Credit Card generation and the Subprime

US... financial crisis... sub-prime... some more financial crisis... Chapter 11... Bear Sterns... Lehman Brothers... almost unanimously all the business daily headlines have an article related to these happenings in the world markets. And almost all of these articles talk less about how it happened and more on lamenting the fact that it happened.

Blame those credit card companies...
Yes, a lot of people have lost jobs, and their life savings, and a lot of houses. The hot shot investment bankers making bonuses of above $600,000 are now arranging garage sales for their Ferraris and Mercs. Most people are still in shock regarding the enormity of the situation, and go like, "How can this happen?". But it had to happen. One cant run an economy like a credit card that's got no limit.! Someday, you have to pay back your credit card dues. And when that day came, your Lehman Brothers, and Bear Sterns went for a nose dive!

Mistakes happen out of bad habits, and a major vice that the US citizen is afflicted with is the Credit Card. If I had to blame for all the mess-up I'd blame the credit card companies for the bad habits they've so very successfully infested in the average American. I mean, an average American owns upto 5 credit cards with an average of about $8000 debt in total. Any middle class Indian would consider this an outrageous amount to have as debt, but perhaps the middle class American isn't perturbed by it. 

And when this approach of letting people have more than what they can afford is extrapolated into the housing sector, a disaster is really a no-brainer. Sub Prime by definition means a person who has a history of loan default or with recorded bankruptcy or with limited debt handling capacity. When we give home loans to people who cannot afford what they are buying, sooner or later it is going to backfire. 

And the most surprising part of it all is that Fannie Mae & Freddie Mac, two government-turned-private entities setup exclusively to provide finance to the American citizen to build their homes allowed such a blunderous proposition to get through. It was a Marketing success but an economic melt-down. 

On an average, the defaulter ratio in a home loan is about 1:10. And when that elevates to 1:2 lets say, one can imagine how badly screwed banks, and financial institutions can get. 

And to add to that, everyone right from ICICI bank of India to the Sheikhs of Abu Dhabi invested money directly or indirectly in this hoopla. The result was like a Domino effect and suddenly, everyone started panicking and hanging on tight to their money (or whatever was left of it).

To surmise, economic meltdowns arise because of people getting lackadaisical more than anything else. When money started coming in easy, people bought houses despite knowing the fact that they couldn't afford it. When economies become developed, life becomes easier, less stressed. Things are more accessible including money. This attitude is not largely restricted to money in fact. My suppliers from EU region (France in particular) are the most lethargic bunch of people I've met in my life.

And this very attitude with respect to money was the reason why everyone (including Lehman brothers with truck loads of IIM graduates) went down the drain. 

Of Anomalies

There's a lot to say, and the best part is none of them have any sort of relation to each other. But I want to talk about all of them in one single post, hence this title.

On the work front, things are running smoothly. And that's what scares me. A smooth running job is something that an Indian Government servant would wish for. If things are running smoothly means I'm not learning. There always is scope for improvisation. And if I'm not seeing that something is wrong in me, which I'll need to figure out.

Besides that, I've been doing some freelancing lately. Not major projects and big money types; but simple ones with basic design templates required. But what saddens me, is that I was awake for 2 nights continuously to finish the project (because it was an urgent project with minimal turn-around time) and I loved every single moment of the 2 nights I spent making the simplistic template. The age old battle of doing what you love versus trying to love what you do came to the foreground. I had buried this topic with myself, swore never to talk about it. Because I know there are not many people who have the balls to follow what they truly love doing. And right now, frankly I don't , one, because I need the money, two because I need some concrete definable experience that the 'corporate world' would accept, and lastly, because financial stability in life is perhaps the single most crucial attribute any society would expect out of a bumbling person straight out of college.

And then there are these MBA jargon related discussions. This is what happens when you stick around with a bunch of MBA degree holders. Your life discussions always revolve around nerdy things like lean supply chains and marketing research. A roommate working for an FMCG major talks as if there's no life beyond the Microsoft excel sheet filled with numbers (lots and lots of numbers), the other roommate working for a software solutions firm talks about nothing beyond Supply Chains and RFID tags. And listening to all of it, brings back memories of what I'd learned in an MBA. It is today I realize that I haven't really, genuinely given enough time to think over what I've learned in my MBA. One year is too short a time to reflect upon things. Supply Chains, Value Chains, Costing mechanisms, all these are the stuff that the hot shot consultants are well versed with. I did learn what these concepts are, but never got a chance to implement them.

So in short, something that I love doing, I can't do that for a living since its too unstable as a job prospect (plus when you have a 1 million rupee loan up your head you really can't think clearly). Something that I am doing currently is all hunky dory, but I honestly don't know where I am headed with it. And something that I have learned during the course of my MBA is slowly withering away and I've begun to start forgetting the concepts that were taught to me.

In hindsight, it's a little depressing scene. Sure, one can always say that as long as the job is going well why one should worry? And that's not a wrong question. But I'm not just made to do a single kind of a job all my life. I want to do everything. I want to make products, sell them too, see how they can be better stored, shipped, priced, promoted, marketed, branded, designed, serviced… everything.

In short I don't want to be a bloke. And looking at the way I'm progressing (or regressing), it seems I've already started on the process of becoming one.

Swades Déjà vu

9 days. That’s all it takes, to make you realize how much void you have in your life. People in India die to run away from dirty pot holes, screaming horns, cow dung on the roads and things like that. But believe me, 6 months after staying abroad, all of that is music to my ears.

Maybe we’re born messy, I don’t know, but I like the hustle and bustle. Sterilized environments sort of make you numb, and in many a ways incapable. Here all you have is control - temperature control, climate control, driving control, attire control, attitude control, control over what you say, and eventually control over what you think.

People call it being civilized, but honestly is there any civility in hiding your curse under your nose? Is there any civility in being so politically correct in whatever that you say and do? True, a developed nation teaches you discipline, and a lot of it. Be it discipline when driving cars, while standing in a queue… whatever; but at one point, that discipline aggravates into control and that’s not good.

Yes, in terms of process flow, developed nations are better and easier. It’s easier to buy property for instance in a developed nation. For a country like India, there are innumerable processes, and each take their own sweet time. But what’s necessary to understand is that our minds have been attuned to this ‘process-less’ system, since birth. We have been living in a world where even getting a cooking gas connection is a challenge. And that’s the very reason why we can strive in any given circumstances.

It was during my trip back that I realized how insanely complex it is to manage a democracy like India. In a place like Dubai, which is maybe twice the size of Ahmedabad city, it’s so easy to drive growth. Had Mr. Narendra Modi been asked to handle a state only twice the size of Ahmedabad city, he would have done wonders, and that too with relative ease. But sadly that’s not the case. He has to handle a state with about 20,000 cities and villages.

In a place like Dubai, a lot of micro-management is possible. The citizen is accessible. There is more money, and fewer responsibilities to put money into. The case is inverse in a country like India. And yet we strive. And yet we post 8-9% growth for a considerable period.

People say that 95% of retailing in India is unorganized. And for all I feel, there’s a fair chance that it will remain so, especially in a rural setting for a pretty long time. A lot of industries in India still remain unorganized. Industrialists, and economists feel that its not appropriate. What most people don’t realize, is that its these unorganized supply chains that have oiled the economy of India since independence.

It’s the roadside vendor, the small kirana shop outside your house, the ‘kaam-wali bai’ who comes to do the household chores everyday, the milkman… it is these people that oil the economy. Their contribution might be miniscule, but together, they give a lot to drive growth.

And this is what fascinates me about India. It is the minuteness of entities from where the enormity comes out. Challenges in large conglomerates are crap. There are really few challenges, but a lot of brains thinking who can solve the problem. But there’s no one to help in the Small Scale industries sector. There are the real challenges. SSI’s face problems day in and day out, simply because there are a lot of SSI’s and not enough trained manpower to run them.

And lastly, I’ve realized, that India is a Knowledge economy, while Dubai is very much still a trader economy. As a trader economy it might have huge financial resources, but not a lot of brains. As a knowledge economy, we have a lot of brains, but not enough resources to tap them.

In conclusion, all I would say is that it is after staying abroad that I’ve truly realized the potential of the Indian economy.

When MNCs started deciding to come to India for setting up business, I thought, “hey! They should have come a lot earlier”… but after staying away, I really don’t blame them. As a nation our PR skills are downright pathetic, and maybe that’s the reason why no one ever paid heed to us. It was the sound of money that made them overlook whatever image they had formed about India and came running to us.

If democracy were a norm of this world, we could have been a world power long back.

Chinese Imitation vs. European Innovation

With just about 6 months of ‘real corporate experience’ as some of my professors would call it, I’ve realised some of the vital differences between the Europeans and the Chinese.

Both the communities have gone through different periods of highs and lows; each economy had their own share of downfalls, but how they’ve eventually grown up is whats so interesting about them...

Coming to the point, my examples would probably refer more to the cosmetic industry, but I’m sure a lot of it applies to other industries too...

If you go to an international trade exhibition for instance, the way the Europeans set up their stalls is way different from the way Chinese people do. The white dudes always have that panache, that extra thing in their stalls... perfumed tissues and chocolates(tiffany’s and not some shady brand), coffee vending machines, freebies and all that... while the yellow dudes have completely plain and simple stalls, with the weirdest names possible. All they can offer you are bulky brochures and have some thousand pieces on display... As for Europeans, they have minimalistic display of actual products on the stalls... rather there are flat screen displays and cute little ladies with laptops ready with the latest presentations on new products...

While the Chinese people take out a visitor register for you to enter you name and email address and the company you work for, the Europeans have a bowl somewhere to drop your visiting card in... while the Chinese people welcome you with a genuine smile, they really cant get ahead more than that since their language skills are limited... While a European makes sure that he’s not too forthcoming in welcoming attendees to his/her stall and keeps the talk rather focused.

While the Europeans guarantee the best in terms of cutting edge research (even for something as boring as plastic bottle packaging), the Chinese guarantee that you give us anything, and we’ll give you a cutting edge copy of the same!

While the Europeans blabber a lot about R&D and innovation in design, thats sadly not something that a Chinese supplier would ever be able to do. But tell him what you want, specify it, guide him, and he’ll give you exactly what you asked for.

The Europeans feel the product. Its as if they add a soul to something so boring as a glass jar and call it exotic or something. But the Chinese just look at the product as a product. A glass jar, is a glass jar, is a glass jar. Cut the crap and get to the point types! They cannot innovate. They cant think on ‘how can I make this better’. They can always say, that, ‘you tell me what to do, and it’ll be done’...

And even when it comes to dealing with Europeans on a business relationship, they’re way too finicky, especially the French. They talk as if, even making a plastic bottle requires so much of care and precision like probably a gourmet dish does. They’re extremely slow in replying to queries and take their own sweet time. The Chinese on the other hand, are like hungry cats, waiting to get new orders. They will do as many changes as asked, to make sure that they get the final order.

And I feel all this is really sad. Its sad because the Europeans just dont see that their businesses are being taken away by Chinese suppliers, while they’re busy being finicky with the customer on how should a bottle look like. And, its also sad to see that a Chinese supplier has no knowledge base of the product he’s making at all, so as to make some improvements to it and give it to the customer...

While one supplier base, can provide real customer service, they’re overdoing at certain areas, whereas the other supplier base can give great value for the goods, but is zilch on any most kinds of customer services... Its like choosing the lesser evil...

Arabs and food

There’s some pretty interesting stuff I found out about Arabs and their relationship with food. Firstly, Arabs as a tribe or as a community is plagued by a compulsive eating disorder. They have to eat… all the time. Doesn’t matter whether they’re hungry, or thirsty, or what time it is… they just have to eat. And that’s really one of the reasons why a large part of the Arab community is so obese. This includes young Arabs too.

Whats more interesting to know, and it’s a sad thing too, is that they purposefully waste food. That is, they never buy things in small sizes. They always buy things in family packs or large quantities. It’s always more than what’s required. If 2 packs of chips would do, they’d buy a family pack of 4 instead, and obviously there’ll be some leftovers, which they’ll throw away.

In a way, its proving that we have so much (in terms of opulence) that we can afford to throw it away.

Sad no?

Zara enters/should enter/should not enter India - Part 3

There are alredy 2 blogs written on this topic earlier. Assuming you’ve read them already, I’ll not waste time on the technicalities of the Zara model, and get to the point.

Should Zara (really) enter India or not? If you look at it in that sense, perhaps every other international brand should enter India. And why not? A sizable part of the population of India is under 30 years of age; disposable incomes are rising, so are aspirations, living standards, customer awareness, and all the economic lingo stuff.

But that’s not the point. Just because things are getting better in an economy doesn’t mean that we have graduated to any other brand/product in the world. As a primer to this statement, lets take the example of a microwave. I think about 7-8 years ago, microwaves were first introduced in India. I really don’t know when, but what I do know is that consumer acceptance of that product wasn’t exactly high. For any American, a microwave is a necessity. Probably an American can live without a stove for a while, but not a microwave. That clearly didn’t happen in India. Heating cold food and feeding it to the children was like a disgrace on a mother’s part.

Today, after such a long time, things are changing aren’t they? And mind you, they’re still in the changing mode. Microwaves still haven’t received absolute acceptance even after giving the consumer so much amount of time to graduate to one.

Same goes for Zara. We as Indians used to wear only traditional dhotis and salwaar-kamiz 80 odd years ago. The transition to the western clothing apparently began during the British rule. So firstly in absolute numbers we’re about 300 years behind the Europeans as far as fashion for western clothing goes.

Think about it; even today, if you wear your dad’s shirt and go out, no one would be able to point out that this is an ‘old cut’. The cuts, the stitching techniques have remained the same since a really really long time.

Think about women’s formals for instance. There’s an extremely short range of women formal shirts available in India. And mind you, I’m talking about the design and cuts, not the color of the shirt.

To put it in simple mathematical sense, this is how the 2 ideologies differ:

For Indian Fashion Industry its –
few cuts x lots of color variations

For the Zara Model its –
many cuts x very few color variations

And even if we take colors as a basis, even that sadly isn’t our strongpoint. We were shades of red in summer and wear shades of yellow during winter.

We wear linen in winter sometimes and synthetic materials in summers as well.

There’s no synchrony in us as far as colors, shades, cuts, fabrics go. We wear whatever we feel looks good on us. Every season, has its own shade, color swatch, designs, cuts etc. etc. We’re never so detailed as far as these attributed go. And the Europeans are extremely fetish about these minor details; the same way we’re fetish about cricket maybe.

Also, India follows a 2 season process; Summer/spring collection & winter/monsoon collection. While in Europe there are 4 different collections released for all the 4 different seasons.

Also, I don’t know how many of the readers have seen a Zara store, but Zara doesn’t play with colors a lot. It plays with cuts. And to save on its supply chain costs, you wont find colors other than white, black, grey, cream, red and a few more. Their color swatch is extremely limited, and their design swatch is much higher than an average Indian apparel outlet. You really think Indians will gladly buy only base colors and wear them, when they have so many other vibrant colors being offered by other apparel retailers?

Mango, one of the leading fashion wear brand for urban women has a few stores in India. The collection that it keeps on the Indian stores is one season old already in the International markets.

After reading all this some might see this as a drawback in us Indians, that we’re not so sensitive towards colors and cuts etc; that we haven’t graduated to these details like others have. But honestly are we supposed to graduate? Were shirts and trousers a part of our cultural heritage? We have our own saaris and salwar kameez. That’s where our forte lies. And that’s precisely the reason why Zara originated in Spain and not some shady town in India.

Zara has not been quite a success in the US, and for the simple reason that an average USUS, not in Europe. citizen wants clothing that is completely relaxed, functional and rugged. That’s why jeans were invented in the

Europe has its own fashion, US has its denim jeans, India has its bandhani.

Its seriously wrong for any of us to expect to graduate to the fashion sense that Europeans have. Simply because their definition of fashion is different than ours.

In Gujarati, there’s a saying, ‘gaam khase ke gaadu?’ (should the village move or the bullock cart?)

P.S. Thanks a lot to Sharimbal Kanishk (ex-Globus merchandiser & a NIFT grad) for all the info on Indian Fashion Industry.

cam expose

aha! Another hidden cam expose! Stumbleupon is the sweetest thing on web I’ve found. Good time pass if bored!

Anyways, so this one talks about glasses that says ‘sterilized’ actually being washed in your wash basin instead of some clean washing space.

I’m like so what? At least they’re being washed. One should come to the kitchen of an Indian hotel. That guy will probably faint and wont ever come to eat at a hotel again. Typically Indian 5 star hotels have frozen everything. Frozen juices, frozen chicken, paneer, and stuff like that. All they do is take it out, heat it, add gravy and give it to you.

Still we hog like crazy no? And brag about it in front of the neighbors too the next day… “We had lunch at Le Meridian!”… yeah right… and the food was like probably a year old! But who listens to me anyways!

teachin n all that

sometimes i get an immense feeling that i shall some day teach. i know its not at all an easy task to make people listen to you especially if their hormones are raging and they're too busy noticing the opposite sex.

but yes, this is the first time i'm getting the hang of what a practical work environment looks like. and it seems completely off tangent to what i've been taught in many aspects. there are so many things that one can tell the learning generation to take care of, or to acknowledge so that they stand a better place in the job market.

and apart from that, there are certain notions that i would really like to clear them of. its necessary to make them realise that marketing is not just about big words like branding and advertising and all that. every single aspect in a product or service creation and delivery is a way of marketing your brand.

i remember my marketing classes during my under graduation were always filled with the mundane and long acknowledged examples. for examples related to luxury you immediately had mercedes and bmw names popping out, for cult followings you always had harley davidson and apple ipods as the most favorite examples, for any other normal question posed by the professor any damn FMCG brand would do just swell. that's how my marketing class ended (and we still thought that we did a pretty darn good job and learned a lot in it).

i really wish that i could make the students realise that there are a lot other brands, a lot many other marketing activities that might give a whole lot of learning than the regular mercedes and Lifebuoy. its not about bragging the fact that i know about brands that you've not even heard of; its about telling that there are products and services which are far more fascinating and technical than a regular FMCG brand.

HLL (or Unilever) has been a star recruiter at IIMs. No offence to the placement committee or the people who join the company, but clearly what they do is not marketing. because if you're trying to tell me that you make brands by letting it eat into your own market share of some other brand, that you make brands by making the holes of your toothpaste nozzle bigger, that you make brands by selling buckets free with your detergents, that you make brands by pushing inventory and pushing even more inventory to your stockist to sell, then honestly you're not really building a building. i mean as far as FMCG is concerned, today a time has come that the market has saturated. you cant make a person use more toothpaste than he previously was by more advertising. you cant make a person use more detergent more than what she previously used. the only way to expand market share is through geographical expansion. there might have been innumberable instances of IIM grads citing experiences of being sent to rural villages for the first 2 months after joining HLL or whatever. but bottomline, thats a sad place for getting to know what marketing is.

alright, enought badgering the FMCG giant.

but if i had the chance i would really like my students to explore about how to market cord blood banking... or i would ask them to study how to market a bottle like SIGG (hit google if you dont know.. but SIGG is probably one of the world's strongest water bottles. each bottle is made out of a single piece of alumnium metal. no welding, no riveting, no clamping of any sort. and one 500ml water bottle costs rs.1000)... or probably how to market an industrial good like motors or machine tools and things like that...

i would want to make them realise, that with websites like blogger, deviantart, istockpro, adobe's softwares, youtube, orkut and facebook, one has as much tools under his/her belt as a normal media powerhouse. i want to make them realise that if they really want, they can easily be a one man(or woman) company, if they know the right trades and techniques, that access to information has become easy that it has put everyone on the same platter, on the same level... you have as much information about the world and its happenings as much as the Prime Minister or the President would have. i would like to tell them that one can really prove his/her worth in this world if the person really has talent; that you dont need politics, or contacts to get to the top.

Today there are bloggers, in their late 30s or so, who are equally popular to the writing sphere as the contemporary people like Shobha De or Sashi Tharoor might be. There are people on youtube who've gained more fame by just uploading 20 videos of the songs they sung, than what Abhijeet Sawant could even imagine, and are far ahead than the ones who won/lost at Indian Idol and other such reality shows. today, most people think that the nearest advertising agency is the best possible solution for their media needs. little do they know that just a computer away at guru.com they'll have access to options far than they could even fathom and at rates which could put even the local ad agency to shame.

and even after such proliferation of information, such access to a wealth of knowledge, people simply overlook aspects that are right on their face, but fail to acknowledge it, or take it for granted.

an intruiging example would be the state transport of Gujarat. over the years i've been travelling in buses, and the upsruge of privately running buses have been increasing. but sadly the state transport which has the largest network under its belt is still incurring losses. why? we saw a turn-around in the railway sector, why not here?

or lets take something else. today cricket by itself is getting a make-over. Cricket is truly becoming the cricket it is supposed to become; where money is paid to cricketers to perform and not for their names. a cricketer is now finally being evaluated as a financial instrument; where he's judged on his Net Present Value, or the expected future returns over money put in right now. this means that any investor looking to invest in a cricketer would like to have a marketplace where he can have all the vital stats of all eligible investments (read cricketers). the first thing that struck to me was that this calls for a centralised data warehouse system which collects performance data of all the state run cricket associations. sure enough no investor would like to roam from state to state trying to hunt for a suitable investment. just a website that keeps a record of all the vital stats for all cricketers who play under the state banner or the national banner can be an ideal place for any investor to vsit. but i doubt if anyone thought of that.

there are similar such experiences that i've faced, and i've felt that all these anomalies that need to be expolited cant be done by me alone. and i need to make someone else realise that there are these many things and you can exploit them too. creaing value is a highly time consuming job. but if you can also help me out in making life simpler for everyone (and a little more richer for yourself) there's nothing wrong about it.

Oracle.! That ain't my job!

Disclaimer: people with no prior knowledge of Oracle (the ERP solutions software) might find this post equivalent to reading Hebrew or whatever!

It’s been a while since we’ve been haggling with the Oracle implementation in our firm. And the views of everyone around as well as myself are quite varied. But it would be fun to surmise all the feelings into one post.

As a background I’d like to note that we’re the only (read again: the only) organization to have implemented Oracle 12.x version of the ERP software. Now I don’t know how big a deal that is, but since I got a mail from the Central IT dept., I reckon its worth a note! Alright. Enough chit chat. Lets get to the whole analysis thingy.

One of the first things that strikes me, is that essentially any ERP solutions software is supposed to be built around a business model, so that it can enhance the efficiency of business and enable free flow of information and the usual yada yada. But more often than not, it so happens that the business unit starts molding itself around the ERP software. Job responsibilities change, work load shifts from one department to the other; and that inevitably leads to resistance. People who loathe excel sheets and their short comings would prefer sticking to the long list of rows and columns instead of getting the responsibility to enter additional data which either they didn’t use to handle earlier or is inaccessible to them.

And sadly when most Central IT Teams responsible for implementing Oracle announce the changes in the job profile, they’re badgered left and right. “Why should buying dept. define in what size of boxes will the final product be shipped? That’s the job of the Shipping Department!”… “Why should we go to the Finance people to create a Supplier? Isn’t Supplier maintenance a job of a Buyer?”

And the only answer that the IT team can give out is that ‘these are the best industry practices and that’s why we follow them’. Well according to me, what might be the best for the industry might not be the best for my organization! But who listens to me anyways.!

The second problem I see is the cold-war sort of situation between the Central IT team (who implements Oracle) and the other office users. The IT team, a bunch of enthu chaps that they are try to boost up people around by holding meetings and praising how Oracle will change their lives as well as the company’s.

This is one of the times I feel Change Management becomes so crucial. And the reason is simple. Shifting from one style of working to the other will always face resistance. Moreover, in the previous style of working, there always used to be a human being who could be held responsible for any goof-up. But here, if the system goofs-up sadly you cant just go to any desk and start blaming any person for not finishing his/her work.

On the other hand, Orcale does prevent the loss of important information. Call it intellectual property protection or something like that. But essentially what it means to say is that if tomorrow I stand up and say bye-bye to the company, it doesn’t mean that all the supplier level relationships in terms of pricing and other conditions also go out of the window. The new guy who comes in has complete access to the deals I struck and can exploit them for future references. Pretty dainty I would say.

Also, I think what Oracle would (hopefully) do best, is that it’ll give clean data, scrapped off all the anomalies across departments which will be updated faster and will be far more accurate than what it has been till now.

I’m just waiting for things to fall in place and Oracle to start pouring in data. Once that happens, people will immediately transform from self-interested midgets to strategic analysts and all that management enhanced jargons.

Project Shakti and ITC e-choupal

I’ve been wanting to write this since long but I haven’t been able to find a lot of proof about the facts that I’m to pen down right now…

During my graduation I did a rural market survey on FMCG products and stuff like that. It was more like a formality to be completed, but since my group was one excited lot, we went to somewhere close to a thousand different households and asked about their lifestyle and got questionnaires filled. It was like a weeklong trip to the insides of small villages where the population is not more than 2000.

In the process of getting questionnaires filled and going from one household to another, I became extremely interested in the rural markets, and the consumer behavior of these people. We used to travel in an SUV that we’d hired for a week. And the very fact that people used to start peeking out of their households when they saw an SUV coming gave us the feeling that their life was so rigidly and extremely simple, that even a car filled with 6 students is enough to generate curiosity amongst the village people.

Many thought that we were there to sell something, and before we opened our mouths they used to tell us, “nahi nahi… kuch nahi chahiye” and rushed to close their front doors. But we had to knock back and tell them that we are here to ask a few questions and not sell anything. And a response to that would usually be a question like… are you from the population survey? After getting all these issues sorted out, we would get down to making them answer the questions in the questionnaires.

And most often than not, if the questionnaire was being answered by the mother or father, they used to call their children to respond to the questions, especially for soaps and shampoos. This again was pretty fascinating since the toddlers popped brand names like crazy. They precisely knew which actress endorsed which brand and how it smelled and all that. Usually the mom would end up saying that she sometimes let the children handle which soap to buy and which shampoo to buy. Sure they had their preferences, but kids were the biggest lot who were open to trying new brands.

So the scene was something like, the elderly male usually remained aloof from all this decision making. Give him a Lifebuoy anyday and he’ll be happy. The elder female made decisions with regards to washing soaps and salt (in fact most women didn’t buy branded salt since they had this myth that since branded salt was whiter than the normal one, it had more harmful chemicals), and many a times, the kids made decisions on which soap to buy.

In fact at some houses there were 2 different soaps being used. The locally made soap was used by the elders and branded ones by the kids. But in all cases, kids were much more receptive to brands, and much better risk-takers than the rest.

Now, moving away from the questionnaire part, we went back and started hunting for previous research to support our research. In the process we came across ‘Project Shakti’ and ‘e-choupal’, two concepts headed by 2 of the biggest consumable marketers of India, HLL or Uniliver and ITC respectively.

But what was even more surprising was that out of all the districts that we went to in the ahmedabad vicinity, no-where did we find an instance of either Project Shakti or ITC’s e-choupal. Maybe because of the fact that we had taken convenience sampling. But I also remember that we used to take permission from every village’s Sarpanch before we went ahead and did our survey. And none of the Sarpanch’s also talked about these 2 initiatives while briefing us.

When I went for my post grad @ SP Jain Dubai | Singapore, I came across cases on ITC e-choupal, and Project Shakti on a frequent basis. CK Prahalad in his book, Fortune at the Bottom of the Pyramid also talked about ITC e-choupal, and I was pretty impressed about it.

I worked out some costings, and found that even though the installation cost for an e-choupal was considerably high, the returns it gave were able to recover the costs of the installation in just a year’s time. Just a year’s harvesting was all that was required to recover the costs. At that rate, I felt essentially ITC’s e-choupal should be running in full gear and must be getting implemented at various places simultaneously. But I never heard news about its progress. While it’s a pure success in the case studies, it really doesn’t seem to be the case in reality. I couldn’t confirm it completely. But even the supply chain professors who came to teach said that the situation has become more like ‘all fart and no shit’… which only leads us to the point that companies are probably not willing to commit to large amounts of money to an initiative like e-choupal. The technology and the infrastructure might be available, but trust between the corporations and BoP people still doesn’t seem to have been established to make e-choupal a success.

Same applies for Project Shakti. Unilever made a smart move to position Project Shakti as a CSR kinda initiative from the very beginning. So even if the project bombed, it wouldn’t be called as a failure. And the project did bomb. Thus, Project Shakti does still remain very much a CSR initiative.

Sad no?!

Herd Mentality

I read this post on Freakonomics blog that talked about the herd mentality when it came to boarding a bus… if you think about it people usually board the bus from the stop nearest to them. And its quite logical to use a bus stop that’s nearer to you. But when a lot of people start thinking the same, that bus stop becomes overcrowded. And somehow people still don’t realize that if they just go a few yards away to another bus stop that’s less crowded they have better chances of boarding a bus than they had earlier…

Something quite similar I experienced when I went to a mall beside my work place. The thing is this mall has nearby commercial offices. Thus, during lunch hours the food court and lavatories are the 2 places with long lines.

One day, instead of waiting in the line, I took the escalator to the next floor’s lavatory. It took me precisely 47 seconds to move up to floor 1 and find the men’s room there. And it was completely empty. Not a soul was there, and since no one used it, it was far cleaner than the one on the ground floor which probably was being rummaged by a lot of people at that time.

This is where herd mentality gets to you. Same goes for checkout counters in supermarkets. The checkout lines to the extreme end are more or less empty, while the checkout lines towards the middle are heavily crowded. Why? I mean, isn’t that common sense to move towards a line that’s not too crowded so that everyone can checkout faster!? Herd mentality again!

The World is Flat

Currently I'm undergoing a training on the Oracle E-business suite; a complete business ERP solution for enterprises and all that stuff. While the instructor was taking us through the process of item ordering and merchandise planning something just struck me...

The scene was like this... An Indian Company (Wipro) created a software on a platform developed in the US (Oracle) for a company in the Middle East (KOJ) which has employees from all across the world (India, Philippines, UAE, Lebanon, UK) and sources materials from countries like China, Taiwan, Italy, Germany, North Korea... another awesome testimony to the fact that the world is flat!

Make hay while the country messages

Throw your head a few months back… there was this ‘new 7 wonders of the world program’ that had hit the scene in India asking every single Indian citizen to vote for the Taj Mahal. Every galli ka kutta with the slightest iota of patriotism was asked to vote for his nation. Every single liner on the ‘motherland’ and ‘bhaarat maata’ was being hurled by the radio, news channels, and the likes. The media was in a rampage with all the TV channels giving consistent flashy ‘ticker ads’ to vote for the Taj Mahal literally begging us to save our ‘heritage’. All you had to do was to type in a message and send it to those 4 digit numbers so that even you could be a part of ‘making history’…

And thus began probably one of the biggest agglomerated marketing effort by the media houses of India. Now before I go ahead and make you realize how we were duped by the media houses and how we quite stupidly helped them make money while we satisfied our conscience by voting for the Taj, let me give you some background on some technicalities of the voting system.

Firstly, the voting system was majorly accepted through sms and an online voting system. There was unlimited number of votes that any person could cast. Thus scientifically the voting system is void completely. Also, the voting system has large dependencies on access to cell phone service or the internet. And lastly, the decision HAD to be skewed since every country doesn’t have the same population size. Surely you don’t expect Indians to vote for the Christ Redeemer in Brazil…! I mean this one is a no brainier… we’re the second largest population in the world; we had to win! Even if 1/10^th of the Indian population cast a vote it would be equivalent to the entire population of Brazil! And given the amount of cell phone proliferation that has happened in the recent times, I don’t think India was at a disadvantage by having a very low internet penetration. And lastly, the entire campaign of the new 7 wonders was a complete private initiative without any international organization backing. In fact, UNESCO issued a statement saying that they were not involved in any way in the ‘new 7 wonders’ campaign.

However, the media houses took this opportunity and turned it completely into a business opportunity. Here’s how. Every news channel has a dedicated sms number for all its services. For instance Star TV has its own private number, 7827. So when Star News urges to cast a vote for the Taj, it would give the number 7827. CNN-IBN might have its own, Zee News its own etc. etc… Each of these 4 digit numbers are provided by cellular service providers like Bharti-Airtel and BSNL to the media houses. So whenever you send a message to these 4-digit numbers you’re charged Rs.3 per message. Out of the 3 rupees, 1 rupee goes to the service provider and the remainder 2 rupees to the owner of the number (the media houses in this case).

Imagine a country with a population of more than 1.1 billion with a high cell phone penetration rate casting votes on these 4 digit numbers. Just think of the revenues the media houses might have raked in just by urging bumbling nitwits like us to cast votes using their numbers.

Was it really a question of preserving the ‘heritage’ and maintaining integrity and all that sentimental crap or was it a pure business opportunity? Your take…

Of potatoes and air conditioners

Everybody, or lets say almost everybody is loving the retail boom in India. I agree that its high time the retailers started giving a shopping experience that the mom and pop stores fail to provide.

And quite obviously one of the major attractions of the retail boom is the cost effectiveness being passed on to the customer. This holds true especially for daily household items and perishable goods like vegetables and regular grocery.

When it comes to the case of vegetables, Reliance Fresh is quite popular. And the fact that Reliance Fresh is more popular as compared to the other mandi fellows isn’t surprising. With air-conditioned environments and the likes it does become a favored place for people to shop for vegetables than the mandi with all its flies and cow-dung infested market space.

But someone tell me, is the core business proposition of Reliance Fresh – to sell fruits and vegetables (which however has been altered in recent times thanks to some unfortunate circumstances) a really profitable and more importantly a sustainable one? The basic problem with the service delivery is not the product, but the costs attached to it, and unlike in developed countries where these costs do not form a larger part of the expense-pie, it sadly does as far as India goes.

I mean, lets take an example of a Reliance Fresh store in Ahmedabad. An average Reliance store would have around 8 split air conditioners with 1.5 ton capacity. The commercial electricity rate for Ahmedabad is 4.85 rupees per unit. And assuming a typical reliance outlet operates for 12 hours a day, the total energy consumption of just 8 air-conditioners for 12 hours a day for a month comes to 3240 units = Rs.15,714 just for the air conditioning alone. The racks with cold storage which keeps the vegetables cool consumes almost twice or thrice as much as the power consumed by the A/Cs to keep the vegetables fresh, and thus twice or thrice as much increase in expenses. And we’ve still not taken the illumination and labour charges into account and not even the rent for the place which, by itself would also be equally high.

Now, spending almost a half a lakh on just illumination and cooling, plus an equitable sum on the rent for the place is quite a lot for just selling vegetables of which the largest selling commodities are tomatoes and potatoes which virtually have negligible margins. I do understand that there are some exotic SKUs like broccoli and things like that which give higher margins, but clearly it’s the potatoes and the tomatoes and other similar vegetables for which the customer comes to Reliance Fresh in the first place.

Lower margins and freaky expenses… it just doesn’t add up at least to me! And I still haven’t taken into account a lot of things… the supply chain expenses, the management fees, the cold storage expenses and most importantly the markdowns that happen everyday since vegetables are a perishable commodity.

I just don’t see where the money is coming… its just going out! If Reliance really wants to be in the market of vegetables for long, the current system at least doesn’t approve of it… can’t say about the future.

Your take…

Intuitive Data or something like it...

Market Research has always been condemned for being a field of Marketing that has dissuaded the marketing managers from making a proper decision. Even while in my MBA the fellow who came to teach us Marketing Research spent a larger part of his time trying to convince the students that ‘proper’ Market Research does give ‘proper’ results.

However, experience shows that in most cases people either don’t know to ask the ‘proper’ questions or they just aren’t able to interpret the same properly. There are more examples of Market Research proving a failure than an astounding success. And perhaps the most popular of the Market Research blunders being the ‘Coca Cola’ research fallout where they decided to change the formulation and all, and then realized that it was utter stupidity and stuff like that.

And today, when Market Research is already been taken as something like a black sheep in the family, the entire field of study is losing out of options. Data through internet surveys was the next in-thing that people thought would probably enable the researchers to get more accurate data; but it still didn’t just deliver as much as it was expected.

However today what’s happening is that people themselves are giving out data on Facebook, Orkut and other sites… Researchers are now plundering data out of these places to get material for their research objectives.

And while whiling away my time in the office I came up with something even more astounding which could probably blow away the ‘Billboard Hot 100’ music listing. The Billboard Hot 100 Music listing generates the top 100 albums based on album sales and airplay (on radio stations). But isn’t it a matter of fact that people are now largely listening to MP3 on their computers and not buying albums? Also the Hot 100 artist listings are generally based on sales in the US and UK. What about the international audience?

Then how come Billboard Hot 100 still remains a benchmark to assess an artist’s success? Also, the BB Hot 100’s longevity is based on weekly sales, and not beyond that. Somehow people just seem to override or rather overlook these shortcomings of the BB Hot 100 Listings.

This is where Google Music Trends come into the picture. Google Talk has the functionality to capture the information related to the music the computer user is playing at that point of time and then upload it to the Google database. This sort of data collection happens on an international level since it captures information about all the users using Google Talk, it happens over a period of more than a year, thus assessing an artist’s longevity too as far as the album’s popularity is concerned, and gives a data that is amazingly different from what the BB Hot 100 has to say…

Check the links of the BB Hot 100 and Google Music Trends and compare the data… there’s a sea change of difference!

Now which one to believe is your choice.

There and back again

Back to Malludom. The land of the brown and the crazy, where people drive Bajaj Pulsars as pizza delivery vehicles and where the roads can change directions overnight… Dubai!

To be honest it’s quite fascinating to see how things have been evolving in this city. I came here 6 months back, and still a lotta things look new to me. But even more than that has been the changes in my living, my lifestyle.

6 months back, I had all the facilities given to me. Food, shelter and transport. But now, all these things are to be managed on my own. But most importantly the matter of fact is I’ve never felt so lonely in my life till now. I thought it would be easier to settle in since I know the place around. But frankly it doesn’t seem to be happening here. There are a lot of things which need to be done, and I seriously wish I had someone around me.

It’s not really a time of distress or dire straits. But perhaps it is now that I’m living the experience of ‘really’ living away from home and abroad. Maybe while I was in the MBA, everything was kinda given. People around me were Indian, the food, the shelter… all these things were given to me. I really didn’t have to worry about things. Here, that’s not the case. Right from finding a decent and affordable place to live in, to getting the bank accounts in order, and perhaps the most daunting task of all… to find a good and ‘sustainable’ mode of transportation which is ‘economical’ too.

I’ve been asked to eat properly and stuff like that. But seriously, you don’t even feel like eating here when you are alone. I think it’s a matter of time before things might settle in, and I really wish that is the case.

Until that time, I’ll be smelling perfumes and applying glitzy powder on my arm and stuff like that… ;-)