Frugal Marketing

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

T Prashanth, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

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Massive Brand building and wide distribution- Two essential components of an FMCG company to sustain it’s growth and survive in the hostile market. Patanjali has defied these odds to become the fastest growing company in the FMCG sector. It has achieved a turnover of Rs 5000 crores and is expected to double it this year.

While the reasons for its rise to prominence has been discussed and dissected several times by several people – ranging from analysts to students, what has not been talked about much is its marketing strategy. According to recently released reports Patanjali has inserted almost 1.14 million Ads in total. What is even more astonishing is the amount of money used to achieve this. It has used up to Rs 300 crore of advertising. This is normally one tenth of the amount used by big FMCG companies for marketing.

Patanjali has pulled off this seemingly impossible feat by putting a big chunk of its Ad’s on TV news channels. With almost 85% of its Ads inserted on all news channels, Patanjali has not only found a cost effective measure to advertise but also get the same amount of reach. This has also enabled it to get attention of mature audience who were previously unaware of the brand and also those who would not have bought Patanjali on Baba Ramdev’s name alone. Another distinct advantage with Advertising in TV channels is it would not be cluttered and thus lost among other Ads. With fewer Ads displayed it would get sufficient screen time and attention as Ads in News Channels is almost an untapped market which has just opened up.

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VODAFONE and IDEA Merger

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Yaswanth Kumar Parasa, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur


UK-based telecom giant Vodafone said on Monday it was in talks for an all-stock merger of its unlisted Indian subsidiary with rival Idea Cellular. This would make the merged entity India’s largest telecom company in terms of revenue, at 43 per cent. It will also become a leading global telecom firm in terms of number of subscribers, at 387 million.

The combined entity will derive significant benefits from network consolidation as the network site requirement will reduce significantly. The combined entity will have concentrated spectrum portfolio with 36.5% of the liberalised spectrum in 1800MHz band, enabling it to deploy higher spectrum per site resulting in higher revenue productivity per site. the Idea-Vodafone merger will help the combined entity to take on RJio more aggressively it will have leaner operations leading to better profitability. This will also boost their ability to invest in the network.

Idea/Vodafone merger could make strategic sense. After merger  they can move  to No.1 in market share, scale/synergy benefits, and complementary footprint with Vodafone strong in urban areas and Idea strong in rural areas. Also, consolidation is always good, especially for any capital-intensive sector with multiple players

Key Challenges:

The combined entity will exceed the maximum user base limit of 50% in as many as nine license areas and revenue market share will surpass the 50% threshold in five circles.

Getting proper synergy between two companies and trying to consolidate market share competing with Reliance Jio and Bharti airtel.

Vodafone and Idea Merger – The Road Ahead

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Nikunj Agarwal, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

Vodafone & Idea have finally confirmed about the ongoing talks for a possible merger of their operations in India. The Vodafone-Idea merger, if a deal indeed goes through, would be the biggest such consolidation in the sector, and create the largest telecom operator of India. The discussion is still in preliminary stage as both companies need to agree upon certain terms and conditions. The deal is based on the premise that both companies would hold equal rights in the Vodafone-Idea merged entity.

The merged Vodafone-Idea entity will become the biggest telecom operator in India, both by subscribers and revenue. At present, Airtel leads the market with 265.85 million mobile subscribers, as per COAI data, while Vodafone and Idea have 204.69 million and 190.52 million mobile users respectively. The merged Vodafone-Idea unit will have a combined user base of 395.21 million, putting it far ahead of Airtel. It will also be at a safer distance from Reliance Jio which is a recent disruptor in the industry.

But, this merger will face some issues. As per government regulations, the merged entity can’t have more than 50% market share in Telecom industry in terms of subscriber base. If the merger takes place, the merged entity will have over 50 percent subscriber market share in five circles – Maharashtra, Gujarat, Kerala, Haryana and Uttar Pradesh (West). Similarly, it will cross the 50 percent limit in RMS in seven circles – Mumbai, Maharashtra, Gujarat, Kerala, Haryana, and Uttar Pradesh (West). This will face regulatory hurdles. TRAI would have to step in to ensure that none of the practices of the Vodafone-Idea joint entity are anti-competitive, considering the large market share.

Impact of Vodafone-Idea Merger

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Divyam Jain, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

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With the growing competition from Reliance Jio Infocomm and the existing one from Bharti Airtel, the second and third largest mobile operator, i.e., Vodafone (India) and Idea Cellular may go from a merger and become the largest in the country. Together, this entity will have a market share of 43%, leaving Airtel behind with 33% market share. As this is proposed to be a reverse merger, Vodafone India will not have go for an IPO which adds to the benefits.

But nothing comes without a price and nor will this merger. As per the merger and acquisition rules on 3G and 4G spectrum, each operators must own less than 25% of the overall spectrum allocated in a particular circle and less than 50% in a specific band. Post this merger, these limits will be breached in Kerala, Gujarat, Haryana, Maharashtra and UP West.As far as the RMS is concerned, it should not be more than 50% for a single operator and this condition is breached in Haryana, UP West, Maharashtra and Kerala. But the RMS problem will be resolved once Reliance Jio starts charging gaining revenue by charging its subscribers. The Spectrum breach, however, will force Vodafone and Idea to surrender a part of their spectrum bands in the respective circles. On a bright side, this merger will give strong balance sheets to both the operators and the merged entity will have more firepower to take on giants like Airtel and Jio.

With all the pros and cons in sight, to expect this merger to be a solution for the common problem of Vodafone and Idea would be a bit too much. Having said that, it is no secret that both the firms do not have much to time lose as they are already lagging in terms of investment and their broadband infrastructure. How quickly and well these companies adapt to the new structure, will define the success of this deal.

 

References

http://www.financialexpress.com/industry/idea-cellular-vodafone-india-may-merge-set-to-create-indias-largest-telco-beat-bharti-airtel/530102/

http://www.livemint.com/Money/ZL7jov9xOFIyVndDXEMN7K/A-Vodafone-and-Idea-merger-is-no-panacea-for-the-telecom-sec.html

Reliance Jio

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Shivani Manchanda, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur

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Being the frequent users of data packs on phone, some of us these days ponder upon the cheap data plans of Reliance Jio. How are they making money? How are they providing us with the cheap data plans? What is their business strategy? Why other companies are not providing at the same prices as Jio?

Reliance Jio is different from other network providers because they have the capability to provide us with unlimited data. Other companies have to pay fiber optic companies but Reliance has bought Infotel Broadband. If a network providing company has once build the complete infrastructure required then they can provide us with unlimited data without further putting in some money. Also the tariff plans made by Jio are defined strategically to make profits. If the user spend anything above Rs. 150 per month which is the average revenue per user, he is considered to be high value customer. Reliance Jio has kept no plan in between Rs. 149 and Rs. 499. So most of the users think of the benefits they are getting in Rs. 499 pack and go for it which is directly making them high value consumers.

The multiple business verticals Reliance Jio is entering, should also be looked upon. Jio apps and LYF phones are good sources of profits. They are providing Jio apps like Jio Play, Jio drive, Jio news etc. for free till 2018 then they will make huge profits from these apps as the apps can only be used by the Jio users and the experience provided by these apps is excellent. Initially Jio was providing all the unlimited preview offers only if you buy the LYF phones, this increased the sales of these phones with not so good specifications which led to the increased profit margins.

Reliance Jio is playing with the minds of consumers yet as a user we all are getting benefited. They are not compromising on any of their profit makings, they have taken sufficient time and have made a proper strategy which in future is going to benefit them as well as our country.

 

Reference

http://gadgets.ndtv.com/telecom/opinion/reliance-jio-business-model-how-can-it-make-money-1454531

Vodafone and Idea merger talks on the cards

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

VIJENDHAR KADIPIKONDA, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur.


Consolidation is not new in the Indian telecom sector. Two companies might come together to fight the competition, to sustain the markets or because of some other reasons. This time however, the country’s largest telecom company is originating as a result of the merger going through. On Monday, Vodafone said it was in initial stages of discussions with Aditya Birla Group’s Idea Cellular for a cashless deal to merge their operations. This merger will help them fight their biggest competitors Airtel and Reliance Jio.

The telecom industry in India is already reduced to four players. With Airtel being the current leader the next positions are occupied by Idea, Vodafone and Reliance Jio. The merger will obtain the merged entity a 43% market share of the revenue thereby creating the biggest telecom company in India. Currently, Airtel holds 33% of market share and Jio would hold 13% by the end of the year. The merger if happens could create some major changes in the telecom industry. This merger is more beneficial to Vodafone when compared to Idea. It can strengthen its position in India. Vodafone India, which had planned to raise about $3 billion through an IPO can raise it now by issuing the new shares of already listed Idea Cellular.

The emergence of the big merged entity might upset all present calculations. Reliance Jio has started a price war by announcing cheapest tariffs for data and free voice calls and is continuing its aggression to capture the market. If Reliance continues its innovation, it will hit Airtel more than the consolidated entity which would have the benefits of market share as well as spectrum holdings. The Indian telecom industry has already gone through two rounds of price wars. The entrance of Jio started the third one and the merger talks of Vodafone and Idea could take it further.

Brands Bouncing Back

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Aayush Sharma, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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PART I – BACKGROUND

In any typical product’s life cycle, there comes a time when it has to face stiff competition or, in general, has to face adverse market conditions. These are generally the defining moments of the parent brand, when just like a human, it tries to find answers relevant to its own existence.

Sometimes, the past achievements help it pull out quickly, but many times a vicious cycle may ensue leading to brand value erosion permanently. Brands may perish as a result of this testing. Kodak1 is one such example. HMT watches2 also had its last lot of 5500 watches produced recently.

In the present scenario, there are brands which are again trying to build back their trust in the customers. Volkswagen3 is a prominent example in this category which is still recovering from a disaster of ethics which it embroiled itself into.

The reasons for failure of big brands can be many. They can range from lack of foresight for judging upcoming trends, unforeseen increase in competition and not heading to true customer needs among others4.

However, in the due course of time, some brands have proved their resilience. These brands are discussed in the next write-up.

References:

  1. The Guardian’s detailed analysis of Kodak’s demise and how it could have been averted (Jan 22, 2012)

https://www.theguardian.com/technology/2012/jan/22/john-naughton-kodak-lessons

  1. Times of India article on the last lot of HMT watches (Jan 7, 2016)

http://timesofindia.indiatimes.com/city/dehradun/After-govt-order-to-close-HMT-mood-somber-in-watch-makers-Kumaon-factory/articleshow/50484695.cms

  1. One of Volkswagen’s revamped ad campaign (started in late 2015)

  1. Detailed reasons for brand failure

Why brands fail

Brands Bouncing Back

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Aayush Sharma, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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PART II – WINNERS

After being hit by a major controversy regarding its contents, Maggi has already regained more than half1 of the market share in the instant noodles segment. Looking at the pace of the recovery, it is pretty clear that Maggi has been able to retain its powerful positive image in the minds of Indians, despite all odds.

Similar is the story of the Netflix, the US-based global provider of movies and TV series streaming services. After nearing a meltdown, Netflix bounced back from a near split2 into two companies. It has recently entered India as well.

Even behemoths like Tesco have to rejig their strategies for fighting competition. It did this recently by cutting prices, improving availability and customer service3. The result of this was that its sales – for the first time in three years – went up 0.9% in the fourth quarter of the previous financial year.

Some other popular brands and their stories are depicted in the following info graphic:

So how can brands ensure their continued dominance? Perhaps three things4 can be reinvention, having adequate back-up fire power to take risks and the vision to achieve big.

 

References:

  1. Business Standard article highlighting recent growth in Maggi’s market share (Apr 20, 2016)

http://www.business-standard.com/article/companies/maggi-back-with-a-vengeance-116042000031_1.html

  1. Forbes article on how Netflix came back from a near split (Oct 10, 2011)

http://www.forbes.com/sites/erikkain/2011/10/10/the-qwikster-is-dead-netflix-scraps-decision-to-split-into-two-companies/#4da9b4181d1e

  1. Marketing Week article (Apr 18, 2016)

How the Tesco brand recovered from crisis

  1. Business Standard article discussing these three things at length with examples (Apr 4, 2013)

http://www.business-standard.com/article/opinion/can-brands-bounce-back-113040400534_1.html

Twitter Goes the Facebook Way

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Glen Savio Palmer, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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Everyone uses Facebook. Well, at least 22% of the entire world’s population does use it. That’s a whopping 1.6 billion persons! The biggest factor behind Facebook’s omnipresence is the way it has learnt more and more about us over the years and evolved continuously. Its algorithm ensures automatically that the posts related to our best friends were shown to us first. This approach does seem logical to most of us. However, another social media platform which boasts of over 300 million active users, never gave in to this approach. Twitter, the Gen Y’s favourite, had a unique appeal in bringing stories from around the world happening at the precise moment straight to our screens. However, all that is set to change, as Twitter has finally announced a change in its policy, going with a strategy somewhat similar to what Facebook uses.

The algorithm that will re-order your timeline is based on the one that ranks tweets for the “while you were away” feature that Twitter introduced a year ago. The best way to think of the new timeline is as an expanded version of this feature. Spend an entire day away from Twitter, and when you open the app again, you’ll see highlights from the day. If you open it up a few times a day, you’ll see a handful of “while you were away”-style sections breaking up the chronological tweets. And whenever you pull down to refresh your stream, its back to the regular, reverse-chronological timeline.

Some users, however, have not responded well to this change. A few testers of this feature reported that It tears conversations apart, and it’s really confusing when some people have been live-tweeting an event and those things get scattered all across the timeline. It makes it extremely hard to follow events, and destroys one of the core values of Twitter.

The core value being expressed by these testers is that of “Living in the moment”. Personally, though I did like the “Why you were away” feature, I believe that the new timeline will drive users away as it confuses both existing users as well as new users. The good news is that the new feature is optional, and can be easily opted out. Let us hope that this new gamble pays off.

Reliance Jio: 4G Everywhere?

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Glen Savio Palmer, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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The fourth generation mobile technology, better known as 4G, has recently taken the country by storm. Most of the big players in the telecom space have launched their own 4G services, promising the highest internet speed. Even in popular media, marketing gimmicks such as the “Airtel 4G girl” have stimulated enough interest in the public. In this scenario, the entry of a new player into the market seems difficult to execute successfully.

Mukesh Ambani, the Chairman and MD of Reliance Industries Ltd., seems to think otherwise. “The commercial roll-out of our Jio services this year will digitally enable a billion Indians and propel growth for India and Reliance,” he said in a recent press release. Reliance Jio, the telecom arm of Reliance Industries, launched full scale service offerings for group employees, partners, vendors and associates on a trial basis on December 28, 2015. According to Reliance, “Over half a million users have been on boarded on the network. The initial feedback is very encouraging and has established smooth operations of all aspects of the network”. The company also said that average monthly consumption per user is in excess of 18 GB within the first month of service and is increasing rapidly whereas average voice usage is over 250 minutes within the first month. These numbers indicate heavy data consumption, which directly translates into high earnings for the company.

It is important to note that Reliance Jio is presently the only operator to hold a pan-India 4G license. This gives it a great edge over its competitors, as mobile phone users always prefer seamless connectivity. With the deep pockets that Reliance possesses, it will not be surprising if we actually see a pan-India 4G service launch from the first day of the commercial rollout of the service. And as Jio prepares to lock horns with Airtel and other 4G service providers, it will once again be the customers who shall have the last laugh.