All hands on the deck, Captain!

Shahrukh khan to Host IIPM 4Ps Annual Business and Marketing Quiz

Great ads, greater roll-out plans, greatest financials... but ‘talent-crunch’ might just play the spoilsport!

Advertising, branding, positioning, geographical outreach... and any other progressive act that you could possibly cook up, were ‘once’ considered just the forte of private sector banks and their foreign counterparts. Not any more! The public sector banks (PSBs) have shed their conservativeness, for good and are tired of being branded as laggards. Today, their approach towards broader outreach, customer acquisition & education and product offerings is anything but the mark of a self-satisfied, complacent public banker. IDBI Bank is one such name, which has opted for an overdrive as far as re-positioning and re-branding are concerned. The project finance institution turned bank, is leading the race and is aptly recasting its business model, strengthening itself through organic growth strategies and basking in the sun of glorified financials!

Its newest taglines: “Not just for the big boys” and “Aao sochein bada” also project the inherent strength of the bank, which, for the first time in a decade, has hit a positive home-run – a positive net interest margin and the highest annual growth in terms of deposits and lendings (30%) amongst all banks in the country. And today, the bank is not just making money for its stakeholders but also working towards ensuring ‘some’ tomorrow for industries across the board. Picture this: IDBI Bank Ltd. is leading a group of lenders to arrange $1 billion debt for Air India (after the airline failed to raise funds from European banks to buy Airbus SAS aircrafts); some reverse osmosis at a time when the biggest of names in the vertical are running around with bailout bowls in their hands (and 9 more for bailout nos.2 to 10). The bank is aggressively pursing the dream of becoming the 5th largest bank by 2011-12, from being the current 8th. This would also help improve its low cost current account savings account (CASA) ratio, which is pegged at 15.22% of the total deposits to somewhere close to 40% (which is the standard for other public sector banks).

So there’s some dream, and happily complemented by ambitious financials. Digest this – it is targeting a growth of more than 100% in its business to touch Rs.3.35 trillion by FY2011 as compared to FY2008. Considering that market reports suggest an estimation of Rs.2.1 trillion by the end of the current fiscal, another good year will just see it get there! So there’s it – great dreams, super numbers and big hopes... but not sans challenges! And what’s the catch? Having obtained the much needed licence from RBI to add 200 branches (at present it has 508 branches and 880 ATMs) by March 2009, its expansion plan had to be ‘carried forward’ for lack of managerial staff. Given the fact that IDBI expects its branch network to grow by 40% (which will indeed enable the desired business growth), ‘talent - crunch’ may just play the spoilsport.

For now though, IDBI is staying away from inorganic diet; having achieved much success in the change process, as Yogesh Agarwal, CMD, IDBI Bank happily quotes, “The bank has indeed come a long way from being a pure development financial institution and is currently transforming into a new generation, full-service commercial bank...” Better safe than dead! But considering that its internal growth plans are paying well, there’s no need to be swept away by the M&A wave... Silent waters run deep... But wait! Is IDBI playing the ship, or is’t the ocean itself? Whatever its intentions, it needs all hands on deck – manpower! [And that one was for you, Captain Yogesh!]

Gyanendra Kr. Kashyap

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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No individual can be bigger than the game.

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Interestingly, this statement is especially relevant to marketers who are looking to strike the right shots with their shrinking budgets in a slowdown. Pawan Chabra & Pallavi Srivastava of 4Ps B&M examine why, in humbling times, IPL promises marketers what the best celebrities cannot.

Is thrift the only mantra of the season? Well, market logic dictates that it’s not just about cutting back on your resources (read: marketing budgets) but also carefully analysing where the cost benefit analysis of a marketing investment can work overwhelmingly in your favour. Thus while companies are cutting corners in their marketing budgets, it would all be in vain if they cut the wrong corners!

So faced with the question: In whom to invest? In Hrithik Roshan or Shahrukh Khan’s Kolkata Knight Riders? marketers should pause before answering. For the latter promises an intoxicating, blockbuster combination of Bollywood and cricket. Last year, the combo had sent an adrenalin rush through the veins of marketers and advertisers. Most probably, you’re one of those who doesn’t even need to ask how the combo could generate a high sense of excitement among marketers. The answer is obvious. Lalit Modi! The man gave India an excellent platform to combine the protagonists we’ve mentioned above, by his biggest adaptation of the Indian Premier League (IPL). Just brush up your memories a bit and you’ll be able to easily recall the scenario of the last season when everybody was crazily fighting to grab a share of the lucrative IPL cake in any possible form.

Well, if last year, in the peak of the boom, IPL made some sense, this year, in bust times it makes for indisputable business logic! A lucrative deal under IPL may force marketers to channelise their advertising budget from somewhere else, which may also include dropping expensive brand ambassadors or regular advertising spends. That’s the reason why Coca Cola India prefers Shahrukh’s Kolkata Knight Riders (KKR) and Delhi Daredevils over superstar Hrithik Roshan. One look at Coke’s advertising patterns on TV will reveal that Coke has not come up with an ad featuring Hrithik for a long time (after the last ‘Jashn mana le’ ad commercial). Moreover, the frequency of Coke ads has also relatively gone down. Similarly Sprite (for which Coca Cola India has tied up with KKR) also doesn’t have any brand ambassador as of now (Sania was the endorser of Sprite earlier). Undoubtedly, Coke is spending its marketing budget wisely. Probably that’s the reason why they have tied up with Delhi Daredevils for brand Coke and with KKR for Sprite.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Focus on your brand

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Take Maruti Suzuki: The now wholly-owned Japanese brand, it seems, changed gears just in time to survive and thrive despite the slowdown. Though not completely unaffected by the slowdown (the market leader posted a decrease in sales for all three months in the last quarter), in January 2009, Maruti Suzuki bucked the trend and reported a 5.59% increase in domestic sales. A closer look at their figures reveal that their recent additions to the A3 segment (D’zire and SX4) is what is making the numbers look so cool. The segment saw a two-fold growth, selling 6,590 units (even higher than their cash cow Maruti 800) as against 2,939 units in the same month last year.

But managing their brand portfolio well is not Maruti’s only claim to the marketing fame. Over the last quarter of stagnating sales, the motor company went on an overdrive to enhance its market penetration. For one, instead of restricting its annual dealer level discount scheme till the end of December (as it does every year to clear year-end sales), Maruti extended the lucrative cash discounts way into February; next up is their strategic tie-up with Corporation Bank to finance Maruti Suzuki vehicles on an all India basis to enable credit access at a time when banks are antsy about lending too easily; and finally, proactively embracing the ‘voluntary disclosure of fuel economy’ to drive home the message to consumers about their leadership in making highly fuel efficient cars. As per Shinzo Nakanishi, MD & CEO, Maruti Suzuki India Limited, the move “would enable customers to make an informed choice when purchasing a car in the market.” Look closely and you realise that all these measures were perhaps aimed at luring those 40 million PSU guys, presently flush with funds they made from the 6th Pay Commission killing. “The recent pay hikes and arrears given to more than 5 million government employees after implementation of 6th Pay Commission report can bring back the lost momentum in the industry,” says Shushmul Maheshwari, CEO, RNCOS.

What did the guys at Maruti do? They revitalised their brand despite and in spite of the slowdown by simply emphasising its core brand proposition – value for money, fuel efficient cars – and increasing its value!

What? You think that was a fluke? Okay, here’s another one!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Have the cars, lost the road!

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The company had undertaken some prolific investments in the United States, but now it all appears to be overdone to an extent. While launching the expanded R&D facility in Michigan, Shigeki Terashi, President, Toyota Technical Centre said, “Toyota’s investment of $187 million to advance R&D demonstrates our commitment to the North American automotive industry.” Was this called for? An open question…

As a result of this argument, Toyota after a long hiatus is ready to offload close to 1,000-1,500 regular employees in this crisis. Toyota employs close to 30,000 workers in North America and UK and operates about 11 plants in these regions. The company also plans to trim its workforce further and wants to get rid of more employees through VRS. It is now clear that even for Toyota, the days of halcyon could well be over and a stricter market analysis is the call of the day.

Hit hard, Toyota is already beating around the bush or at least visibly so. Before the entry of the new president from the founder Toyoda family, the company has started working on the ‘Market Vision Plan’. Under this plan, Toyota will be working in a more docile way. For once, the company will be focusing more on product susceptibility to changing market conditions, planning for product launches up to the year 2015 and managing production cycles better. In all likelihood, Toyota must modulate its production in line to the changing demands of the market and must have the flexibility to divert unsold inventories towards more prolific markets.

The last six months have made it clear that even Toyota is not immune to making strategic bloopers. As a result of its aggressive expansion strategy, perhaps gloating from its success of becoming the world’s number one automotive manufacturer; an inevitability that was being talked about for years; Toyota is now making news for the wrong reasons. It has been rightly said, you cannot have too much of a good thing. Now what does Fujio Cho do with all those cars???

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Play the masterstroke

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Don’t be exhilarated by falling home loan rates, the best time to buy your dream house is still to come

Time, money and opportunities wait for none. And thus not timing the opportunity stands for loss of money. That’s why Gurus say have patience. After all it has its own advantages, especially for those who are involved with the financial and the real estate markets. And considering the present market conditions one such opportunity seems to be present ‘round the corner’ for those who are waiting to invest in real estate.

As the demon of slowdown slowly creeps into the Indian economy and the government is trying to shrug-off all concerns with its stimulus packages. As part of a good news for aspiring real estate buyers and as a result of the combined effort from the government and the Reserve Bank of India, home loan rates have come down substantially. While the interest rates on loans up to Rs.5 lakh has been restricted up to 8%, the same for loans between Rs.8 lakh and Rs.20 lakh is fixed at 9.5%. Moreover, the above mentioned rates can be fixed for up to five years. Now, with these cheap and easily accessible loans at their disposal, its a natural tendency for many of the aspiring home buyers to jump forward to buy their dream house. But then, they should not forget the rule of timing the market. Because as of now, though we have witnessed a slight fall in real estate prices it’s still far from what is being anticipated. (Some very optimistic valuations show that the prices would go down by 40-50% across India. However, few pessimistic research firms like Macquarie Securities confirm that the price falls in most part of India would be around 25%).

Moreover, the real estate players, who are still holding onto their around 50% profit margin, are set to enter into a phase of debt repayment soon. Considering their present liquidity starved situation, the upcoming debt repayment would mean that they are bound to cut on their prices to be able to realise funds stuck in unsold and halfway through projects. And then we may see some real fall in real estate prices. Going by the logic, it’s definitely not advisable to invest in real estate at the moment, feel many experts. Indraneel Karlekar, Senior Vice President and Head of Global Research & Strategy, ING Clarion Real Estate Securities explains to 4Ps B&M, “The macro economic indicators are not yet favourable for investing in reality and the investors should wait for now.”

However, while playing the ‘wait and watch’ game one must not forget the fact that over-waiting with greed may also dampen their profitability. By the way, did you manage to time Satyam’s scrip? Well, some did. Believe it or not, they have tripled their money!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
1500-plus IIPM students placed across the country with 44 bagging international offers
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IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
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