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Tuesday, December 11, 2012

'My main brand is better. Always. Period.'

I came across a couple of news articles recently which talk of how MNCs in India are trying to 'adjust' the relative strength of their portfolio brands to mirror their global situation. What that means is that globally Brand A might be stronger than Brand B, and if the case is reversed in India, the corporate honchos will do all they can to make Brand B weaker than A.

The first example is Coca Cola India, which is (as usual) trying to push brand Coca Cola ahead of its brother brand Thums Up. Link here. The other example is of Volkswagen trying its best to prove to Indian customers that the VW brand is actually superior to Skoda. Link here.



Neither company is trying this for the first time. Coke has been attempting fratricide on Thums Up for over a decade now, and VW has been after subsidiary Skoda's brand equity since they entered India in 2007. Both have failed spectacularly - and yet they continue their efforts. Why?

The articles highlight some of the management thinking that goes behind such decisions: "We need our brands to be consistently positioned across the globe", "We want to offer our consumers the same experience world over", so on and so forth.

Maybe I don't understand long term multinational branding strategy too well, but it looks like these companies are actually going away from what customers are telling them about their brands. The current strategy of keeping Coke prices lower than Thums Up prices is still ok - at least it isn't actively hurting Thums Up. But Coke did exactly that a few years back when it famously stopped ALL marketing support for Thums Up while egging the Coke brand on. As a customer did you or I care? We still drank Thums Up by the droves and kept it a clear No. 1 in India. Today thankfully Coke gives brand Thums Up good marketing support, though the itch is always there to support brand Coke more (from the article: "...Vision 20:20 as it's called internally, most critical markets have been asked to show volume growth for the flagship brand")

The VW-Skoda story may not have such a reasonably happy ending though. Skoda entered India early (in 2001, vs 2007 for VW), and has built some tremendous brand equity here over the last decade. VW is forcibly trying to put Skoda 'in its place' - as a 'budget brand' below brand VW. Therefore all Skodas are now ~5-10% cheaper than VWs. There are two things to consider here.

One, the Indian customer's love and respect for brand Skoda is driven by the core product offering - the Octavia, Laura, and Superb have all been massive hits here. And all play in the 'premium' space, so lower pricing may not matter for customers. They may simply see Skoda as an even better deal - strong brand with great pricing.

But two, there are fears Skoda quality may go down to ensure the lower price points can be met. Now that would be a tragedy. And an ironic one at that. Skoda is a brand on the move, shedding its legacy quality issues in Europe and become a truly strong player. If these same legacy issues cause it to forever remain an underling brand to VW (with poor quality at that), then we would have come a full circle!


Monday, May 14, 2012

Newspapers in the news

GigaOM has an interesting article on how paywalls are a terrible idea for newspapers. The debate has been raging for years of course, and I have written in the past how solutions like DoubleRecall could help avoid paywalls. Mathew too says newspapers should look beyond the oh-so-obvious paywalls to create revenues:


To me, it makes more sense to try and figure out how to take advantage of the Web in order to provide something that the current market is likely to value, instead of focusing on how to squeeze as much as possible out of a declining market. 
However, how many newspapers have ever managed to 'creatively' monetize a website in a sustainable, ongoing fashion, without resorting to paywalls? In a sense, paywalls are the newspaper guys' answer to the book publisher guys' $10 ebooks. Sure there is no variable cost of selling each additional ebook, but you still have to charge folks per ebook to keep business running. Of course the fundamentally low cost of ebooks will probably shake up the publisher industry's high overhead costs in the long run, and reshape publishers if not destroy them completely in the long run.

However the newspaper industry has a far worse problem. While book publishers undertake the real job of hand-holding authors, helping them publish, and promoting their books (basically they do some value addition), most newspapers are just news aggregators (thanks GigaOM for the thought). And I think thats a key funda, one which may point to the long term future of newspapers, beyond just the current paywall debate.

So your newspaper basically picks up articles from agencies like AFP and Reuters, adds a few local (city/state/country) articles from a few journos on their payroll, prints them on a sheet of paper, adds a ton of advertisements, and delivers them to you in the morning. For this task their costs include

a) Payments to the agencies like Reuters
b) Printing costs
c) Salaries to journos / editors directly on their payroll (and hence not part of item 'a')
d) Overheads, overheads, and more overheads (advertising sales teams, subscription sales teams, printing staff, middle managers, regional managers, HR, Finance, etc. etc.)

Now these paper guys are having to compete with Google News, Yahoo News, Huffington Post, and a ton of other online aggregators, whose costs are only 'a', and in some cases, 'c'. Paywalls or not, how the hell are they going to compete with leaner online news aggregators whose only handicap is lack of journos / editors covering local news? If I may do some crystal gazing...

In some time agencies like Reuters and AFP will also add journos / editors covering local news onto their own payrolls. Or maybe new agencies will get created specifically for local news. But once that last bastion of newspapers is breached, there will be a big shakeout in the industry. Most smaller newspapers (who have little original content) will get wiped out. Larger ones like NYT may survive for a while. Meantime, the online guys get better and better at understanding your news needs (they are already much better at it than your print guys, who force feed random stuff down your throats all the time!). And as the final nail, some online aggregator will probably start offering a reverse newspaper down the line for the remaining paper format addicts. Imagine a Google News offering low-overhead printout and delivery (locality-level) of a Google newspaper in your exact preferred layout, but in paper format. Don't you think that might mean curtains down for conventional newspapers?

Thursday, April 5, 2012

Take it, Tenez!

Nadal quits ATP role as Federer stands firm

Nadal and Federer have time and again sparred off the tennis courts too - in the ATP players council. The boiling issue has been whether players should be ranked basis their performance over the past 1 year (current scheme), or the past 2 years (proposed). For a change I have been rooting for the Federer camp. You see, I agree with Nadal's concern that the tour is too taxing on players as they have to trot around the world to a new tournament every 2-3 weeks just to maintain their ATP points. But while 2 year based rankings may improve the fatigue situation, they will simply not reflect real form and competitiveness of players. For example, ESPN analysis towards end of 2011 shows that, even after one of the best seasons ever, Djokovic would still have been No. 2 behind Nadal had there been a 2 year ranking! I say player fatigue and resultant injuries is a very pressing issue, but can't there be other ways to address it? Reducing number of tournaments is an easy yet difficult-to-implement one, so maybe they should increase the profile (and awarded points) of mid-rung tournaments. That way top players will know they can get better returns on their efforts by choosing all Grand Slams, a few mid-rung events, and only a few lower rung affairs. Others can choose a more grueling mix if they please, with only limited chance to leapfrog higher ranked players purely on the basis of higher appearances.

But wait, isn't that what the ATP is already doing with its ATP Masters series of titles? :)


PS: All this reminds me of the ICC cricket rankings. I was wondering why India did not become No. 1 in ODI rankings even after lifting the World Cup in 2011. The team has of course gone into spectacularly decline since. Did the Reliance ODI Ranking predictor know something we didn't?

PPS: The title of the post 'Tenez', points to the origin of the sport's name. From Wikipedia: "It was not until the 16th century that rackets came into use, and the game began to be called "tennis", from the Old French term Tenez, which can be translated as "hold!", "receive!" or "take!". An interjection used as a call from the server to his opponent."

Wednesday, April 4, 2012

Are you sure you are more intelligent than a dolphin?

Dolphins deserve same rights as humans, say scientists
Do read the above BBC article if you want to alter your perspective even slightly.

The great tragedy of our times is that, while we have (after centuries of slavery) accorded all human beings equal rights ('human' rights), we are not able to protect even the most bare basic of animal rights (the right to survival). Many animal species are emotionally complex and extremely intelligent. Its just that we humans, in our minuscule understanding of the world, never took the hints (see my previous article here). Its only now that we realize that several species have highly advanced languages. Blurs the line between man and animal, does it not? God knows how many more amazing things about other creatures will we get the chance to discover, before we banish them forever into extinction.