of
>
EXPERT TAKE
The power of predictive analytics

nalytics is increasingly being used by
engagement
Real time analytics can help e-commerce
e-commerce players to personalise sales
catalogue for multiple customers. The
companies calculate the key critical factors that result
in providing value to the customer, be it in tracking
recommendation engine helps to estimate features a
user will like and, hence, helps in increasing the
shipments, returns, transportation routing, cost
response rate. While this can lead to cost escalation,
reduction and price discovery in real time. The value
can be interpreted in terms of:
higher response rates and higher sales make it worth
the effort.
Analysing the geographic order pattern and
E-retailers can also deploy A/B testing to
warehouse proximity in real time to reduce end
TITIR PAL
understand which product display, offer or feature on DIRECTOR, PRODUCTS AND user product price
SOLUTIONS, ABSOLUTDATA Analysing the current inventory levels and demand
the website is leading to higher rates of clicks,
purchase and reviews. The testing is done on a sample ANALYTICS
patterns to automatically trigger price changes
of visitors so that the impact of making changes to any of the
Analysing current transportation time for shipping, transportation
features, including the sale catalogue can be studied thoroughly
cost and predict approximate delivery time to the user
before a bigger rollout.
Detecting early logistics situations such as freight delay or loading
In-addition, building cookie-level attribution models can help
time and sending automatic notification to the customer about the
in understanding what marketing channels work for different users
delay in shipping
and optimise marketing budget accordingly. Recommendation
Analysing geographic demand pattern and season loads to
engine can also be designed especially for a particular user, and
allocate/coordinate with idle delivery resources in real time
change content of the website for the user in order to increase the
Sharma points at a big shift in the way ecommerce players target customers. Says
Myntras chief strategy officer Prasad
Kompalli, Gone are the days of sending
irrelevant mail shots to one and all. Today
we are in a position to identify and reach out
to our customers. To make this possible on
a large scale, e-commerce firms are sprucing
up their predictive analytics skills and the
attendant infrastructure to understand who
their most valuable customers are.
Predictive analytics factors in all possible
variables that help the marketer devise the
right strategy to generate the desired
engagement with customers from providing timely and accurate sales forecasting
insights, to equipping them with opportunities to improve diagnosis and the design
of their websites to accommodate the pressures of any shopping blitzkrieg. These
insights can range from what time of the day
your website can witness maximum traffic,
what products/pages will receive high
impressions, which region you can expect
the bulk of the orders to come from (to help
in the planning of logistics and cash on
delivery options) and the like.
All of this to drive that awfully important
thing conversion.
Go step by step
Higher conversion rates can be achieved by
following a three-step process. Any e-commerce company must begin by understanding the shopping mission. The main
objective behind this is to understand what
the customer is looking for. Besides getting
an idea of a customers product preference,
the company tracks how the customer via
search engine, banner ads, mailers etc
reached the landing page of its website.
Today more than 50 different types of cookies and trackers are present on a browser. So
firms have additional information on which
other websites a user visited. Step 2 involves
defining what the customer is likely to buy
and how this can be fast-tracked through
recommendations. While any leading e-tailer has millions of SKUs, only four to five
products can be recommended to one customer. For instance, Amazon uses recommendation algorithms to personalise the
online store for each customer. The store
radically changes based on customer interests, showing programming titles to a software engineer and baby diapers to a new
mother.
The third and last step is related to setting the right shopping context. For exam-
138
ple, umbrellas could sell more in Mumbai

between July and August when the city
receives heavy rainfall. Other aspect of setting the right context is about using the customers geolocation information. Explains
Srikanth Velamakanni, chief executive officer, Fractal Analytics, If I am standing at
a Shoppers Stop store to do a price comparison for a shirt on the Flipkart app, the e-tailer can respond by sending a favourable price
quote. What he means is theres no dearth
of software and tools to create distinct consumer profiles. Fractal Analytics has a service called customer genomics that uses
proprietary machine-learning algorithms
to help clients leverage big data to create
deeper customer insights. This service can
create comprehensive consumer profiles in
seconds for gaining authorised access to
their Facebook IDs.
Do your homework
By now leading e-commerce companies like
Flipkart, Myntra, Jabong and Snapdeal have
access to a huge amount of internal and
external shopper data. However, at this
stage in their evolution, these companies are
focused more on building the internal data.
A customers shopping history is the main
>
input that goes a long way in building her
profile. As mentioned earlier, to build their
toplines, e-commerce companies are organising more sales properties. Now, to manage high traffic and up the conversion rates,
they have to do their homework really well.
For one Myntra had begun preparations
for its End of Reason sale around a month
in advance. Preparations kicked-off by
understanding the marketing message of
the sale event. The next step involved an
in-depth analysis of the best-selling categories on its portal over last 10 days. After
this, a catalogue was prepared, listing all
the items on which the company offered
discounts in the range of 20 to 70 per cent.
In the final stage of preparations, the company reached out to a targeted set of customers. With its vast product assortment,
while it makes sense for Myntra to approach
as many customers as possible, the company does not look at this as a carpet-bombing
exercise. For example, if a particular sale
catalogue does not contain womens products, we do not send mailers to them, adds
Kompalli. Myntra claims that it got 20x traffic for the January 3 sale day and because of
this overwhelming response the two-day
sale was wrapped up in just one day.
Despite the availability of recommendation and event-driven promotion
engines, many e-retailers find it challenging
to determine the right product recommendation or promotion that will help them
close a sale. Says Puneet Gupta, chief technology officer, Brillio (a US-based technology consultant and software developer),
With predictive analytics and the use of
machine learning, e-commerce players can
now derive a clear understanding of consumer behavioural patterns, spanning purchase history and performance of different
products on the site.
Amazons forecasting tools use historical
data and also have the provision for assessing fluctuations in demand during festivals
and holidays. Says Samir Kumar, director,
category management, Amazon India,
Analytics helps us predict the traffic on the
website along with the possible conversion
rate. Since our website runs on the Amazon
Web Services (AWS) cloud, we also have the
flexibility to scale up in real-time. The company uses brand and SKU data along with
the number of visits to various product
pages to determine if the assortment will
attract customers. This data is then shared

with the listed sellers.
Analytics can also be used in predicting
the amount of sales that is possible during
peak sale seasons. In general, Snapdeal
doesnt set prices. But it encourages the
seller to offer discounts. Sellers by themselves neither have the data nor tool to
analyse the big trends. The company has a
platform on which all the data on what is
sold in various seasons, day of the month,
time of the day etc is stored. A collective
data analysis of all the ongoing sales helps
sellers in setting the prices of their products. Snapdeal also provide its merchants
with
data points on the expected volume of sale
based on the prices set.
Focus on mobile
In last two years, the likes of Flipkart, Jabong
and Snapdeal have paid extra attention to
pushing their app downloads. The idea is to
create more loyal customers and mine accurate data on each one of them. Says Amitabh
Misra, chief technology officer, Snapdeal,
You can collect more consumer data
through apps because it can access consumer data on mobile phones. So if a user
139
has given the access, we can give her better

recommendations on the basis of the social
information collected.
This is how Snapdeal mines its app data.
First customers are profiled on the basis of
mobile devices they are using. There is a
tracking SDK (software development kit)
embedded in the application and as the person navigates through the app, data is collected and sent to the server for analysis.
Next, the app interacts with the API (application programming interface) layers at the
backend. At the API layer, information on
browsing data, buying history etc is collected. The information that can be collected
also depends on kind of phone being used
and whether you get access to the consumers contact list, social data and so on.
It has more to do with connecting mobile
data with personal data and their interaction with the app, Misra adds.
Snapdeal, however, is cautious about not
using any information that a user has not
explicitly given permission for. The data
collected through smartphones is not stored
in a personalised manner. It is more about
trend analysis than individual shopper
analysis. Even as personal data is used as an
input for algorithms around offerings like
similar products, also viewed etc, the
moment it passes though the system, it is
obscured. In other words, data relating to
one shopper will never be shown to another. Besides providing a better buying experience to shoppers, this capability helps
Snapdeal cut costs.
>
WINNING
THE PEOPLE WARS

Howthe smartestdirectselling corporations are recruiting,
rewarding and retaining talent
DEVINA JOSHI
ear, whatever youre selling, Ive

already got two of them. These
words, from the Ashley Juddstarrer Double Jeopardy, uttered by a
woman who mistakes an approaching Judd
to be a door-to-door seller, are an apt reflection of the predicament of the direct selling
industry. Considered a last resort for people
unable to find employment otherwise, or for
those looking to make a quick buck, the

only qualification direct selling needed, it
was widely assumed, was nonchalance and
persistence when doors were slammed on
ones face with a thunderous no.
It gets worse in emerging markets like
India where modern direct selling, which
proliferated in the mid-90s, has suffered
from an acute lack of regulatory clarity,
because of which it has often been equated
with fraudulent pyramid/ponzi schemes.
140
For a long time, products sold by such firms

were viewed with scepticism, while recruitment processes lacked the professionalism
present globally.
But over the last few years, the sands
seem to be shifting in the Indian direct selling market, estimated at ~7,200 crore and
set to touch ~64,500 crore by 2025 (according to a FICCI-KPMG report). Some of the
newer multinationals in India have brought
with them global best practices. With a
>
EXPERT TAKE
Finally, some takers

he contribution of
direct selling
industry to the Indian
economy and our
society cannot be
MOORTHY K
ignored. Apart from
UPPALURI
promoting microCEO, RANDSTAD
entrepreneurship
INDIA AND
and financial
SRI LANKA
independence
especially for women, it is also generating
direct employment opportunities across
the value chain by outsourcing production,
packaging and distribution of products,
thereby helping the SME sector and
positioning India as a manufacturing hub.
Taking note of these benefits, the
government has instituted an interministerial committee to create a
framework to regulate the industry.
These developments are encouraging
for the industry as it increases its credibility,
helping the players to recruit better talent.
greater emphasis on recruitment and training, we now hear terms like career development, succession planning, work-life
balance and diversity in hallways of the
rather plush offices of direct selling companies. The business environment now also
supports the spirit of entrepreneurship
more, which has worked in attracting educated people to the sector. It is like doing
business without worrying about the business investment.
Consider this: the 1982-founded Eureka
Forbes India chooses to employ its own
sales staff as opposed to having a network
of dealers. Its service network enters 20,000
kitchens daily, and 90 per cent of its customers are present within a 5 km radius of
a company service station. Or take consumer products company Amway India,
where 50 per cent of the employees have
worked in the company for over five years;
25 per cent for more than 10 years, and
And unlike many other businesses, the

success of direct selling also depends on a
persons skill as well as his cultural fit with
the company, making HR best practices
from across the globe relevant and critical.
Today, companies offer professional and
personal development programmes to
hone individual talents. And to maximise
performance, companies establish specific
and meaningful goals in addition
to consolidating careers through
certified diplomas. Interestingly, technology,
which was perceived to be a threat with
shifting demographics, has now been turned
into an advantage by inducting passionate
youngsters into the industry through social
media platforms. Companies have also
realised the criticality of succession plans
grooming motivated youngsters
will go a long way in ensuring
sustained growth in the
future.
globally, the average tenure at Amway is

over 20 years. The attrition rate at Amway
India is 10 per cent. What seems to be working in its favour is a sharp and deliberate
focus on human capital.
So, how are direct selling companies
managing to hold their own in the battle for
talent? How do they make sure they are
developing the right skills at every level?
More importantly, are they prepared to
identify and aggressively develop high
potentials as part of a proactive succession
management process?
The people story

Of the 11,000 employees at Eureka Forbes,
8,000 are sales employees (called
Eurochamps) who meet 60 million people
every year by knocking on their doors. Over
65 per cent of the recruits come through the
friend-get-a-friend scheme, while the rest
are recruited from colleges, through job
141
melas, job portals, recruitment consultants,

ads, employment exchanges etc. In the case
of beauty companies Avon and Oriflame,
even social media is a hunting ground. We
look for people who are not typical city
boys they should be hungry to prove
themselves. They may come for money,
but they dont stay for money, says Marzin
Shroff, CEO, direct sales and senior vicepresident, marketing, Eureka Forbes,
adding, the maximum attrition in the company happens in the first six months itself,
post which it is 6-8 per cent.
Avon hires sales representatives following two models: cold (involving cold calls in
a neighbourhood or participating in closed
group events), and warm (backed by a
strong network of friends and family and
helping them join Avon). On its part,
Oriflame recruits through pamphlets, referrals, Oriflame opportunities meetings
(forums where new catalogues are
launched) etc. Users of Oriflame products
are known to turn into its consultants.
Now consider how every meeting at
Eureka Forbes starts with the corporate
anthem an attempt to build pride among
employees. Once a Eurochamp joins, he
goes through a structured training programme a 14-day module called NEO
(new eurochamp orientation) where he is
imparted selling skills, product know-how,
English skills and field-training. There is
one trainer per 100 people. After a month of
joining, these Eurochamps undergo
refresher training, which integrates the first
month of field experience with 11 key objection-handling and relationship-building
skills.
At Amway, the distributor is first made
an effective salesperson, then an enthusiastic product advocate, then a team
leader and finally, a supervisor/leader.
Amway has seven lakh distributors
attending 18,000 training sessions (conducted in 11 languages) in a year. The
company also has high-tech e-learning
portals in four languages (Hindi, English,
Tamil, Bengali), which had four lakh registrations in 2014. Product booklets are
present in 11 languages. Furthermore,
Amway provides its distributors with
health and beauty assessment centres
experiential and advisory zones in its 155
offices where distributors can not only
learn about products but also bring select
>
customers with them for tips and product
experiences.
More than 60 per cent of our distributor base is women, which is why training
time is flexible so that housewives or parttimers can attend as per their convenience,
says Anshu Budhraja, general manager,
Amway India.
At Oriflame, consultants undergo a
monthly Set One training, which highlights
the products/benefits and imparts effective
sales skills to maximise earning. Set Two
training teaches networking and managerial skills and business know-how. Further,
beauty and wellness training is held every
quarter for all consultants. Depending on
skill sets, there are 30 annual trainings that
its 2.5 lakh consultants can avail of. There are
beauty and wellness and leadership academies (teaching time management, teamwork etc). Then there are director seminars,
including train-the-trainer programmes etc.
For advanced level training for network leaders, Oriflame offers leadership academy 2.
Avon is equipped with a structured talent model where annually, pipelines of
internal talent and succession plans for
each position across various levels are
reviewed and mapped out.
From trainings to order placements, IT
plays a very prominent role in facilitating
the operations of direct selling companies.
Virtually all companies have e-learning
modules and with an increasing number of
educated, IT or managerial people entering the business, online training is crucial.
Avon, for example, has an e-learning portal
equipped with modules on leadership, onthe-job effectiveness etc. There are sophisticated IT systems for performance management, compensation modelling and HR
dashboards.
At Eureka Forbes, reviews take place at
the end of the month where a Eurochamp
is assessed on the number of doors
knocked, demos given, and sales achieved.
This is fed onto a SAP server, and through
algorithms of the demo-to-sales ratio, the
supervisor figures out his weaknesses,
highlighting where he needs more training. A leader can know a champs scores on
his phone through the touch of a button.
Sales people fill their reports on tablets
every day. IT helps HR function like clockwork. There is also a special hotline number
for Eurochamps to use when stuck with a
customer query.
Diversity and inclusion

Incentives, gifts and holidays abroad
standard fixtures in a direct sellers HR
strategy arent enough to retain employees. To go beyond this, high performers at
Amway become part of its global talent pool
and some choose to take up assignments
overseas. The company also has virtual
reporting structures across the EIA (Europe
India Africa) region. Recently, Amway sent
a batch of 120 local recruits from Madurai
for training to China on Amways upcoming manufacturing plant in India.
Avon and Oriflame also send executives
overseas for assignments, projects and conferences. Expat movements/postings are
assisted by training on the nuances of different countries, functions etc. At Avon, the
concerned person is sent on a familiarisation trip to that market; theres a lot of handholding to facilitate the move and convey
internal and external communication
guidelines for that market. Whether you
cut it by gender, experience, job description, locality/country of origin, we have a
different mix of people in the organisation,
says Ruchira Gupta, HR director, Avon
India.
Oriflame has international sponsorships in the 60 countries it is present in,
and over 500 people go out of India every
year for conferences and projects. We
float opportunities and people who want
to go maybe for the opportunity or
because their husbands are there are
encouraged to do so, says Pradnya
Deshpande, sales director, Oriflame
India.
Eureka Forbes has recently launched a
women-only direct selling line for its
Euroviva range of products. It has 500
women as nutri-consultants and through
a four-day seminar the company gives
them a career plan, compensation structure, and learning roadmap. The companys call centre, EuroAble, is managed by
90 differently-abled people. As part of the
selection process, candidates have to
undergo a written examination and group
discussions, followed by personal interviews. Most of the employees recruited
come from the lower income strata, with
limited or no fluency in English.
The management provides three-
142
month training right from English proficiency to product training and handling
consumer calls. Infrastructure too has been
specially designed for the team. The workstations are a foot longer than the standard, three-feet call centre desks, and have
enough space all around to allow easy
access, both by wheelchair and crutches.
Desktop computers have all controls on
top, so employees dont have to bend low.
In the good old days, Eureka Forbes followed the model of having large offices in
important areas in a city, but now, the company has smaller offices at short distances.
This fiscal, over 250 Eurochamps under
the age of 30 were promoted to the level
where they can run their own offices. The
promoted champ and his wife sit in the
office puja, for instance, to allow them a
sense of ownership. Any young leader who
wants to take up a challenge can become an
entrepreneur of sorts and run his own
office, while still being an employee of the
organisation.
EuroSenate is another initiative to
empower employees under which some HR
functions have been decentralised. In all
SBUs, Eurochamps with over two years
tenure stand for elections from their constituencies (around 10 offices) every year,
from which four counsellors are elected, and
these four make up a senator. The senator is
given power to sanction money on the spot
for champs in case of family/health emergencies, without waiting for approvals from
the head office.
An ecosystem of micro-entrepreneurship is a by-product of direct selling, concludes Amways Budhraja, with resources,
investment, physical infrastructure and a
business model all taken care of.
>
Cost cutting in action

Everybodyis doing itbutwhatworks on the ground and whatdoesnt?
Lessons from leaders and managers
KANIKA DATTA
ill 2008, when the world economy

was booming, growth was the
favoured strategy in C-suites. After
Lehman Brothers collapsed and global
growth contracted, cost-cutting became
the mantra, and it has stayed that way
since. The takeaway for corporations in this
long slowdown has been that a cost-cutting exercise is much more than a sum of
sharp cutbacks. How can cost-cutting be
made a constructive exercise? Here are
some lessons from the field as experienced
by leaders, entrepreneurs and experts.
Many of these may appear obvious, yet
executives and experts say they are often
overlooked in the urgency of the mission.
From the PMO

The most apparent of these is the close
involvement of the companys top leadership. As Subroto Bagchi, chairman of
Mindtree, one of Indias pioneer IT services firms, points out, Irrespective of
how necessary cost-cutting may be, and
how mindful the decision maker, it causes

collateral damage. These need to be
understood and, if inevitable, budgeted
for.
And budgeting entails close monitoring. As Deming said, whats measured gets
done and an effective cost-cutting exercise
involves day-to-day, week-by-week monitoring. This requires sustained energy and
organisational time and that only happens
if the top management is fully on board,
says Devinder Chawla, partner, advisory
services in consultancy firm EY.
Full involvement entails what Bagchi
calls the programmatic approach with a
PMO in place. This is what Pune-based
Deepak Fertilisers and Petrochemicals,
maker of industrial chemicals and fertilisers, did when it went in for a massive costcutting programme in 2012.
The exercise began when profits shrank
in FY13 to `147 crore from `213 crore the
year before for multiple reasons (drought,
higher raw material costs and so on) even as
the top line grew steadily. Lower profits
suggested a need to relook cost structures
143
so that the company became more resilient.

One of the first things chairman and managing director Sailesh C. Mehta did was set
up a team under him to monitor the exercise.
We have a strong Internal Board that
takes all decisions so there was a buy-in for
the big vision from day one, explains
Sanjay Gupta, associate vice-president, who
headed the monitoring team. The importance of this was evident when, as he points
out, the drilling into each area starts so a
very healthy discussion at each level
ensured we had very high degree of commitment.
The top-down approach also sets the
agenda. In Deepak Fertilisers case, the
vision was to sustain the best of the last
three years performance and ensure full
capacity utilisation of all assets. This
helped us identify the areas we needed to
tackle, Gupta explains. We had a feeling that we needed structural changes in
both management staff and workers to
align to the new strategy, so we took help
of external consultants in many of these
>
areas which brought in an outsiders perspective and industry benchmarking. To

implement these broad goals, the company put cross-functional teams in charge of
each project and these were monitored
on an almost daily and sometimes weekly frequency.
By the next financial year, the company
saw profits rise to `244 crore a caveat:
Deepak Fertilisers is suffering losses now
owing to a specific problem with supplies of
gas, the basic feedstock for its products,
which is administered by the government.
Though metrics and measurement lie at
the heart of a successful cost-cutting exercise, communication is vital for executives
down the line to participate and come up
with the critical small ideas that accumulate into big gains. As Bagchi puts it,
The war must be a peoples war and not a
CEO war. Indeed, consultants say teams
often know the problem 60 to 70 per cent of
the time, so involving them in the exercise
Cost cutting must be a

peoples war and not
a CEOs war
SUBROTO BAGCHI
rather than making them defensive helps.

To minimise the defensive mind-set,
recognition is important. This was something Deepak Fertilisers Internal Board
instituted from the start. While each success was celebrated, we made sure no failure was criticised, Gupta says. Rewards
and incentivisation matter too, since
organisations are essentially asking people to do something outside their regular
work description. Some consultants link
their fees to the benefits that accrue (the
success fee), to create positive energy
and companies often do the same for their
executives.
This strategy can backfire. The CEO of
a diversified company that was looking to
save
~100 crore announced a reward for executives that matched the consultants success fee. Although the CEO attained his
target, he did so in an atmosphere vitiated by us versus them competition
between internal staff and the

consultants.
This mindset is often a product of organisational resentment to consultants, who
are associated with job cuts. This is less of
a problem in manufacturing firms where
manpower costs tend to be lower than raw
material costs (even well-run firms can
have 15-18 per cent of poor quality). But
what about firms in the service industry?
Mindtree showed how creatively involving
executives in hard decisions can help.
When 9/11 hit and business dried up,
the company was barely a year old and cutbacks were inevitable. Bagchi recalls, We
huddled with our middle management and
asked them to let go of poor performers.
The entire team came back and told then
chairman Ashok Soota that a crisis is the
worst time to let go of the bottom 5 per cent
because, unlike high performers, they
wouldnt land on their feet. Accordingly,
the middle management said they would
In the long run, a

sound cost-cutting
strategy is a mix of
good expenditure and
spending reductions
External consultants
bring an outsiders
perspective and
industry benchmarking
during hard times
DEVINDER CHAWLA
SANJAY GUPTA
PARTNER, ADVISORY
SERVICES, EY
ASSOCIATE VICE
PRESIDENT,
DEEPAK FERTILISERS &
PETROCHEMICALS
CHAIRMAN, MINDTREE
144
>
take an additional cut themselves but keep

the bottom performers for another six
months.
Being human
Mindtrees middle management highlighted a basic truth: that it is vital for
the management not to lose its humanity. This was something Bagchi learnt
from a near-death experience when the
company had to pull out of the R&D unit
of a smartphone company it had
acquired. Acquiring it was a big mistake
because the business plans of the leaders of the acquired business were off the
mark and there were unfolding culture
and value issues. A time came when we
had to make a tough call and close that
business and that meant 500 people had
to be let go of.
In doing so, Bagchi says the management made a clear mental difference
between shutting a business and shutting
out people. We shut the business rapidly
but we made sure we provided as much
safe passage as we could and staggered the
separations. Importantly, the company
exhausted all other forms of intervention
before doing so.
Attitudes begin from the manner in
which the message is conveyed. Thus,
tonality and transparency are critical. Says
Bagchi, Executive bravado and e-mail
urgency are a no-no. If there is a rapid environmental downside that calls for urgent
intervention and tactical cost-cutting is a
must, the top team must show up at ground
zero and speak and answer hard questions
however hurtful.
Salami tactics
The latest global slowdown has demonstrated that the era of plain vanilla costcutting is over. Many companies now
talk about end-to-end transformation,
says EYs Chawla in which process
improvements are essentially funded by
cost reductions.
This is especially true of companies in
acutely competitive businesses like fast
moving consumer goods. Cost-cutting is a
365-day, 24x7 concern for finance, says R
Subramanian, vice president, Finance,
India sub continent, GlaxoSmithKline
Consumer Healthcare (GSKCH), and we
approach it from two ends of the value-
chain the shareholder and the consumer. In practice this means the finance
guys are involved in each of the five or six
buckets marketing, sales, supply chain,
administration and so on. Each of these
departments meet once a month on a fixed
day and scrutinise ideas and innovations to
enhance value.
The critical issue is to examine ways of
value engineering, or what Subramanian
calls salami tactics. This, drawing from
his vast experience across many organisations, could range from changing the way,
say, tea sachets are transported to the distributor it is possible to replace spaceoccupying cardboard boxes with gunny
bags to minimise transport and packaging
costs. Or by focusing on a creative, it is possible to reduce the length of a TV commercial from 30 to 20 seconds, with concomitant savings.
No one understands salami tactics
better than car makers. For them, as
Jagdish Khattar, former managing director of Suzukis India subsidiary Maruti
puts it, the selling price is determined by
the market but costs are in our control.
This is a lesson Maruti Suzuki imbibed
after its strike in 2001, when it introduced
the Baleno, WagonR and the Alto.
Recalls Khattar, We were in a hurry to
introduce these models after the strike but
the import content was very high, and we
were losing money, sometimes by as much
`1.5 lakh per car. So we launched a vigorous
localisation programme, setting out an
engineering plan monitored by the management committee. Eventually, the differential between Marutis Alto and its bestselling 800, for example, was reduced from
about ` 1 lakh to `10,000 over a year and a
half.
The exercise began, Khattar says, with a
target price from which they worked backwards, disaggregating the major systems
engine, transmission, and so on. The
next step was to assign it a weight in the
total cost. This, then, became the target
price of each component which was conveyed to the vendor who had to sign an
145
MoU with a specific localisation schedule.

How are vendors motivated to comply?
Messaging, Khattar says. We didnt go for
cost reduction by the danda; we never told
the vendor to reduce price but cost.
Second, the benefits of the cost cut were
calibrated so that vendors received a larger share of revenue for every reduction with
each year. That way, its a win-win for both
we were able to sell more so they got
more business and our credibility went up.
Good expenditure
Not all costs are wasteful, however.
Indeed, one common error companies
make when markets are growing but profits are under pressure is to cut costs that
are considered discretionary: advertising and promotion or the sales function.
Cutting back on anything connected
with growth is like putting a rope around
your neck, says GSKCHs Subramanian.
The same rule would apply to companies that cut back on quality parameters
in such circumstances. One example is
when Hindustan Unilever cut the total fatty matter (TFM) in its soaps some years
ago. TFM determines the softness and lather of a soap and when it was cut in several
popular brands like Lifebuoy market shares
dipped.
Not postponing critical investments
that create efficiencies is another counterintuitive lesson. For instance, a fast-growing chemicals company needed larger
trucks to transport its products but could
not deploy them for lack of sufficient space
to turn such large vehicles in the factory.
Although the company was in the middle of
a cost-cutting programme, it invested in
widening the roads and other infrastructure to accommodate bigger trucks so that
it was in a position to ship greater volumes
in the future.
Similarly, a fertiliser company was
advised to replace the manual loading of fertiliser bags with a boom conveyor; although
contract manual labour is cheaper, they are
unlikely to be able to handle the volumes
envisaged in the companys growth plans
in the long run. Its a question of considering what is strategic and what is nonstrategic, says Chawla of EY, so not all
cost-cutting exercises involve spending
reductions theres also a case for good
expenditure.
>
PLAYING CATCH-UP
As digital-born-and-bred
paymentcompanies gain
traction, banks putup a brave
fightbyreconfiguring their
payments ecosystem
DEVINA JOSHI
n March 2012, American Express

launched a Twitter sync feature for customers to get discount deals by tweeting
offer hashtags and in the next year, the card
company went on to integrate payment
into Twitter. The 1998-founded PayPal is
known to have revolutionised digital payments, currently processing around 11.5
million payments per day across 203 markets globally. Add to that internet giants
like Amazon Payments and Google
Wallet, and the mobile payments plot
gets thicker.
Closer home, companies in
the mobile payments space
have mushroomed all over
India; there are about a dozen
mobile wallet firms, including
Paytm, with 20 million active users
(more than the cumulative number of
credit cards in India), and others
like MobiKwik, Oxigen, ZipCash and
Citrus, which allow users to digitally store
cash (under a cap of ~10,000)
typically for low-value mobile and online
transactions.
Why are all these companies important? Because digital-first companies, by
setting the tone for new paradigms in payments, have forced traditional bankers to
sit up and take notice. The fear? That digital-savvy customers will migrate to slick,
new technologies and fast-track convenience, veering away from old-fashioned
banking payment instruments.
Consider these facts: 64 per cent of
Indians are willing to make purchases on

smartphones this year, compared to 2014
(source: Dyn). SMS-based payments have
the ability to reach out to the unbanked
sector. Over 40 per cent of digital wallet
users hail from tier-II and tier-III towns.
Whats more, competitive lines are blurring
with telecom companies entering the arena, an example being Vodafones M-Pesa
mobile wallet designed to reach out to the
under-banked or unbanked population.
146
With 943 million

mobile connections in
India (source: TRAI),
ignoring the mobile boom
can prove fatal for a financial
institution.
Banks, regarded as custodians of
wealth, need to be prepared to face nonbank attackers or digital natives like Paytm,
if they are to compete in the digital game for
the customers share of wallet. Domain
expertise is where niche digital players have
the lead. Having said that, banks are not
blind to the advantages of going digital,
particularly in a core area like payments. A
whole host of players, including behemoths
like ICICI Bank, Kotak Mahindra Bank and
even State Bank of India have launched a
slew of products to address the evolved
needs of digital-savvy customers. But a
product is just a battle strategy if the war
has to be won, the traditional banking
ecosystem has to undergo a metamorphosis and organisations have to reorient themselves around digitisation.
Being late movers, how are the banking
giants gearing up to compete with digital
>
payment companies? What are the clear
returns in going digital? And most important, how prepared are they for the host of
challenges in their way?
A change from within

Banks have limitations in terms of the
number of branches they have. It is in a
banks interest to digitise processes, says N
Jambunathan, DMD and CIO, State Bank
of India. And digitisation, much like charity, begins at home, or in this case, at the
organisation. SBI lets its teams make use of
tablets for field inspection and customer
doorstep services. Or take ICICI. While digital ideas can come from anyone, ICICI has
a special innovation team of 15-20 people
comprising a mix of business development,
technology and operations people.
Resources are hired not just from banking,
but also digital arenas like credit card companies and e-commerce companies. We
have embedded a youth team in the retail
bank, as most mobile payments are youthled and we need to know how young people
think, says Rajiv Sabharwal, executive
director, ICICI Bank. The average age of
employees is 30. Several hires below the
age of 25 are made from IITs and IIMs.
Ideas, before being taken to production,
are taken to the cross-functional innovation
team to check feasibility. Teams not only
scout new trends on the internet, but are
also sent overseas to ascertain which international products can be tailored for India.
Investments are being made in big data,
CRM software, and multi-channel retail.
Usually, when one talks of digitisation, it is
associated with customer facing teams
only, but an internal subliminal digital culture is crucial. ICICI, Kotak Mahindra and
SBI have internal apps for employees which
serve as HR dashboards.
Kotak Mahindra embarked on the digital journey two years back with a mobile
banking app to grow the customer base
beyond the branch footprint. The bank
had the right distribution footprint: targeting the mass-affluent, digitally savvy
customer in markets in which mobile and
internet penetration was high. Emphasis
was laid on choosing which customer
problems need solving, bettering salesforce productivity, transaction convenience, reducing overall customer acquisition costs and addressing pain points for
We have embedded a youth

team in the retail bank, as most
mobile payments are youth-led
and we need to know how
young people think
RAJIV SABHARWAL
EXECUTIVE DIRECTOR, ICICI BANK
Banks have limitations in terms

of the number of branches they
have. It is in a banks interest
to digitise processes
N JAMBUNATHAN
DMD & CIO, STATE BANK OF INDIA
medium; it can be a social layer on top of

it, says Arvinder Gujral, director, business
development, Twitter India and South East
Asia.
Used as a grievance redressal medium
thus far, Twitter is now a platform for novel banking services like finding the nearest
ATM, recharging your DTH or prepaid card
etc. To transfer money, for instance, linking
of Twitter and bank accounts is required,
and a direct message on Twitter to the bank
does the trick. Social banking addresses
security concerns as no social media platform stores bank account data, and a second factor authentication (possibly a onetime password) is a prerequisite for final
transacting. The financial transaction happens at the banks back-end, digitally; all
Twitter does is facilitate the conversation.
Ditto for Facebook banking, where one can
pay bills, ask for a cheque-book, transfer
money etc.
Hacking on social media accounts cannot lead to hacking of bank accounts. Take
Kotak Mahindras KayPay offering, which
rides on the IMPS (Immediate Payment
Service) platform of NPCI (National
Payments Corporation of India) an
attempt to woo even non-Kotak customers.
It allows for payment transfers via
Facebook without knowing a recipients
bank account details. Data crunching
reveals more than 50 per cent of Kotak
Mahindras customers are on Facebook,
which is why the bank launched its Jifi
products with the blogger community in
key cities for better marketing.
Addressing concerns and challenges
channel partners. Kotak Mahindra works

with tech innovators, billing partners etc to
build a collaborative digital network
ecosystem.
When banks go social

Indias social media adoption has been
phenomenal, as the second largest market for Facebook, third largest for Twitter
and the largest for WhatsApp. Banking on
social media almost seems like natural
progression, with Kotak Mahindra and ICICI both taking to the hashtag banking concept. Twitter is not a financial instrument
147
Research data is the cornerstone for a

banks digital strategy. Customers tend to
use cash for low value payments, and
cards for high value payments.
When ICICI examined why this is so, it
found the reason to be the lengthy duration to finish a credit/debit card transaction. Through NFC technology and contactless cards, ICICI worked with a regulator for low-value transactions, like autorecharging metro travel cards.
Similarly in the payments space, all
banks offer people to people (P2P) transfers
by way of adding beneficiaries, which is
great for repeat or high-value payments but
cumbersome for one-time transfers or lowvalue payments an area of expertise for
>
EXPERT
TAKE
No easy task
n India, there is just enough disruption
for banks to initiate an honest digital
dialogue. As unlikely partners come
together to forward the digital agenda,
Indias payments banks will be an
experiment to watch out for. It is
important to better understand the digital
entrants, so that in the new paradigm,
each can bring in their advantage rather
than be saddled with the others
disadvantage.
> The ability of technology companies to
app their way is impressive. Once you get
hooked to your shopping, restaurant,
travel or movie app, such companies
unassumingly make their presence felt
alongside netbanking. Tech companies
simply latch on to new habits being
formed by pampering providers of other
services on the back of social information,
transparency and differentiation.
> For the financially excluded,
leapfrogging is working in favour of
technology companies. Being young,
mobile-abled and bank un-abled, this
customer is quick to see the benefit of
signing up with someone who is
available, flexible and respects her time.
digital-first companies. When we compared the internet journey with mobile,

some felt lets bring the same offering on
mobile or lets have a stripped-down version of the internet on mobile, says Deepak
Sharma, EV-P, digital initiatives, Kotak
Mahindra Bank. We chose none.
As mobile is an on-the-go device used
when people are pressed for time, the key
payment issue here is tedious beneficiary
registration on a small screen. The Kotak
mobile app hopes to address that with a
one-time funds transfer feature including
a search bar in case of multiple recipients,
device authentication for personalising
widgets without app log-in, and facilities to
integrate multiple bank accounts on the
same app. For low value-payments like to
grocers, vendors etc, Kotak has options to
> The absence of entry barriers in the
SHINJINI KUMAR
PARTNER AND LEADER, BANKING AND
CAPITAL MARKETS,
PRICEWATERHOUSECOOPERS
technology arena drives efficiency and
constantly puts downward pressure on
cost of delivery. On the other hand,
banking has suffered from high entry
barriers, driving service quality down to a
low common denominator around
regulatory minimum and preventing
differentiation.
> Banks are weighed down by legacy
systems and partners. Their customer
proposition is essentially multi-product,
Mail Money (for internet banking) and

Message Money (for mobile phones),
where a mobile number and an email id
are sufficient for the bank to send links to
make transfers and authenticate the transaction.
The merchant payments space is one
where digital natives have a firm foothold,
with a flurry of tie-ups with e-commerce,
travel, food and other portals. Here, banks
have had to introspect and understand the
problems faced on a banking interface
while purchasing on digital media.
The first big issue is transaction failure: on the web, almost 30 per cent of
transactions fail at the checkout page while
transaction failure rate is as high as 50 per
cent on mobile apps. Add to that, most
merchants today drive shopping through
148
which gives them lasting market power,

but also makes it harder to focus their
data mining efforts.
> Armed with digital advantage to detect
fraud, digital companies confidently open
doors to all. Given the dynamic nature of
population and economy, there are
substantial benefits to this universality.
> The proposition of technology
companies is built on consumer choice,
thus specialising in targeting behaviours.
Banks believe that every customer will
choose a bank because it is safer, which
may only bear out for savings.
Banks, however, will continue to
dominate Indias financial landscape.
Some of them will succeed in bringing
about fundamental shift in behaviour and
become digital banks with a full-service
offering. The regulatory framework will
enable others to collaborate and co-opt.
Non-bank providers will be constrained
by pre-funding and no-cash-out and will
judiciously get co-opted. The ball will be
in the court of regulators to ensure that
flexibility, open entry and quick buyouts,
that make the technology sector agile, are
somehow incorporated in the new
framework to prevent new banks from
quickly racing to the bottom.
mobile, going by customer preferences.

Fifty per cent is too high a failure rate in
this space for those looking to make transactions on the move! exclaims Sharma.
Kotak Mahindra decided to target travel,
where one needs to make a sure-shot payment for booking, unlike other categories
which offer cash on delivery facilities. On
Kotak Mahindras m-store, which has a tieup with Goibibo, customers can choose
flights and hotels, checkout, and complete
transactions without remembering card
details.
On the back of these benefits on their
m-services security, zero failure rates,
direct integration and no card data inputs
bankers are counting on customer
acquisition and customer delight. It is a
paradox to see banks trying to do things
>
which are bank-agnostic. What do they
have to offer which digital companies
dont? People love technology, but not at
the cost of trust, and research shows that
people trust banks most with their money, says Sharma of Kotak Mahindra.
When we researched customers on
where they would place their bet convenience or security, more than 80 per
cent chose the latter. For small value
transactions, they may prefer convenience, but wont risk large sums a
clear advantage area for banks.
Interestingly, banks do not earn additional revenue as they are not levying transaction fees for m-services, unlike digital
wallet providers, which charge 1-5 per cent
for various transactions. The attempt is
clear: every bank brand wants to become a
customers primary banker on the back of
increased transactions. Two, the ball-play
of payments should largely remain with
the bank. The incremental benefits involve
customer retention/stickiness.
Furthermore, automated digital
processes by default spells lower cost of
services and transactions. The advantage of
the digital world is having a very thin backend as compared to what it would be in the
physical world.
Banks are also countering the varied
promotional offers given by digital wallet
providers, by flagging offers of their own.
Transacting on banking mobile apps can
now win you cars and even give you discounts on flights or entertainment tickets.
But while this will induce trials, the larger
attempt is to get consumers hooked onto
the convenience and security of being on a
banks mobile platform without having to
remember cumbersome bank or card
details, much akin to other mobile wallets.
We think we can precede most of
these things in the market, says ICICIs
Sabharwal, on comparing ICICIs digital
bank (called pockets) or its remittance services, with the likes of PayPal and Paytm.
Pockets is a full credit bank offering all
products, whether liabilities or assets, or
insurance, completely in the digital space.
Banks have the capability to offer much
stronger, more comprehensive propositions. A physical branch network a
banks forte can also aid in sorting last
mile issues, as opposed to a purely virtual presence that digital natives have.
People love technology, but not

at the cost of trust, and
research shows that people
trust banks most
with their money
DEEPAK SHARMA
EVP, DIGITAL INITIATIVES,
KOTAK MAHINDRA BANK
Another important competitive advantage banks are relying on is their ability to

not only allow customers to make payments from their wallets, but also absorb
unused wallet money into term deposits, so
that it brings more returns to customers as
opposed to lying idle in a non-bank companys digital wallet provision. Further,
banks have the ability to roll out other services like credit and loans, on the back of mservices.
Digital service providers obviously do
not have the same clout as banks do in
India, says Jambunathan of SBI. One
must consider that such wallets also need
to be accepted by merchants. Banks have
such a large network that as usage of our
wallets
increases,
acceptance
will grow. And services such as in-app
purchases of movie tickets, food and even
payment of electricity bills are only set to
proliferate.
Having said that, competition in the
m-payments space is only going to get racier, as telecom companies along with digital wallet providers eye payment bank
licences.
149
>
WIN BACK LOST

CUSTOMERS
With a cross-channel retargeting strategy, brands can improve
customer conversion rates
SONALI CHOWDHURY
id you know nearly 98 per cent of

the first-time visitors on your website leave without purchasing anything? While some visitors browse the site
for a short while and then move on, others add items to their cart but abandon it
without going through the purchase

process. If window shopping is a problem for brick-and-mortar retailers, shopping cart abandonment is one metric that
keeps a large number of e-commerce
bosses awake at night.
So what does one do? The first option
would be to make the shopping experi-
150
ence so compelling for consumers that

they complete the purchase loop. Second,
if they do indeed exit, you need to find
ways to bring them back to the site. Over
90 per cent of marketers responding to a
recent survey by global retargeting company, AdRoll, said that retargeted ads are
as good as or even better than the gold
>
HOW RETARGETING IS SHAPING UP

Investment in retargeting goes up y-o-y
How much of your budget goes into retargeting?
2013
40
2014
15
<10 10-50 >50
53
71
14
Of companies with over 1,000 employees, 24 per cent spend at least

half of their online budget on retargeting
Marketers are
using retargeting
in new ways:
| Brand awareness
| Social engagement
| Customer retention
| Driving sales
SOCIAL TRENDING
54% of marketers say

social media is the hottest topic
in retargeting
MEASURABLE SUCCESS GOES
CROSS-DEVICE: 54 percent
of marketers are currently
retargeting on mobile
Figures in %
Retargeting stands its ground against

the titans of performance
92 retargeting performs same as or better than search
91 retargeting performs same as or better than email
92 retargeting performs same as or better than
other display
Insights into customer
behaviour
Total conversions
High RoI
Its a tie!
Cost per click
Success means
Low CPA*
sales plus
understanding Click through rate
of the
CTC**
customer
How do you
measure
campaign
success?
55
55
43
20
20
15
9
*CPA: Cost per acquisition, CTC**: Click through conversions; Source: The state of The Industry report by Adroll; Adroll surveyed 1,000 marketers
and analysed campaign data from over 11,000 advertisers to find out how US marketers are using retargeting
standard in digital marketing, search ads,

to do the job.
What is retargeting? In simple terms,
in retargeting, e-tailers try to bring back
lapsed customers by showing relevant
ads on other websites so that they come
back to the original e-store for their next
purchase. Today retargeting forms part
of the monthly digital budget of most etailers and run throughout the year just
like search marketing. Retargeting helps
convert users at one-and-a-half to twoand-a-half times the websites standard
conversion rate. Typically the budgets for
retargeting is 10-15 per cent of the total
digital spend but it could be more, says
Subra Krishnan, VP, products, Vizury.
Adds Praveen Sinha, founder and MD,
Jabong, Retargeting is a high returnon-investment campaign, hence, budget
expansion is easier on this.
Traditionally, retargeting had been
strongly associated with performance
marketing and the return on investment.
But the concept is being redefined today.
It has become a customer value management programme. Retargeting helps
in extracting the value of the data generated and ploughing it back into the system to engage dormant or active customers, says Narayan Murthy, VP, global
sales and strategy, Vserv.
A retargeting strategy would vary
depending on the category and sector you
operate in. Heres how you can retarget
effectively and then figure out when to
pull the plug.
Cracking down on the problem

Like everything else, the starting point
would be the consumer understanding
her needs and why she was on the said
website in the first place.
The interest of the user could be
defined in a variety of ways during the
customers journey. Some parameters to
look at are: how many times the user has
visited the site, which products and how
many products did she see, how deep did
she go into the website (cart versus home
page), buying history and so on. If a customer has shown a greater propensity to
convert then you can target her more
aggressively. The key to retargeting lies
151
in creating a customised message, says

Krishnan. For example, you may show a
static ad of a product, a semi dynamic
ad, which will include price, discount
etc, or a fully dynamic ad where other
relevant products with their prices are
shown.
Mostly e-tailers segment the audience
under heads such as abandoned users,
product viewers, category viewers, checkout users, and so on. By doing that they
can use different communication plans
for each segment to target them better.
For instance, Lenskarts first-frame-free
offer was not shown to visitors who have
already made a purchase from the site.
Such repeat visitors were rather shown
the latest collection of its eyewear.
The next question is, which medium
should a brand use to retarget. Ideally,
brands should engage customers in all
the channels display advertising,
Facebook marketing, email, SMSes, notifications, mobile ads, apps in a unified manner.
It is also important to time your retargeting efforts. For example, if someone
>
EXPERT TAKE
Three ways to make

re-targeting work better
TRIPTI LOCHAN
CEO, VML
nsuring that consumers return to a brand
or third-party website to buy a product
has ordered monthly disposable lenses

then Lenskart starts reminding the user
with messages to change her lenses
before the expiry date. We keep a close
check on the performance of each segment and measure metrics like clickthrough rate, conversion rate, cost per
action and ROI on a daily basis, says
Peyush Bansal, CEO and founder,
Lenskart.com.
Retargeting can prove especially helpful in a category like furniture where the
purchase cycles are longer. If a customer
is looking to buy a sofa, she may take 1030 days to make a decision. Hence, by
effective targeting, we can stay relevant in
her decision- making frame and tailor
offers depending on how far she has progressed in the purchase cycle, says
Vikram Chopra, CEO & founder,
Fabfurnish.com.
In the e-commerce space, the entire
game is moving to apps. App re-targeting
makes more business sense and companies have been investing heavily on dataled retargeting via apps. We have seen
or service of interest is the focal point of retargeting. The reason re-targeting works for
the marketer is fairly easy to fathom. First, it
is about building a funnel of consumers who
have interacted with your brand already and
shown interest in a product/service. Second,
it ushers these consumers through the
conversion funnel by bringing the message
back in their view. So re-targeting is integral
to the marketing mix. If we can create
additional sales at no or little cost, then we
are achieving the best possible return on
investment (RoI). Having said this, there are
some guideposts, which will help us make
re-targeting work better:
Keep in mind that re-targeting is a process
and over a period of time you will know
four-five times better conversion ratios

in apps compared to mobile web, says
Murthy.
Vserve offers two retargeting platforms Smart RT and Smart Connect.
Smart RT is capable of retargeting customers from desktop to mobile and show
ads to consumers in real time with customised content. Smart Connect helps
leverage offline consumer intent to help
brands remarket to their consumers
across mobile sites and apps. Data collection tags are implemented in apps and
mobile web pages and then passed into
Vserv servers. The information passed on
in the server contains encrypted data
about the user. Once the system deciphers this data, it starts running a match
for the similar user with the same unique
identity variable for audience identification. After the user is identified, a predetermined action-oriented communication is shown to the user with a clear
call-to-action. The final step would be
closure or re-engaging the customer into
the client funnel.
152
which audiences are more likely to convert.

To work out optimal re-targeting frequency,
find out those consumers within a target
audience segment who dont buy and marry
them with those who take a longer time to
be persuaded to buy. This way
you can work out the optimal
re-targeting frequency.
Ensure that you retarget with the right
message. If you target consumers with a
generic messages, you are likely to waste
marketing money. Also, if you are far too
specific in retargeting, you risk being seen as
a quasi-stalker.
In e-commerce, it is easier for e-retailers to
define their RoI because any retargeting
activity can be seamlessly linked back to
online sales. However, for marketers who
don not have any e-commerce presence,
this becomes a little trickier. We have to find
ways to close the loop at stores and counters
to measure effectiveness of re-targeting.
In a campaign there can be multiple

elements to entice a user to respond.
Hence, retargeting potential buyers with
different styles of communication and
channel is important.
Pulling the plug

Companies need to consider two metrics
conversion and RoI to determine
the effectiveness of a retargeting strategy.
Typically for e-commerce companies,
5-10 per cent of daily sales should come
from retargeting. The next thing would be
to check the return on investment, tells
Krishnan. You also need to consider if the
campaign is enabling traction on higher
margin or lower margin products.
Besides this, you have to keep in mind
that the retargeting efforts should not
prove to be a dampener because there is
a thin line between following up, reminding or retargeting and spamming. There
has to be a way to identify the customer
you are retargeting and stop at the right
time. The decision is mostly based on
mature algorithm and judgment that help
>
Get the cheese, avoid the traps

Avoid these pitfalls when designing a
retargeting strategy:
Unmanaged frequency: Frequency is defined as
the average number of times a unique visitor is
exposed to an ad over a period of time. If it is
too high, it would
make a visitor feel overwhelmed
Using same messaging for retargeting:
Showing the same ad over and over again can
annoy users exposed to it. One of the advantages of retargeting is that you can personalise
the message based on the actions a visitor has
taken on the website.
Improper user segmentation: Ads should be
relevant to anyone who sees them. Identify
those who have shown interest in the brand
and retarget only that segment.
With inputs from Make My Trip
to determine that we are not moving in

the direction of spamming and it doesnt
become a noise, says Sinha of Jabong.
To get this right the first step would be
to exclude customers who have completed a transaction or to identify users who
have lost interest based on their user
score that factors in responses to ads.
Dont overdo campaigns; you will end
up with higher opt-outs from emails,
says Kalpit Jain, chief operator officer,
netCORE.
Travel portal Makemytrip retargets
customers more aggressively when she is
close to the departure date. Customers
are not retargeted for the second time if
there was no conversion at the first
instance.
At the same time it is crucial that com-
panies dont compromise on the privacy

of the consumer while retargeting. It has
to be a controlled strategy to ensure that
you dont over-sell or reach out on too
many channels, creating a lot of noise in
the process. Most important, give the
power to opt out of ads or emails targeted
at the customer.
In other words, let the controls be in
the hands of the customer.
153

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PREPARING THE BIG SALE

THE ROAD TO THE TOP

JUST A MISSED CALL AWAY

THA BIG LEAP

RECREATING THE MAGIC

PLAYING CIO TO MILLENNIALS

THE RIGHT FIT

THE GREAT ONLINE WAR

THE IKEA WAY

LOOKING BEYOND THE STATISTICS

LEAVING ON A JET PLANE

IT IS DIFFICULT TO TALK OF VALUE

OVERHAUL THAT PERFORMANCE REVIEW

WHEN YOU CANNOT MEASURE THE

METHOD IN THE MADNESS

VALUE YOU ARE DELIVERING

DOING MORE WITH LESS

MAKING DOWNTIME COUNT

WINNING IN A SLOW-GROWTH ECONOMY

MAKING CSR WORK

GETTING OFF ON THE RIGHT FOOT

CHASING THE LONG TAIL

WINNING IN THE AFTERMARKET

INFOYSIS NEW APP

MOVING UP THE VALUE CHAIN

CREATING A CULTURE OF INNOVATION

THE DEMISE OF A STAR BRAND

RETHINKING THE MEDIA PLAN

NOT JUST A QUICK FIX

LEARNING FROM THE MASTERS

MAKING THE MOST OF DATA

DEALING WITH THE PROMISCUOUS SHOPPER

WINNING THE PEOPLE WARS

BEST OF BOTH WORDLS

COST CUTTING IN ACTION

WIN BACK LOST CUSTOMERS

iting changing market scenario

REDEPLOYMENT CHECK LIST

carried through by managers trained to implement them

Take time to plan and train

close the unit. The facility had a strength

dow of two to three months to assign new

The article has been written with inputs from

n a country where cost has always been

wealthier customers. In 2009, it expanded

its affordable products recently unveiled

The Big Bazaar story

products. The model flopped in India. Big

being revamped first. Advertising isnt

A long, winding road

benefit and flag its on-time performance.

it is now pushing the Nano as a second car

When it comes to a change in packaging, a

The other pieces of the puzzle

t is a regular weekday afternoon for

or anything else that can

THIS IS THE SORT OF INFORMATION

The code conundrum

If you are a brand owner, get this straight.

Now see how mass brands are using

When consumers set the call

allows a business to communicate with

which has been doing real-time media