October 31, 2006

Why employees are less committed

Source : www.economictimes.com
Dated : 31/10/2006

"Why should I work more than what the company pays me for?" You must have heard this comment in your workplace. Even my friend cribs, "When the company doesn't recognise our work and doesn't acknowledge it monetarily, then, why should I work beyond its expectations?"

Increasingly, such an attitude appears to be the new gospel at workplaces and ought to be recognised as a trend that is haunting most employers.

"Most of us work and wait for month-end salary because we are recruited and paid for that. It's a give and take relationship we share with the company and there is no emotional bonding."

"So if company treats us well, then we will work up to its satisfaction. And if it plays dirty games, then it cannot expect us to treat it fair." Such was the reaction of an employee working in a leading PSU firm in Mumbai when ET.com asked why most employees are not committed to their companies.

There are many employees who think this way and the attitude is growing fast not only in Indian companies but abroad too. An employee loyalty study released by London-based research firm Taylor Nelson Sofres (TNS) reveals that a majority of US workers admit to having a low level of commitment to the job they do and the company they work for. The study also unveils that even satisfied employees are not necessarily hard working or committed to a company's bottom-line performance. As a result, we get to see organisations battling for workforce share, just as they battle for market share.

Nevertheless, the level of commitment varies from an employee to employee. Dinesh K Vohra, author of 'Success in just 6 steps away' says, "Employers also need to understand that the level of employee involvement and commitment will not be uniform for all times. There would be phases when a number of employees will feel low and it will impact their productivity, but that is natural. They will also commit silly mistakes, but the leadership has to be considerate towards them if they are honest in acknowledgement and are willing to mend. Even machines do not perform with 100 percent efficiency all the time. "

Employees need a caring leadership and work atmosphere to perform their best. High achievers are always groomed through a congenial work atmosphere and motivational leadership.

Employer Vs. employees Vs. bosses

Employees consider the employer as the boss. But the organisational structure has many bosses at every level. Nalini Srivatsav, a working professional from Bangalore talks about her dilemmas: "Although I want to work for my company but the bosses who are also part of the same system do not allow me to be. I am unable to work due to lack of co-ordination and understanding by my immediate seniors and boss. Just based on this, can an employee's commitment be questioned?"

This kind of vulnerability has to be accounted for in an organisation. The level of commitment also depends upon on the leadership of each boss in the hierarchy. It's not true that satisfied employees are committed and non-committed employees are unreliable to a company.

Fortune 500 companies have significantly higher levels of employee commitment. Workers at these companies give management higher ratings on issues of business ethics, innovation and competitiveness. The TNS study which surveyed 20,000 workers across 33 countries exposes the level of commitment in employees globally. It classified employees as 'ambassadors', 'company oriented', 'career-oriented' and 'disengaged' to measure the level of their commitment.

The survey revealed that globally there are 44 per cent of ambassadors (the most committed - those who are fully committed to the company and to their work.), 8 per cent of company-oriented workers (the next most committed group, which includes those who are fully committed to their company - more so than their work and career.), 14 per cent of career-oriented (includes those who are more interested in furthering their career and their needs over the needs of the company) and 35 per cent of disengaged (the employee segment that no company wants, but has in abundance. They are neither committed to their company nor to their career.)

While not everyone can or will become an ambassador, it appears from TNS study that enhancing those factors that drive ambassador commitment would increase the commitment of all other segments. Commitment is a two-way process and one must go the extra mile to create and maintain it. Do not forget the fundamental fact that commitment, trust and empowerment go hand-in-hand. It is probably the only way to achieve true corporate excellence.


October 12, 2006

It is ESO (Education Services Outsourcing) now!!!

Source : www.economictimes.com
Dated : 11/10/2006

For thousands of teachers here, tuitions have become a dollar spinner, thanks to the growing demand for online tuitorials from USA, UK and Europe. According to an online tuitorial site, nearly 100,000 teachers from India and Pakistan were expected to set up their own internet businesses during September-October, the time when the new academic session begins in America, to teach students there.

"Educational Services Outsourcing (ESO) definitely seems to be the next 'in-thing. Education is a growing sector and the demand for Indian educators is on the rise," says Kiran Karnik, President, NASSCOM. "Indian educators are respected globally and held in high esteem. We must capitalise on this opportunity," he says. "ESO market is estimated to be USD eight billion dollars and Indian teachers are currently offering services to countries like US, UK , Canada , and the Middle East," says Shantanu Parkash of Educomp, an e-learning major.
"School tuitions is the main sector for Indian teachers as in higher education, accreditation with the American Education Council is compulsory. It is just the beginning of ESO and many small players have entered into the field," says Nicholas George, Vice President, NIIT. There is very high demand for tuitions in maths, science and English.

Though the main demand is from USA, newer markets of Netherlands and Europe too are fast opening up for Indian teachers, says George.

Low cost of tuitions and very good teaching skills of Indian teachers is what attracts American students and parents to them, says George. Thus when the rest of the India sleeps, many postgraduate teachers sit wide awake before their PCs, giving interactive online tuitions to children seated before similar computer modules, continents apart in the USA.

A number of online sites have come up where teachers can register, stating their expertise in a particular subject. The sites sub-contract work from SES (Supplemental Education Services) in the US. Schools unable to improve student performance are falling back on tuitions for help.

There are over 75 such tuition centres across the US. Called SES providers, they charge students up to $40 an hour to take classes. Wire the work to India over broadband links and it can be done for half the cost.

However, there are some Indian educational technology companies which have directly approached the schools in the US, he says. The Education Market Research of US estimates the K-12 market size at USD 2 billion annually. K-12 is the North American designation for primary and secondary education.

The infrastructure for EPO includes broadband connectivity and a workstation with a whiteboard that replaces the traditional blackboard. The student and teacher can speak to each other continuously using a hands-free headset, much like talking on a telephone.

The student and teacher also write questions and answers on the same workspace displayed on both the student's and teacher's computer screens using a digital pencil (like a stylus) and a digital writing pad (that's the whiteboard, similar to a mouse pad).

The trick lies in training the teachers to handle American students. Most companies in India put them through a training programme. The focus is on attitude - training teachers to teach students online in real time, solve problems in US books, engage in group meetings and understand common mistakes that the students make, which is followed by voice and accent training.

The online tutorial interaction uses both voice and data. Exercises are done on electronic notebooks which are available at both ends. "Indian teachers are doing a very good job and the students and their parents are also satisfied with their high standards of teaching," says Anju Agrawal, who takes maths tuitorials for American students from here.

Market for high quality digital content for all subjects (mapped to the learning standards of the particular country) will see huge demand and consequent growth. Online tutoring for all subjects(beyond Math and Science) will also pick up, notes Parkash.


October 10, 2006

Mobile phones invade the blog space!!!

Source : www.economictimes.com
Dated : 10/10/2006

This will surely be music to bloggers’ ears. Imagine using your mobile to post a blog entry from the lawns of Taj Mahal or a snap from the crescent beaches of Kovalam. Sharing your thoughts and pictures with the world is set to become instantaneous, with telecom operators in India planning to roll out mobile blogging, or moblogging services.

Blogging allows people to share images, videos and their thoughts with a group of friends or with everyone on the net using the world wide web. A mobile weblog refers to content posted to the Internet from a mobile phone or PDA. Reliance Communications (RCL) is set to be the first operator to host a blogging site in India.

“Our subscribers, who have MMS and video capability, will be able to send blog entries using mobile telephones. In case of other phones, only text blogging is possible,” Mahesh Prasad, president — Reliance World, told ET.

RCL has partnered with the Hyderabad-based mobile content provider IMI Mobile for moblogging. RCL will charge Rs 5 per MMS/SMS for posting a blog. Users will have to MMS picture or video to 1234 with the keyword ‘mblog’ and they will be automatically registered on mblog. A return SMS specifies the user’s password and the website URL for her blog.

“Bloggers can have a ‘buddy list’ specified from the phonebook, which can include both Reliance and non-Reliance subscribers so that everytime a blog is posted, they get an SMS alert informing them to check out the specified URL,” he explained.

To view the blog, one has to visit www.relianceinfo.com/mblog and key in their password. “The community of bloggers is growing. We want to ensure that pictures taken on mobiles are not left just in the phone. They can be shared through moblogging,” said Mr Prasad. Over 8m of RCL’s nearly 25m users access Reliance Mobile. “We are optimistic that a large chunk of these customers will use our blogging services,” he added.

Meanwhile, Greg Young, the CTO of Tata Teleservices (TTSL) said, “While we do not provide a hosted blogging site, with an appropriate handset our customers can access the internet and update their blogspots using the superior data capabilities provided by the CDMA technology.”

The same is true of Hutchison Essar, whose subscribers are using the mobile to make blog entries. TTSL, however, remains bullish on moblogging. “We recognise the exponential growth of the blogging community and emerging internet and 3G services. We look forward to bringing to customers innovative services following the completion of the policy on 3G spectrum and our deployment of this new technology,” Mr Young added.

Idea Cellular is offering moblogging through www.mygamma.com, a mobile networking community. Idea users can log on to this website and upload their pictures and messages and share ringtones. The service can be subscribed to for Rs 10 for a week or Rs 25 for two weeks (with online points). The company receives around 3,000 renewals every month for this service.

As of now, telcos in India are not looking at moblogging as large revenue generators. “It is being offered as a service required by the fast growing bloggers community,” Mr Prasad said.


Google finally buys YouTube in $1.65-bn deal

Source : www.reuters.com
Dated : 10/10/2006

Google bought hot young video-sharing website YouTube on Monday in a $1.65-billion stock deal that the companies proclaimed was a natural for the evolving Internet.

The acquisition married Google's online search prowess with a video-sharing website renowned for devotees but not revenues. "With Google's technology and search leadership we will have the resources to take our services to the next level," YouTube co-founder Steven Chen said during a telephone press conference with Google executives.

"We believe this is just the beginning." YouTube soared to online popularity after its launch in February 2005. The company claims that more than 100 million videos are watched daily by visitors to the free website, which features content ranging from silly home videos to snippets of Hollywood films, television shows and concerts.

Google said that it was drawn to YouTube because it was the clear market leader and had put together a "remarkable team" in a short time.

"We think one of the keys to comprehensive search experience will be video," said Google co-founder Sergey Brin. "On the whole it is hard for me to imagine a better fit with another company. YouTube really reminds me of Google just a few short years ago."

Google's stock price rose slightly to $431.75 a share in trading that followed the announcement of the deal, which came after the close of the financial markets in New York.

"It will be interesting to see what happens next and what happens in the copyright world," outspoken billionaire investor Mark Cuban wrote in a fresh weblog entry titled "I still think Google is crazy."

"I still think Google lawyers will be a busy, busy bunch." Cuban has referred publicly to YouTube as a lawsuit magnet because users freely upload digitized videos, television shows and other copyrighted material.

The blockbuster deal was announced on the same day that Google and YouTube unveiled agreements with major studios to post copyrighted music videos online.

The agreements were seen as efforts to pre-empt accusations of rampant copyright infringement at the online video-sharing sites and enlist studios as potential beneficiaries of the trend.

The pacts will rely on advertising to generate revenues by encouraging users to click on companies' links alongside the videos. YouTube was putting new systems in place to "fingerprint" copyrighted material so it could be tracked, said YouTube co-founder Chad Hurley.

Google and YouTube engineers already have dozens of ideas for handling ads, searches and videos, according to Google chief executive Eric Schmidt. "Most people believe that this is just the beginning of a video Internet revolution," Schmidt said. "I think there is a whole new ecosystem and we are expecting to be a part of it."

"Our community has played a vital role in changing the way that people consume media, creating a new clip culture," Hurley said. YouTube will continue to operate independently with its headquarters in San Bruno, California, after the acquisition is complete, according to Google.

In Silicon Valley tradition, YouTube was launched on its meteoric rise from a garage. In its first foray seeking external funds, the company raised $3.5 million from Sequoia Capital in November 2005. In the newest deal, though, Google will pay for YouTube with shares of its own high-flying stock.

By purchasing YouTube, Google would be able to apply its proven prowess for generating revenue through online advertising. YouTube meanwhile will provide Google traction in the online video-sharing market, where Google's own video service has failed to take off.

"This is the next step in the evolution of the Internet," Schmidt said. "It is a natural next step." The deal is expected to be culminated by year-end provided it clears regulatory requirements.

Meanwhile, Google Video "will not go away now, or ever," Schmidt said.


October 8, 2006

Microsoft releases final test version of Vista

Source : www.reuters.com

SEATTLE - Microsoft Corp. (MSFT.O: Quote, Profile, Research) released on Friday the final test version of its upcoming Windows operating system and said the launch for the highly-anticipated upgrade is running on schedule.

Incorporating feedback from earlier test releases, the world's largest software maker said it distributed Windows Vista Release Candidate 2, or RC2, for its testers to try.

"Microsoft expects the RC2 build to be the last interim release before the product is released to manufacturing," the company said.

Earlier this week, Goldman Sachs analyst Rick Sherlund said Microsoft will most likely ship Vista on time and distribute RC2 this week or next week, indicating that the Windows upgrade will be available for business customers in November and retail PCs by late January.

Microsoft said it continues to target that schedule for Vista, but said the final delivery date will depend on the product's quality.

Windows Vista, already five years in the making, has been postponed by Microsoft several times and some industry analysts have speculated that the world's largest software maker will again be forced to push back its release dates.

Microsoft Windows sits on more than 90 percent of the world's personal computers and the Windows business accounts for about 30 percent of the company's $44 billion in revenue.


Google eyes Web video site YouTube

Source : www.reuters.com

San Francisco: Web search leader Google Inc is in talks to buy YouTube Inc, the world's leading Web site for video entertainment, for close to $1.6 billion, the Wall Street Journal reported on Friday, citing a person familiar with the matter.

According to the newspaper, the talks are at a sensitive stage and could break off. YouTube declined comment on the report. Google representatives could not immediately be reached.

YouTube was founded in February 2005 as one of dozens of Internet video start-ups.

It has exploded in popularity since last November by letting users share short video clips – both home videos and programming copied off television.

Rumors of a Google-YouTube deal appeared on Thursday on the TechCrunch blog of Web start-up powerbroker Michael Arrington, who said such talk was circulating among Silicon Valley venture capitalists after months of speculation that YouTube was an acquisition target.

"YouTube is the hottest property on the Web, one that could be worth much more than $1.6 billion if monetized properly," said RBC analyst Jordan Rohan, adding he had no information on whether YouTube would be acquired. His calculation is based on combining YouTube's audience and Google's advertising prowess.

For Google, the acquisition of YouTube would thrust the Web search leader quickly into the emerging market for video advertising, where it has only a tiny foothold compared with Yahoo Inc and various Web start-ups, Rohan said.

"Essentially Google can give less than 2 percent of its market cap and keep this platform out of the hands of everyone from Yahoo to Microsoft to Viacom," said Rohan.

"There is something to be said for that old playground game of 'keep-away,'" he said. "Defense here matters."

YouTube has asked for about $1.5 billion during talks with potential suitors in recent weeks, sources familiar with the matter told Reuters. Google shares rose $8.69, or 2.1 percent, to close at $420.50 on the Nasdaq on Friday.

MTV owner Viacom, still hurting after News Corp elbowed it aside last year to acquire top social networking site MySpace.com, recently dodged questions on whether it had courted YouTube – another of the most popular Web destinations for young people.

"It's a very good company," Viacom Chairman Sumner Redstone said in a TV interview with Charlie Rose on Wednesday.

YouTube reports serving about 100 million videos daily and has drawn scrutiny from major media companies for copyrighted material appearing on its pages without their consent.

YouTube commands a 47 per cent share of the online video search market as of September 30, compared with 22 percent for the MySpace video site and 11 percent for Google Video, according to Internet measurement firm HitWise Inc.

The site serves about 32 million visitors monthly and has about $11.5 million in venture capital financing from Sequoia Capital. A Sequoia spokesman was not available to comment.

Google has previously preempted rivals from striking deals that could threaten its dominance in key Web segments.

In December, Google agreed to pay $1 billion for a 5 per cent stake in Time Warner Inc's AOL unit in a deal that expanded their advertising partnership.

Mark Cuban, an Internet investor and the outspoken owner of the Dallas Mavericks basketball team, told the Online News Association in Washington, DC, that Google would be "crazy" to do a deal because of the legal challenges YouTube faces.

To control rampant copyright infringement on YouTube, Google would be forced to monitor what videos users upload to the site.

"Once you have to start monitoring, the whole business changes," Cuban said of the risk to Google.

Cuban sold his pioneering Web radio company Broadcast.com for $5.7 billion to Yahoo at the dot-com era's height in 1999.


Is it Zuner than later for the iPod?

Source : www.economictimes.com
Dated : 08/10/2006

(I am definitely waiting for the Microsoft ZUNE to hit the markets and to see how much would it affect the martket cap of the giant Apple IPOD.)

Microsoft recently declared that by this Christmas break it was going to come out with a new Zune+Tunes challenge for the present sleek and eye-catching long distance runner — Apple’s iPod and its software sister in iTunes.

So, what is Zune+Tunes? How is the “Zune effect” different from the iPod and iTunes and what is Microsoft’s “Zune challenge” all about in terms of competing with the present ring king in iPod? The present article on how technology changes life tries to capture the essence behind the challenge and provides an answer to the questions posed above.

What is Zune + Tunes?

Zune (as Microsoft calls it), is the name of a new MP3 player that the company plans to launch this winters which in many ways would be very similar to present ruling king i.e. the Apple’s iPod. With 30 Gigs of memory, close to a 3-inch screen, an FM tuner and in colors of white, black and brown, the Zune would be very close to the “look and feel” and accompanying functionality that is currently provided by the conventional big iPod (but which is still far in sleekness when compared with the iPod’s Nano version!).

Like Apple’s “iTunes” (which is a piece of software installed on the computers that make them speak to the hardware in the iPod), Microsoft’s Zune would also come out with its sister, free to download software for the windows PC and laptop computer users. I refer to this sister software, here in this article, as “+ Tunes”. The all-popular “Windows giant” has paired up with the Japanese brand in Toshiba, to manufacture Zune for its music fans.

How is IT different from the iPod and iTunes?

The Zune, as it appears, is going to be a “social machine” in the present Pod world of music for most of its fans. This does not mean that the soon-to-be-out Zune is going to be the first social music machine, as the iPod in its present form has already caused a social music revolution and today captures 75% of the MP3 music player industry in use and popularity.

When I call Zune a social machine, I am referring to the wireless music sharing feature that the new MP3 player promises to bring first time to the MP3 player market. The Zune’s wireless feature would enable a number of similar Zune devices to connect to each other using the wireless communication mode, where a person using a Zune would be able to listen to music and browse photos and videos stored on another distant Zunes, as if these were stored on his own.

To avoid the loud uproar this “widespread sharing of music” would bring from the music record companies, Microsoft plans to go for a “3-controlled sharing”of media. This means that the a Zune user would be able to listen to a piece of music (like a song) stored on other Zunes, only three times or for three days, which ever happens to be the first (and soon after the distant song, which the Zune user was listening to, automatically disappears from his Zune!).

But all this “wireless on Zune”, would mean more battery consumption (either making the Zune heavier with more batteries to support the wireless cause or the Zune providing a lesser battery run time, when compared to the iPod).

Most probably, the wireless would also come at a price and may not be the best means of sharing music for the cable familiar Indian music fans. The king Pod for many reasons at present, does not provide this wireless feature but still continues to holds a popularity among the avid music fans.

Another point to be noted in the Zune is that the 3-inch screen which would mostly cover 2/3rds of the front face area (which is definitely much bigger than what the present video iPod offers), not only makes Zune’s track-wheel much smaller but also make the device a costlier proposition when compared with the present iPod. Whether, Microsoft will be ready to sell a bigger screen at the same price as the iPod (and hence going in for an initial loss) is something to watch out for!

What is Zune’s challenge to the king Pod?

With similar features and size to the iPod and an additional wireless experience, what is in it for king Pod’s future popularity in the light of Zune’s winter release? Will Zune tunes turn iPod users from iTunes to Microsoft’s “+Tunes”? The questions reflect the interesting soon-to-happen challenge between the two competing companies in the IT industry today, where the competition, this time, is not between the Mac and the PC but in the music domain. Here Apple already holds a majority share with its iPod and Microsoft is going to be a new bee.

Although Indian music fans should themselves decide as to which would prove better for them, in my opinion Microsoft’s Zune would not be instantly popular device in the hands of present iPod users. The first users that the “Zune effect” is going to captures, for sure, would be the ones who still haven’t tasted the “iPod effect” and who continue to use non-iPod MP3 devices in the Pod world today!


October 6, 2006

Young techies quit to follow heart!!!

Source : www.economictimes.com
Dated : 06/10/2006

Big money and bigger perks notwithstanding, the IT/ITeS sector continues to be plagued with high employee burnout. While top executives taking a break at the height of their careers is not unheard of, young techies calling it quits to follow their heart and venture into different business streams is a recent trend. A case in point is IT professionals and management graduates Pallavi Gupta and Gaurav Jain who quit their cushy jobs at TCS and Wipro to start their own restaurant. Another techie with an ear for music put up his feet to turn his passion into a full-time interest.

When business and now life partners Gupta and Jain bid goodbye to IT two years ago, the idea seemed far-fetched. Compared to IT, food was considered a grungy business. The couple had no idea how to go about in the competitive, service-oriented business.

“We were clear about one thing — we wanted to be entrepreneurs as our energies were not being channelised optimally in the regular jobs,” says Gupta, director, Spring Leaf Retail. Their inclination towards a “challenging, upcoming sector where they could directly interact with customers” led them to zero on to the food business and Mast Kalandar, a restaurant chain specialising in North Indian cuisine, was born. Started in April 2005, Mast Kalandar has four outlets in Bangalore.

After spending nine years at Oracle, US, software architect Anand Adkoli decided it was about time to do his own thing. With friend Ramana Gogula, Mr Adkoli co-founded Liqwid Krystal in 1999. A Bangalore-based entity, it focuses on products and solutions for e-learning . Its CodeSaw platform is used by publishers and e-learning companies in the US and offers over 20,000 courses and 5,000 e-books .

“Most students start learning software programming from books, but the transition from books to the keyboard is never smooth. The idea behind Liqwid Krystal was to make this education more interactive,” says Adkoli. Gogula, who worked with Sybase, US, before co-founding Liqwid Krystal, has since moved on and is a full-time Hyderabad-based music director. If education and training were a priority for Mr Adkoli & Mr Gogula, alternate energy solutions found favour with Shiv Senthilvel.

After putting in 15 years in the software industry , including stints at HP and HCL, Senthilvel launched Alternate Lighting to offer turnkey solutions in alternate energy and market low-energy portable lighting products. “First, the Indian software industry wasn’t servicing the Indian market . That rankles after a while in spite of the lucrative salary. Second, I realised the importance of decentralised power generation. The way we use our resources today , there isn’t going to be anything left for the next generation,” says Senthilvel.


October 3, 2006

Brands Battle!!!

Source : http://www.business-standard.com
Dated : 03/10/2006

Here's how entrenched players tackle newer, low-priced competitors.

Think value brands and Nirma springs to mind almost immediately. The Ahmedabad-based detergent brand’s growth from a minuscule, one-man operation to a Rs 2,500-crore company that employs 14,000 people is the stuff of case studies. In many ways, Nirma was India’s original value brand — low cost, low price and good quality.

Now, of course, there are several examples and that too, across categories. And in almost every instance, incumbent players have emerged bruised, if not battered, by the entry of the value brand.

Consider Air Deccan. India’s first low-cost airline launched operations in 2003 by offering tickets for Re 1. Its most expensive ticket was still cheaper than the national carrier Indian Airlines (now Indian) and Jet Airways. Three years on, Air Deccan has a 21.2 per cent market share, pushing Indian to third place.

Then there’s Gold Winner. The refined sunflower oil brand was launched in 1995 by Chennai-based Kaleesuwari Refinery. When other brands such as Sundrop were selling at Rs 40 a litre, Gold Winner was a price warrior, offering three litres for Rs 100.

In the past seven or eight years, volumes have trebled and Gold Winner is now the leading sunflower oil brand, with a 24 per cent share of the Rs 2,000-crore mass packaged sunflower oil market.

How do value brands grow? Typically, value brands don’t carve out spaces for themselves; they fill existing gaps in the market. Once a value brand identifies a slot, it claims it on the price platform.

By adopting a low-cost business model, offering higher margins to retailers and growing volumes, value brands are able to offer lower prices than the existing players in the market.

Says Chris Outram, chairman, OC &C Strategy Consultants, “Behind a value brand is a business design to give a good quality product at a low price. They don’t come and go. We have seen them become leaders in more than one market.”

Where does that leave the incumbent players? Running for cover? Not really. They usually have strategies of their own. Here are a few.

Offence is the best defence
Value brands fill spaces that exist within the market. The best way to keep them out is by filling those cracks yourself: cover new need gaps as they emerge.

Tata Motors is a case in point. In 2000, losses at Telco (as the company was called until 2003) had crossed Rs 500 crore and market share had dipped in both light and heavy vehicles.

Based on the realisation that the company’s product-centric strategies were probably at fault, Telco initiated a study among customers to discover what they wanted.

“Traditionally, we took a product to the customer and asked for suggestions. This time we went to 5,000 customers without a product, to understand their requirements,” says Shyam Mani, vice president, sales and marketing, Tata Motors.

The findings were startling. There was no vehicle in the market that fit between the Rs 1.8-lakh three-wheelers (capacity: 700 kg) and four-wheelers like Telco’s 207 DI (1.1 tonne, Rs 4.2 lakh) and 407 (3.2 tonne, Rs 5 lakh).

Customers wanted a vehicle that fulfilled three important criteria: higher levels of safety than the average three-wheeler, comfort and lower operation costs than most four-wheelers.

Based on that research, last year Tata Motors launched the Tata Ace (750 kg, Rs 2.5 lakh). Tata sold 29,000 units of the Ace last year and expects to sell 65,000 this year. “We now look at what gaps the customer sees. Then we reconstruct and fill these gaps,” says Mani.

Meanwhile, another blue-chip company is filling the gap between the Ace and the 207. Last month, Mahindra & Mahindra launched the Maxx Maxi, a 900-kg, four-wheel truck priced at Rs 3.5 lakh, to compete in the same segment.

“It will be the vehicle of choice for three-wheeler and small four-wheeler owners who want to upgrade,” says Mahesh Kulkarni, deputy general manager, marketing, M & M automotive sector.

What’s even better than filling new gaps as they emerge? Filling them before they appear. Consider cigarette major ITC, which ensures it is present across price points.

At Rs 3.5-4 for a stick, Wills Classic Milds and Insignia compete with premium brands like Philip Morris’s Marlboro Lights and Indonesian clove cigarette brand Gudang Garam.

In the economy segment, Gold Flake and Wills Navy Cut sell for Rs 2-3 a stick, while Bristol and Capstan (Rs 1.4 a stick) fight it out with Godfrey Philips’ Four Square and Red & White.

Doesn’t leave much room for a value brand, does it? “We look at all our business from a portfolio window and deploy different brands in different price segments to meet varying needs of consumers,” agrees Syed Mahmood Ahmad, executive vice president, marketing, ITC.

A healthy distance
Moving up the value chain could help in deflecting competition from value brands. If your brand appeals to premium customers, it may be worthwhile to withdraw attention from the mass-market and instead focus on your upscale audience.

“It’s not a question of lower price points. It’s about defining a very clear territory or a tangible value and communicating the same to your consumers,” points out Kiran Khalap, co-founder of brand consultancy chlorophyll.

That’s what Kwality Walls did. Sales of Hindustan Lever’s ice cream division plummeted from Rs 171 crore in 1999 to Rs 89 crore in 2004. A key reason for the meltdown was the 2002 entry of Amul into the ice cream industry. Amul laun-ched on the value-for-money platform, with prices substantially lower than Walls’.

Consumers lapped it up and Amul is now the leader with 34 per cent of the market (volumes), while Walls is down to a meagre 6 per cent.

Walls did react to the Amul launch, though. It changed focus to concentrate on only the top six metros.

Changes in the product portfolio also underlined the urban emphasis: Vienetta, a premium vanilla ice cream, Double Sundae, Vienetta Capuccino Nut, Super Cornetto triple chocolate and Feast Almond Fudge were clearly aimed at the affluent, urban consumer.

In 2004, Walls extended its distribution to the top 16 cities and sales grew to Rs 98.15 crore the following year. Amul’s stranglehold on the market continues, but Walls’ change in positioning from mass to class is clearly bringing in results, albeit slowly.

Says a Hindustan Lever spokesman, “This strategy has been hugely successful for us and is evident in our growth in the past six quarters.”

Sometimes, premium bran-ds see the growth of value brands in related product categories as early warning signals, and react accordingly.

Marico’s blended oil brand Saffola is a case in point. Launched in the 1960s, the brand chugged along reasonably well for close to 30 years. Around the time Gold Winner was making its presence felt in the mass segment with its sunflower oil, the premium refined oils segment was taking a hit.

Nevertheless, Saffola continued and extended its premium positioning to the wellness platform: now it was the good-for-the-heart oil. Meanwhile, it restricted its presence to the top 20 cities.

“This way, we can run specialised ad campaigns that speak to our target audience,” points out Saugata Gupta, chief marketing officer, Marico. The shift in positioning has helped Saffola launch brand extensions and also grow at 21 per cent in the past five years.

If you can’t beat ’em, buy ’em
Finally, if nothing else works, analysts believe it makes perfect sense to acquire value-for-money brands. Of course, there’s a caveat: study the value brand’s business model and ensure you can leverage the same cost advantage once it is part of your stable.

In March 2006, when Hindustan Lever put its hair oil brand Nihar on the block, Marico paid Rs 216 crore for it. Hindustan Lever had acquired Nihar as part of its 1993 acquisition of Tata Oil Mills.

Under Hindustan Lever, Nihar continued to promote its value-for-money promise, but with little success. Marketshare dipped to 7 per cent in 2005, and Nihar was shown the door.

For Marico, the acquisition made immense sense. In one stroke, it was removing competition for Parachute, its premium hair oil brand, and also improving its presence in the eastern markets, where Nihar was popular.

Nihar will be a flanker brand for Parachute, even though it’s now down to a low 6.2 per cent market share of the Rs 800-crore market. It allows Marico to cater to a new consumer segment.

As Gupta says, “More than anything else, the move was beneficial because it enabled us to prevent any other brand from getting into that space.”


October 1, 2006

IBM to recall 5 lakh laptop batteries

Source : www.ibnlive.com
Dated : 01/10/2006

Washington: IBM Corp is recalling 526,000 laptop batteries worldwide made by Sony Corp, the latest in a series of problems with Sony batteries, the Consumer Product Safety Commission said on Friday.

IBM and the batteries' distributor, Lenovo Inc. of Research Triangle Park, North Carolina, were seeking the voluntary recall of the rechargeable, lithium-ion batteries used in ThinkPad notebook computers because they may pose a fire hazard.

About 168,500 of them were sold in the US, while the rest were distributed worldwide, the CPSC said.

It was the fourth recall in recent months involving Sony batteries believed to be defective.

In August, Dell asked customers to return 4.1 million faulty laptop batteries and Apple recalled 1.8 million batteries worldwide, warning they could catch fire.

Last week, Toshiba said it was recalling 340,000 laptop batteries due to a problem that caused the laptops to sometimes run out of power.

In the latest recall, Lenovo cited a potential risk following one confirmed report of a Sony battery overheating and causing a fire that damaged the notebook computer.

The fire, which occurred in an airport terminal as the user was boarding a plane, caused enough smoke that a fire extinguisher was needed to put it out.

There was minor property damage and no injuries were reported.

Spokeswoman for CPS, Julie Vallese, said the overheating poblem did not appear to be linked to the defects cited in the Apple and Dell case.

But IBM and Lenov sought a recall as a precution given Sony's past problems, she said.