The Fittest don’t Survive

Thursday, December 17, 2009
IN THE PRESENT SCENARIO IT’S NOT THE FITTEST THAT SURVIVE. INSTEAD THAT GLORY IS RESERVED FOR THE “ADAPTABLE”. IF YOU ADAPT, YOU CAN ‘FIT’ IN ANY ENVIRONMENT & SURVIVE

“GO ON BE A TIGER” proclaimed the tagline of Accenture - said to be the largest consulting firm in the world with more than 1,86,000 employees and branches in 52 countries, with 96 of the Fortune Global 100 companies as its clients. The advertising campaign was seen as a perfect fit between the celebrity (Woods) and the client (Accenture). Tiger Woods was known world over for his strength, mastery, discipline and relentless focus on winning – much similar to Accenture and its business performance. This was 2003. Last month the tagline took on a whole new meaning when the world came to know about Tiger Woods’ frolic with porn stars. On the night of 13th December 2009, Accenture become the first company to drop Tiger Woods from its multi million dollar endorsement deal. For a company that for years had built its whole advertising campaign around this one man – the move was a strong indicator of how Wood’s popularity had sunk.

Tiger Woods surely knows what it feels like to hit rock-bottom. From being a cynosure of all eyes, the perfect celebrity endorser has become a toxic taboo subject overnight. So has Woods outlived his utility for the brands which he endorses? Moreover, is it time to rethink the celebrity endorsement industry as a whole? Well, the correct answers to these questions are still not clear. What is clearly emerging however is the impermanence of it all. Someone whom the media (and the rest of the world) called the epitome of success was labeled a “loser” in a jiffy. Herein lies the secret of real success. As Winston Churchill once said “success in not final, failure is not fatal, it is the courage to continue that counts.” The world will be watching Woods and how he continues after his fall.

FALL – YOU WILL
The road to success is long and difficult, but if you are determined to succeed and if every part of your being longs for that, then there is no one who can stop you from succeeding. If you have the courage to follow your heart and know what you truly want to become, everything else becomes secondary and every step you take will bring you closer to success. However, with success come great responsibilities and with success also comes undisputed failure. A truly successful company or individual is one who knows how to manage his success and failures equally well. There is no law of nature that states that the most powerful will inevitably remain at the top. Almost everybody faces a fall. But then success is what Nelson Mandela said: “The greatest glory in living lies not in never falling, but in rising every time we fall.” It is true for individuals, for corporations and even for kingdoms and empires.

Look at some of the greatest companies. Apart from their ‘greatness’ as a common denominator, they also have one more thing in common – each one of them have taken at least one tremendous fall at some point in time, but found a way to recover. Be it IBM, Disney, Boeing or Xerox, each of them have stumbled but have refused to give up. Each crisis has only taught them some new lessons in leadership.

The reason for fall may be different for different companies. As Leo Tolstoy very rightly quoted in his book Anna Karenina: “All happy families are alike, each unhappy family is unhappy in its own way.” Merck, for example, faltered because it became obsessed with growth. It grew so fast that it was not able to find the right people to sustain this sudden spurt in growth. Much like the Roman empire, which once seemed invincible and indestructible under Julius Caesar. But according to some historians, it was the empire’s rapid growth that caused its eventual demise. Its colossal size made it near impossible to manage and protect.

IBM fell in 1980’s when its top leaders refused to accept that times were changing and new companies and products were slowly edging it out. Scott Paper thought it was the best in making paper towels and no one could touch it. Companies like P&G and Kimberly Clark came out with products that attacked Scott Paper and still the company refused to acknowledge that things were going wrong. The result: from being the most successful and commanding company in paper-based consumer products, the company went into total oblivion. It didn’t take its competitors seriously.

That’s something Kalanithi Maran, India’s undisputed leader of regional broadcasting never overlooked. “I don’t take competition lightly,” he said. When everyone (including Zee Network) rejected his proposal of starting a regional channel, the man believed in himself and went on to start SUN TV Networks. Today, his collections of 20 satellite channels and 46 FM radio stations have helped him dethrone Zee and become India’s most valuable listed media company with a market capitalisation of $3 billion. If Zee wants to hold on to the top place, it needs to be careful not to go the route IBM traveled in the 80’s. IBM needed a great leader like Louis Gerstner Jr. to pull the sinking company back into form and his book ‘Who says Elephants can’t Dance’ showed how when everyone suggested he break up the giant, the man slowly infused life back into it and showed the world that even elephants are manageable!

THE DINO BLUNDER
An old adage goes that it’s all about the survival of the fittest. But when you look at dinosaurs, the adage is proved wrong. Fittest means in ‘best physical shape’ which is what the dinos were in. But as in business, so in nature it’s not the strongest of the species that survives, nor the most intelligent, but one that is most adaptable to change. Survival is a choice, an option. You decide to adapt, you survive. Madonna, adapted and changed and today she still tops the charts. Big B changed from the ‘angry young man’ to PAA and just look at the man today.

If corporates want to survive, they need to change too. They need to adapt with changing times and not make the same blunder that the dinos made. An interesting study by Aries De Geus reveals that average Fortune 500 corporations survive for less than 50 years, while special corporations like Nokia survived for centuries. The difference was in the attitude, in the way they looked at success. For these hardy survivors the sole purpose of an organisation was not just to make money, but make a difference to the world they were living in; not to look after Wall Street, but after their people; not to just help their employees make money, but to make a ‘life’. This was how they defined success and every time they failed these are the thoughts that brought them back from the brink and helped them survive not just for a few years, but centuries. These corporations were ‘living organisations’.

So as we ready for the New Year, let us make a choice. Let’s redefine what corporates are meant to do, let’s redefine leadership and in the process, let’s build ‘living organisations’ that would not perish with one fall but would rise again and again and again. After all, we do know that survival is a choice and it is not always the fittest that survive...

WAKE-UP WAL-MART!

Wednesday, December 2, 2009
KNOWLEDGE ABOUT CULTURAL NUANCES AND ETIQUETTES GOES A LONG WAY IN ENSURING THE SUCCESS OF YOUR BUSINESS ON FOREIGN SHORES AND IN AVOIDING SURE-SHOT FAILURE.

Women don’t wear pants in Japan! Now before your imagination runs riot, let me tell you this is one of the guidelines prescribed to many female business travellers to Japan. As per Google, “Japanese business etiquette” is one of the most searched for Japan business related keywords. According to these guidelines, Japanese men do not relate easily to women with authority in business and that can cause problems while doing business. The Japanese culture encourages women to wear long skirt suits to work. Most Japanese companies prefer that their female employees not wear high-heeled shoes as Japanese men are not very tall, and towering over them might offend some.

While “Going Dutch” is a culture common to Netherlands and accepted in many other cultures, the Turks don’t believe in “Going Dutch” at all, and a suggestion to that effect may not be appreciated much.

The head is considered a sacred place and nobody in Singapore appreciates it if you fondly pat a child on his head. In India, it’s a way of showing affection – not there.

Each country comes with its unique cultural nuances, and as a business traveller, it’s of utmost importance that one remains sensitive to these seemingly small irrelevant details. They will help you strengthen your bonds with your foreign partner and help you do business better. Though it might not in any way affect your balance sheets but it helps to understand your counterpart better when you know that sitting cross-legged in Singapore may be considered offensive, or that Germans consider a weak handshake as a signal that you are insecure and not convinced of your abilities, or that in Israel (due to years of fighting) men prefer to sit with their legs slightly apart and upper body leaning forward (akin to a position where they are ready to get up at a moment’s notice), or that in Switzerland, before starting a conversation, it’s important to shake hands with everyone – including children. While Arabs consider it a show of trust and solidarity when they put their arms around you and hold your hand with both their hands, doing the same in Germany could be one of the biggest etiquette blunders one could make. Germans avoid physical contact and placing your hand on someone’s’ shoulder could make you appear too authoritative and not appreciated. Knowledge about the etiquettes of other cultures is becoming very vital as it could as well be a deciding factor in whether you succeed in that country or not.

ACROSS THE SEAS
Yes, gone are the days when simply understanding your own country’s business environment well was enough to succeed. Today, if you really want to make it big, you need to stretch out, go beyond the boundaries and learn to do business in strange, foreign cultures. Ratan Tata, during his 18-year tenure as Chairman of the Tata Group, ensured that his company expanded internationally – a strategy that India’s other business houses copied and are still trying. Today, the Tatas have annual revenue of about $70 billion – that’s great, but what’s of significance is that 65% of the group’s sales are derived from outside India. If you really want to grow big, you not only need to expand but also need to have a global mind-set too.

WHEN YOU DON’T THINK GLOBAL
This company’s revenues are more than the GDP of at least 144 nations, and today, it’s the world’s second largest company – yes, you guessed it right, it’s the retailing giant Wal-Mart! It’s an organisation that’s been super successful in America. As someone once said, “If you want to reach the Christian population on Sunday, you do it from the church pulpit. If you want to reach them on Saturday, you do it in Wal-Mart.” There is hardly any American who has not shopped at least once in Wal-Mart. That’s the power and reach of this retailer.

Yet, when it comes to going global, this is one company that has committed some very costly mistakes, for it failed to understand he local culture.

In Mexico, Wal-Mart started its stores and set up huge parking lots. Little did it realise that what was considered as a “facility” had no meaning for Mexicans as most came to the outlets in buses. It entered China in 1997 and in spite of doing business in the country for more than 12 years, the company has still not made a profit – it definitely has failed to understand the Chinese market. It tried to bulldoze its American styles into the Chinese market; a move that failed as expected. Selling golf balls in a low-income country like Mexico was as wrong as selling meat, neatly packaged in Styrofoam and cellophane to Chinese customers. A country where consumers insist on live fishes in grocery stores and on killing them in front of their eyes, packaged meat was looked upon as stale food and did not sell – despite being correctly priced and being of good quality.

Wal-Mart tried to export its American consumer culture to the world. Even its ‘Everyday Low Prices’ strategy failed and did not pass muster against the cultural preferences of consumers. No wonder it beat a hasty and costly retreat from Indonesia, South Korea and Germany. It’s not always a good idea to retain your individuality and be rigid. It pays to be flexible and Wal-Mart learnt it after incurring billiondollar losses. Today, the Wal-Mart of China keeps live fishes and turtles in its stores; it stacks up on diapers in the ‘Year of the Monkey’, which is considered a lucky year to bear children. It’s slowly learning to woo the Chinese shoppers

Wal-Mart seems to have found its footing in India too. It’s realised the importance of understanding the people and their culture before trying to sell its goods. So the first thing it did was to look for a man who understood the Indian consumer to head its Indian operations. It understood first what the Indian people wanted, studied the local kirana shops, understood which paneer sells where, and also realized jhadoos where more important to Indian households than vacuum cleaners! With 50% of Wal-Mart’s assets outside USA, it was high time Wal-Mart woke up from its stupor and realised that every market is not like its American one. Under Mike Duke – the new CEO of Wal-Mart – things seem to be looking up.

You too should know how important it is to understand the different cultures. Don’t commit mistakes like Wal-Mart. As Jawaharlal Nehru said, “Culture is the widening of the mind and of the spirit.” Widen your horizons too. If you don’t want to fail, don’t do what Wal-Mart did in the various countries. You will learn all your lessons in culture through one exercise – keeping an eye on Wal-Mart goof ups. So keep watching Wal-Mart.


WHO’S NEXT?

Thursday, November 19, 2009
FINDING THE RIGHT SUCCESSOR TO PASS-ON THE CEO’S BATON IS ONE OF THE MOST CRITICAL STRATEGIC DECISIONS THAT A COMPANY SHOULD TAKE... MUCH BEFORE THE CEO IS ACTUALLY READY TO ‘PASS IT ON’.

He’s finally back in business (thank God for that!). Fortune magazine has named him ‘CEO of the Decade’ this month. He is the perfect choice and there can be no one better, for this man has single handedly redefined mobile communication (with the iPhone), made the geeky PC hip-n-happening (with the Mac- Book) and brought back Apple from the brink. Steve Jobs is a man whose products inspire a religious devotion in users – and he is worshipped by many around the world. But this is where the problem lies. Early this year when Steve Jobs took a leave of absence from his company to get a liver transplant, Apple’s stock slid to an all time low. It’s said that when Jobs sneezes, Apple catches a cold. If a company is all about a great personality and a not a great product there’s going to be a big problem of survival

Till recently, Apple was synonymous with Jobs. Not so much now and thankfully so. Without Jobs at the helm, Apple surprised Wall Street with its Q2 profits which showed the world that – yes Steve had shown the way, but the company was in safe hands without him too (under Tim Cook). Steve was back in September and got a standing ovation from the audience, not so much for the new iTunes software and new line of iPod Nano music player with video cameras, but for being the greatest icon of corporate world. Yes, the wizard is positively back but has ensured that Apple is definitely not just about its founder’s charisma, but about computers and others things – in which they are the best. Tim Cook seems to be the right choice for successor and Apple is apparently in safe hands.

When the man at the helm of affairs is a living legend and one of the richest persons in the world, finding the right successor gets a bit difficult. However, when you are a smart investor like Warren Buffett, you don’t just have one but four potential successors to choose from. For more than four decades, the man has been nurturing his firm Berkshire Hathaway, making it America’s sixth-largest company by market value. Choosing the next Buffett is as important for Berkshire as it is for America. Buffett at 77 is aware that the one question hanging on everyone’s mind is – who’s next? He knows and understands the sentiments and jokes that he has built Berkshire so that it could be run by a cardboard cutout or the bust of Benjamin Franklin. When a company is performing well, who its successor is going to be, becomes all the more important. And with Warren’s good planning, everyone’s optimistic that whoever the successor – Ajit Jain, David Skoll, Joseph Brandon or Tony Nicely – America’s most famous investor, the so-called Oracle of Omaha, will find the right guy as his successor.

GREAT IS NOT ENOUGH
When Jack Welch became General Electric’s CEO in 1981, the company was worth $14 billion and when he retired 20 year later, GE’s value had touched $500 billion. This was fabulous, but true success lies in the ultimate test: once the leader is gone, does the company continue to flourish? The most important job a CEO does is not just keep the balance sheets looking good, but finding the next man who can take the company forward. Jack Welch says, the most important business decision he took was selecting his successor. At GE, CEOs have the ‘airplane’ question that help them identify the next man. Imagine you are flying in one of the company planes and the plane crashes. Who would be the next chairman of GE? This simple question helped GE identify Jeff Immelt as successor for its top job. As Jim Collins discovered while writing his book ‘Good to Great’ – it’s getting the right people in the right job which is more important than strategy. Getting the right person for the most important post in the organization (that of the CEO) seems to be a leader’s most important task.

Back in the 1970s, American car giant Chrysler was losing money and faced bankruptcy. Its new CEO Lee Iacocca convinced the government to provide a $1.5 billion bail out loan. Soon this maverick turned around the company and made it profitable. Not just that, he returned the government loan seven years early. This grand-old-dad of business became America’s favourite straight talking leadership guru. His famous slogan “If you can find a better car, buy it” became a super hit. This business rock star retired from Chrysler in 1993. Today, Chrysler is bankrupt again. In May, President Obama announced a plan for Chrysler to file for bankruptcy - this time there was no knight in shining armour to save the company. Iacocca did a great job but sadly it was not enough to save the company.

A wrong successor can ruin even a great empire. History is proof that incapable kings and emperors have ruined everything their predecessors built. The extremely capable and intelligent Akbar, the greatest of Mughal emperors, was able to conquer and control all of northern and parts of central India. When he died, the empire extended from Afghanistan to the Bay of Bengal and southward to the Northern Deccan. But just making a grand empire was not enough. A series of weak successors and everything Akbar created was ruined when Aurangzeb took over the throne. Sometimes just keeping it all in the family may not prove to be a good idea.

HOMEGROWN OR NOT?
Who to choose as your successor may prove to be a tough question to answer. Succession planning needs to be done intelligently. It’s a slow process and a difficult one too. Nine years before his anticipated retirement, Welch said, “Choosing my successor is the most important decision I’ll make from now on. It occupies considerable amount of thought almost every day.” That’s what we call ‘visionary leaders’. And it’s these leaders who choose their successor from within the organization. ‘Home grown CEOs’ is the key word to successful succession planning. In the 1900s, Colgate and P&G were at par with each other, but by the 1940’s, Colgate had fallen to less than half the size of P&G. The reason? Poor succession planning. If you need to depend on some outsider to take your company forward it may be a wrong choice. All great CEOs have started their careers within the organization – no wonder they understand it the best. Jack Welch joined GE in 1960 as a junior engineer; Mike Eskew, the erstwhile CEO of UPS, the world’s largest package delivery company, started his career in 1972 in UPS as an industrial engineering manager. Under him, UPS saw unprecedented growth with revenues growing by nearly 57%. Not just that, its international package revenues more than doubled and its supply chain and freight revenues quadrupled. Contrast this to Carly Fiorina who joined Hewlett-Packard in 1999 as its CEO, becoming the first woman to lead a Fortune 20 company. Her decision to merge Compaq with HP led to her downfall and in 2005 she was forced out of HP. Dynamic, articulate and powerful, Fiorina had seemed the ideal choice. The media loved her and she adorned the covers of most business magazines. Yet, these may not be the right criteria for choosing a true leader. As Ram Charan states in his book ‘Execution’, most people assume that a great leader is one with vision, is articulate and can inspire. They forget the most important question: How good is this person at getting things done in the right manner? Do they set adrenaline pumping goals and energize the whole team to achieve these goals? Do others enjoy working with him? If the answer to the above questions is ‘Yes’ then you have found your man. Most of the time he/ she will be a person who started his career in your organization.

CREATING THE CULTURE
A successful business is one that not only has great management and an excellent business model, but also a great culture to hold the two together. To keep the culture one needs highly able managers who understand the company values and its business models. At Berkshire Hathaway, each of Buffett’s hand-picked successors are trained to run the business just the way he would. Many companies fail to do this and then need to rush back to their founders to be able to survive. Howard Schultz was brought back to help Starbucks survive the slowdown. Toyota is looking up to Akio Toyoda, the 53 year old grandson of the company’s founder, to help the company recover. For the first time in 14 years, Toyota is turning to its roots for leadership to help it tackle its worst crisis. Our country looked up to Sonia Gandhi to help the country and provide it the right leadership. Let that not happen to you.

Some of the world’s most admired companies are now being headed by new CEOs or are on the look out for new leaders. Ratan Tata too is looking for his successor and he has two years to find the right man. The fate of India’s most respected business will rest on those hands. P&G is replacing its longtime CEO A.G.Laffley with the 29-year-old company veteran Robert Mcdonald; Wal mart has a new CEO Mike Duke who replaced Lee Scott – a man who spent 30 years in the company. Next year, Douglas R. Oberhelman would look after Caterpillar and Bank of America too will have a new head in place. All these companies feature in Fortune’s list of most admired companies. Would they continue to remain so is what we need to see. If the successors are chosen carefully, these companies would continue to prosper. So if you want to build a great company, invest in a great successor. Just doing a great job is not enough. You need to ask yourself daily: Who’s next?

Get OUT GET NOTICED

Thursday, October 22, 2009
THE ONE WHO CAN PUT HIS FOOT OUT OF THE DOOR, IS THE ONE MOST LIKELY TO SUCCEED. EVEN IN TODAY’S WIRED WORLD, DON’T UNDERESTIMATE THE POWER OF THE PERSONAL TOUCH. SO GO ON, AN. NOUNCE YOUR PRESENCE...

This is the story of a simple woman, a story of an Indian girl, born into a conservative family in Chennai, who went to the US to pursue higher studies and who while studying also worked as a receptionist from midnight to sunrise to earn money. Finally, after a lot of hardships she passed out from Yale University and got her first call for a job interview. She struggled hard and somehow managed to scrape together $50 to buy herself a western suit. Not having much idea about western wear, she landed up for the interview wearing a trouser that barely reached her ankles. She was rejected. Dejected and disheartened she turned to her professor at Yale for help, support and advice, and she got the simplest, yet best possible advice – “Be Yourself”. She wore a sari for her next interview and got the job. Today, Fortune ranks her as the most powerful woman in US business.

Yes, you guessed it – she is Indra Nooyi, Chairman and CEO, PepsiCo. And the Indiaborn Nooyi has been named as the most powerful woman in the US business for four straight years now. This Queen of the business world, and my personal favourite, has shown the world how if you need to survive you need to change; you need to adapt and reinvent yourself. Today, if she continues to sit pretty at the top spot, it is because she has consistently changed and reinvented herself, in tune with the times. Her secret – “being visible”. According to her, people need to know that their CEO cares about them and has a realistic vision. She feels the need to see and be seen. After becoming CEO, Nooyi’s goal was to visit 80 countries in her first five years as CEO so that she could see and also be seen. This strategy seems to be working for her. It was during her visit to China that she saw the resurgent trend of people eating according to traditional Chinese medicine. She immediately knew she had to find ways to incorporate Chinese medicine into Pepsi- Co’s products. China is such a huge market after all and one could not ignore it at any cost. Clearly, just ‘being there’ can work wonders for you and your organisation and help you choose the right path.

GET OUT, GET NOTICED
It is a highly wired world that we are living in today. Technology is doing all it can to help you stay connected. Be it SMS or e-mails, or Facebook, or LinkedIn, or the latest craze – Twitter – all these have made ‘staying-in-touch’ easier. Yet, while searching for excellence decades ago, Tom Peters and Bob Waterman discovered a very simple and effective trick that great leaders and companies put into use extensively to manage people and work. They called it MBWA – Management by Wandering Around. The strength of an organisation lies in its informal communications. One needs to know who they work with, what drives them, what their passions are, what are their fears, their dreams – everything. You need to stay “intimately in touch,” says Tom Peters, “if you want to manage well.” E-mails, Twitter and others of their ilk fail here.

In 2004, Peters was asked to give a talk to retailers. He talked to experts, searched the web and prepared a beautiful speech. But it took merely two hours of wandering in and out of shops, for Peters to scrap this speech and write a better one. Those two hours helped him understand the retail environment better. His advice – get out of your cubical. The ability to go out and talk and understand is the most important skill. If you are just relying on e-mail, it’s time you stopped and pondered on the importance of human-touch. Excellent companies are a vast network of informal, open communication, which is only possible when there is an environment of trust. Walk around to build that environment. When people see you, they will know you better and trust you more.

‘GET OUT GET NOTICED’ ...YET AGAIN
If you need to be visible to be successful, then the same applies to your brand too. You need to make sure your products are ‘visible’. How do you make your brand visible, is the moot question. Branding, after all, is a pivotal task for any company – some work out extensive advertising campaigns, while some use expensive celebrities to attract attention. Some others, however, take a different path.

In 2005, Nestle entered into a partnership with Coca-Cola. According to an agreement, Nestle could sell its Nescafe products through the world’s largest beverage makers’ vending machines and sales outlets. Suddenly NestlĂ©’s products were more visible and as expected in a few months, Nescafe’s market share, as well as sales revenues, increased drastically. Coca- Cola, on the other hand, used McDonald’s to increase its visibility. If McDonald’s sells Pepsi Cola instead of Coca-Cola, it would not take long for Pepsi to defeat Coke!

Lenovo too knew it had to be ‘visible’ to be seen as a successful company by the world. It went ahead and bought IBM’s PC business in 2005 and changed its image instantly. Now it was perceived as a “global brand” as opposed to a Chinese brand – because it used IBM’s distribution network to make itself visible and hence available world over. When Coca Cola abandoned its Indian operations in the 70’s, Ramesh and Prakash Chauhan decided to fill the void by launching Thums Up, with the punch line ‘Happy days are here again’. People loved it and the company soon set its cash registers ringing.

Ironically, it was the same Thums Up that Coca Cola acquired for a meager $60 million to get a one up on competition. Buying Thums Up also meant buying its distribution network and overnight Coca Cola was visible everywhere in India. Not just this, Coca Cola worked hard on its supply chain to cater to India’s vast rural market. It increased its ‘visibility’ like no other beverage company had done before and the strategy paid off. Today, rural markets account for almost 80% of new Coke drinkers and 30% of its total volumes.

This is a trick that Coke learnt from its senior – Hindustan Lever Limited – which entered India years ago and had mastered the art of being visible. In 2002, Sanjeev Gupta, Coca-Cola’s Deputy President said, “We want to be the Hindustan Lever Limited of the Indian beverage business.” Look carefully and you realise that it’s HUL’s fantastic distribution network that has prevented any competitor from even coming close to this FMCG giant in terms of overall market share. Great distribution means great visibility and great sales.

In fact, it is distribution that helped ITC Foods make its maiden profits this year. From being the tiniest company of the multi million dollar Group that was losing close to Rs.60 crores annually, it has indeed come a long way. With brands like Bingo and Sunfeast in its portfolio, the company’s revenues this year would be Rs.2,200 crores. It has indeed been ITC’s tremendous reach (through its extensive distribution network) that has given ITC Food its competitive advantage. Bingo’s marketing plan included ITC Foods’ distribution of more than 4,00,000 brand display racks at all points of sale. The strategy created such a powerful impact that competitor Frito-Lay also had to come out with their racks.

Yes, advertising gives a brand its visibility. But don’t forget the powerful impact of distribution and partnership strategies too. When Acer entered into a partnership with Ferrari, it started putting Ferrari logos on its laptops. This made Acer laptops standout and increased not just their visibility but also brand value. They began to be perceived as highly as Ferrari cars.

GET OUT – GET NOTICED... NOT JUST IN BUSINESS
If you want your career to go places – you need to do similar. You need to market yourself. You must be your own best advocate – otherwise your hard work may actually go totally unnoticed. The more visible you are, the more likely you will be remembered – especially during the time of raise or promotion. A recent study found that one of the reasons why women were not occupying more high level positions was they did not understand the art-of-self-promotion. So sit up, and find ways to become visible, to make your brand visible. If you want to win, you need to get out – and get noticed!

JUST ONE

Thursday, October 8, 2009
‘One’ is not just the lowest single digit numerical value; neither is it just a show of miniscule strength. Instead, the digit has the wherewithal to change national destinies, unflinchingly challenge mighty emperors and irrevocably alter your life condition!

It is just another day, yet today, this one date has begun to signify something of great importance to all of us. Its impact has been felt all over the world. Yes, 9/11 or September 11 today symbolises terrorism. One incident on this day shook up the entire world. Overnight Kabul and Kandahar became the most talked and written about places. The world became more knowledgeable about bombs and forget about our way of thinking, even our manner of speaking changed. ‘Ground Zero’, the original meaning of which was the epicenter of a nuclear explosion, now meant something else entirely. ‘Terrorism’ was no more an activity that happened in far away places for Americans, but something that took lives in their own home. One event and look at the profound impact it has had on all of us.

In fact, one way to judge the impact of any event is to see how much it affects the language we speak. In that sense at least, 9/11 has added words like jihad, holy-war, Taliban and Twin-Towers to our collective vocabularies. Another event had similarly enriched the English language – World War II. Words like jeep, blitz, java, flak, sonar, radar, bazooka and atom bomb didn’t exist prior to World War II.

Clearly, one event can change a generation’s outlook. ‘One’ may be the smallest of numbers, but ‘one’ is all it takes to have a profound impact. It’s interesting to see how ‘one’ has influenced us in more ways than one. To start, take the date 9/11 and flip it once. This one change brings us to a date dramatically different from the previous one. If one stood for terror, and destruction and ruin, the other symbolised unification, hope and brotherhood. The 9th day of November or 11/9 was the day the Berlin Wall fell. If 9/11 divided the world, 11/9 was an attempt to unify a city that had been divided for over 30 years. The 28 mile barrier dividing Germany’s capital was built in 1961 to prevent East Berliners fleeing to the West. ‘One’ of anything (even the flip of a date) can do wonders.

ONE WORD, ONE ACT – CHANGE...
One word and its wrong interpretation caused irreparable damage. The Americans issued an ultimatum demanding the unconditional surrender of Japan. Nearing breaking point, the Japanese wanted to negotiate for peace, but not surrender unconditionally. They issued a statement using a Japanese word ‘mokusatsu’, which technically meant ‘refrain from comment’, but had another interpretation i.e. ‘ignore.’ And that is how the Americans decoded it. Keeping the Japanese ‘refusal’ in mind, Americans continued to fight and eventually dropped two atom bombs – an event that changed Japan forever. One wrong translation caused so much destruction. In contrast, one statement shot this actress to fame and resurrected her failing career. Yes, one racial slur shot Shipla Shetty to fame and made her a fortune. So much so that now everybody seems to want one!

But, it was bravery of a different kind that changed the world. A simple seamstress from Alabama refused to relinquish her seat on a city bus to a white man. It was her one act of courage that sparked the Montgomery Bus Boycott and brought the Civil Rights Movement to national attention. Jack Kemp ‘once’ said, “the power of one man or one woman doing the right thing, for the right reason and at the right time, is the greatest influence in our society.”

ONLY ONE, YET NOT INSIGNIFICANT
It may look small and insignificant but sometimes ‘one’ can have tremendous impact. It was one vote per precinct in key states that gave victory to George Bush. It was one vote by then Vice President Al Gore that approved President Clinton’s budget, which included the largest tax increase in American history. It was one vote that made Hindi the National language. History proves that one vote absolutely does matter. So next elections, remember that your vote could be the crucial deciding factor.

Compared to this vast universe you may look like a tiny dot but you have the power to control this vastness. However small, but you do matter. When in doubt hum the Song “Everybody makes a difference.”

ONE – IS ALL IT TAKES
It was ‘one’ film and ‘one’ title of the ‘Angry Young Man’ that changed the career of Amitabh Bachchan and catapulted him to fame. When he was deep in debt and was ‘written off’ by the industry, it was one game show – Kaun Banega Corepati – that again saw him riding the high wave of fame and fortune. Not just Amitabh, KBC even changed the fortunes of television. Suddenly, TV programming was hot & happening and worth watching again.

Back when Indians were fighting their war of independence from British Colonial rule, the favourite British jibe was that “Indians were not ‘manly’ enough to rule themselves.” Mohammed Salim was a simple boy from Calcutta, known for his ability to keep a football in the air. He, together with his team used football to give a firm retort to the British. He proved the British wrong by defeating them in their own game and showed that Indians were not inferior to the British in any way. Most interestingly, the Indian team played the game bare foot and defeated the haughty English men in boots. That ‘one’ victory sent a strong signal to the whole world!

Large numbers are simply no good because sometimes just ‘one’ is enough. One album ‘Thriller’ shot Michael Jackson to fame and made him immortal.

Napoleon was obsessed with the idea of ruling the world. He seemed unstoppable, conquering one country after another. It took one man, one day to smash Napoleon’s dream of invading Britain. In the Battle of Trafalgar, inspite of being outnumbered by the French, Nelson won and that too without losing even a single ship. The Trafalgar Square in London stands testimony to that beautiful victory.

In the corporate world ‘one’ is the new buzz word. Top executives globally are facing criticism for drawing hefty salary packages and the growing financial crisis. CEO’s are now pruning down their packages to just one dollar. Vikram Pandit the CEO of Citigroup will now take home a one dollar salary, Larry Ellison the Oracle CEO too would take home just a dollar this year as salary – a cool $999,999 less than last year.

Steve Jobs and even the founders of Google have been old members of the ‘$1 CEO club’, which now seems to be getting bigger and bigger. We hope that it also helps the economy – but one thing that it is doing for sure is attracting attention.

‘One’ is small, but has the power to make a big difference. Sometimes the number of chances that you get or need to completely overhaul your whole life is just ‘one’. As Abraham Lincoln said, “It matters not the number of years in your life. It is the life in your years.” Seize the moment now; know that this is your one chance to change everything. Strength, my friend, doesn’t lies in numbers, but in just that ‘ONE’ opportunity. Don’t miss it!

“Shut-up and dance”

Wednesday, September 23, 2009
A critical part of communication is not what we had thought it to be all along. If history had commanded corporations to ensure that they ‘speak out’ their advertisement campaigns and product features in as forceful a manner as possible, contemporary times are destroying that strategic belief to forward a line of thought that perhaps quite the opposite is true now, if one wishes to succeed fantastically!

I teach a course in communication. After I have taught students the importance of making a good first impression, of the power of words and how to use them effectively, of the factors to keep in mind so that one is understood properly, of how to use one’s voice to make a speech most interesting, I tell them, “Now you know everything about speaking in public, but you still are not a master communicator.” And that is because there is still something more to communication than speaking. Speaking is just 33% of communicating. Then what’s the rest? Well, let’s try to figure out that.

LINCOLN NEEDED IT TOO!

This was decades ago when America was torn with the Civil War and Lincoln was fighting hard to abolish slavery. He wrote to an old friend of his and asked him to come to Washington to discuss some problems. When his friend came, Lincoln talked to him for hours. Lincoln went over all the arguments, letters, newspapers, articles, which had arguments both for and against abolishing slavery. After talking for the whole night almost, Lincoln finally bid goodbye to his friend without even asking him his opinion. His friend later commented that that night, Lincoln did not want advice, he wanted a friend.

A man once met Stephen Covey and put forward his problem, “I can’t understand my kid. He just won’t listen to me at all.” A visibly surprised Covey commented, “You don’t understand your kid because he won’t listen to you? But I thought to understand another person, you need to listen to him!” The father looked even more surprised.

To put it simplistically, what is it that Lincoln’s friend did, which the father in the second case did not do? Yes, listening! That night, Lincoln wanted a sympathetic listener to whom he could unburden himself. And perhaps the father in the second case did not realise that most children want absolutely nothing from their parents but an empathic listening. Children are waiting to open up if only they were listened to without being ridiculed or judged.

HOME OR WORK, IT’S THE SAME

Toyota was designing its Tundra Truck, but considerable inputs come not from designers, but from farmers. A team from Toyota spent days visiting different regions of US – horse farms, factories, construction sites and more – to meet with truck owners. They did not just ask them about their preferences for towing capacity and power (in a truck) but even silently observed them at work. Through this, the team learnt the ideal placement of the gear shifter; they also learnt that the door handle and radio knobs needed to be extra large because pickup owners often wore gloves all day. Clearly, no amount of discussions or brainstorming sessions could have possibly revealed these nuanced preferences.

Earlier, while Burger King used to serve Coca Cola, PepsiCo was trying very hard to convince Burger King to add Pepsi to its menu; but Burger King kept saying it had room only for one beverage. To this, PepsiCo argued that Burger King promoted “choice” in its advertising and offering Pepsi was a way of giving consumers a choice. The negotiations reached nowhere. Finally, somebody in PepsiCo listened, and really listened to what Burger King was trying to say; and consequently changed Pepsi’s pitch. The new pitch stressed the similarly between Burger King and Pepsi. The pitch forwarded the proposition of how both Burger King and Pepsi were number twos gunning after the number ones; and how, therefore, it made sense for Burger King to kick Coke and bring Pepsi in.

Pepsi never in its wildest dreams could have thought of suggesting to Burger King to throw out the leader; but someone out there read between the lines, and bingo, the deal was done. Later, an executive at Burger King said – this is exactly what we were trying to tell them for months, we’re glad they finally listened.

‘Listen’ to succeed in business, for not many people are doing it as everybody is so eager to talk. In listening lies the formula for success. Albert Einstein has famously said: “If A equals success, then the formula is A=X+Y+Z, with X being work, Y play, and Z keeping your mouth shut!”

READ PEOPLE, NOT BALANCE SHEETS

A master negotiator uses “silence” to sell. Silence helps him to listen and actually learn; and even when there isn’t much to learn, it gives you a chance to collect your thoughts. Ever wondered why Japanese businessmen use the help of human translators even when they might understand perfectly well what you are saying. It’s a masterful negotiation technique – it gives them time to frame their reaction and then respond cautiously. If you are too quick to speak/respond, you may make a mistake sometimes. Well, not the Japanese.

Everyone knows that in business, there are few places as delicate and important as the negotiating table. A master negotiator is one who listens well. Not just listens well, but listens aggressively. It goes beyond simply listening to words. A master negotiator listens with his eyes and ears. He observes the other person closely. It was Captain Michael Abrashoff’s ability to listen aggressively that helped him transform the worst ship in the Pacific fleet into the top ship in the entire Navy. He realized his young crew was very talented and full of great ideas, which came to nothing for no one in charge ever listened. So he listened aggressively, observed keenly and picked up every good idea the crew had; and a miracle happened – the worst ship transformed into the best. His simple logic – the crew sees things the officers don’t, all that the captain needed to do was to see his ship from the crew’s eyes. Business is no different. You need to see the business from the customer’s point of view. You need to aggressively listen – which means you see the body language, the facial expressions, the tone of the voice; and not just the words. You understand the feelings behind the words. As someone said, “The first duty of love is to listen.” I would say the foundation of any relationship is to listen, and listen aggressively – as a Chinese proverb says, “To listen well is as powerful a means of influence as to talk well, and is as essential to all true conversation.”

After all, those are aggressive observers and listeners who always get what they want. Remember, every teenager knows the best time to ask his dad for his car is when dad’s in a good mood (preferably in the evening, after he’s had a drink or two!). Good people observers are master negotiators and great leaders. If a teenager can be in the know of these tricks, it’s time you used them too. Customers always give a feedback – either by buying your product or the competitors’. Observe carefully. Listen to the market, watch your competitors aggressively. Many a time, we miss important clues as we are busy ‘acting’ (formulating strategies, changing plans etc). Stop and shut up! It will help you think better.

Motorola had a magnificent run of success in the 1990s when it grew from $5 billion to $27 billion in annual revenues in just a decade. It was around this time that a New Zealand mountaineer Rob Hall died on the Mount Everest. But as his life ebbed away, he talked to his wife; and his parting words, “Sleep well my sweetheart. Please don’t worry too much,” captivated the world’s attention – all thanks to a satellite phone link. Motorola took this as an inspiration and developed a bold and very expensive venture named ‘Iridium’. It planned to launch 66 satellites to ensure people were connected to each other always, irrespective of which part of the world they were in. By the time Iridium was ready to be launched, the world was already used to the traditional cellular service; and no one wanted a satellite phone whose handset was the size of a brick and that worked only outdoors. Iridium did benefit people who were stuck in remote places; however, the company forgot to calculate that not many people needed to call home from the South Pole or Mount Kilimanjaro. The company ignored the markets needs and wants. It failed to listen aggressively and change accordingly. As a result, Iridium – that was launched in 1998 – had filed for bankruptcy in 1999, sealing Motorola’s fate.

So if you want to really make it big and succeed, it might well do you good to shut up and simply dance your way to success.

DHAN TE NAN

Thursday, August 27, 2009
THE WAY TO ADVERTISE

Early this month a very interesting book was released which caught my attention and really got me thinking. Named “Nobody’s Perfect: Bill Bernbach and the golden age of advertising” this book is written by Doris Willens, a former journalist who looked after the PR division of Bill Bernbach’s advertising agency DDB (Doyle Dale Bernbach) from 1966 to 1984. Twenty seven years after the death of Bernbach, here came a book which painted Bernbach as a blemished, insecure, person who leaned on others work. A man who I hold in very high esteem, a man who features at the number 1 position when it comes to drawing up a list of “Top 100 people of the century in the field of advertising” for he changed the course of advertising history- how could he be painted in such a bad light? Here was a man, who according to the author Doris Willens, was a devoted family man, unlike the many womanizing and boozing admen of those days (and even today!), was creative and disciplined. However, what interested her more were anecdotes of little or no relevance to the world of advertising- things like he recycled speeches, put one of his sons on the payroll unbeknownst to management and was frustrated over not being able to publish his own book. Ridiculous! The man has contributed so much to the business of advertising that these allegations seemed so petty. But they did have one positive influence on me- they made me go back to my old notes, my books to read and understand this genius and many more like him and rediscover the important lessons that their work has taught.

IT’S NOT A QUESTION OF “EITHER”, “OR”

When advertising started there used to be someone who would write lines and then hand it over to someone else who put a picture or an illustration that matched those lines. Bernbach was the first to take a bold step and change this business of making ads. According to him “Advertising is the art of persuasion” and he cited an interesting study by “AAAA” which claimed that 85 percent of all advertisements were ignored by consumers. What was the use of businesses spending so much money when all it caused was boredom? One needed to persuade and persuade hard. This could be done only when every aspect of the advertisement spoke the same language. So he changed the process of making the advertisement. Everyone knew the rules of advertising but they lost it all by working independently. He made sure at every level of ad making the artist and the writer worked together. Now the artist could suggest a headline, the writer a visual and for the first time “art and copy” were integrated as one. Everyone was in sync with each other’s thoughts and the ads worked brilliantly. Now 1+1 equaled 3. DDB’s unique approach gave birth to many masterpieces in the 1950’s. A bargain department store in New York named Ohrbach’s had a small media budget but Bernbach and his agency created a masterpiece for them. His ad without once mentioning prices made an advertisement which gave a clear positioning to the store. The advertisement showed a man carrying a woman under his arm with a caption that read “Liberal Trade-In: bring in your wife and just a few dollars….. We will give you a new woman.” Another in the series showed a well tailored woman flanked by a man shattered into pieces with a caption that explained “clothes that make the woman without breaking the man”. It was a beautiful and relevant combination of “art” and “copy”. It is not surprising then that it’s in the list of the Top 10 advertising campaigns of the century and number 1 and number 10 have ads created by DDB. No one else could get 2 of their ads into the top 10. At number 1, you have the Volkswagen ad with the headline “Think small”, at number 10 is the very very famous advertisement of Avis which had the most iconic headline ‘We are no.2. We try harder”. It was these few words that altered the fortunes of both the companies forever. Bernbach not only made sure his agency did good work, but he ensured that no “good idea” got lost. A lot of people think up wonderful ideas but its rare to find an ad man who can recognize a great idea created by others. His creative philosophy was simple “…indulging in graphic acrobatics and verbal gymnastics is not being creative” you need to create something where every word, line, shadow, makes the ad more persuasive.

PERSUASION- THE ONLY GAME THAT MATTERS

In life what matters most is the power of persuasion and its words, rather the right words that most often determine whether an ad will work well or not. Yes, years ago Confucius did say “A picture is worth a thousand words” but in the business of advertising, a picture without words does not work. After all have you ever seen an advertisement without text? But you would definitely have seen ads without pictures. In fact great genius like Claude Hopkins went to the extent of starting that “illustrations were a waste of space”. May be this was true 60-70 years ago when clutter was less, but what we should not forget is a picture alone- however wonderful can never sell a product. The advertising greats never forgot this. Raymond Rubicam made sure his agency Young and Rubicam made well written ads. He used to say “The way we sell is to get read first”. In order to do that he ensured that every fact about the product being advertised was well researched. He was the first to make research a part of the creative process. Like Rubicam, David Ogilvy too was a firm believer in research for he believed in the power of words to convince a consumer to buy a product. It was the “headline” which could make or break your advertisement. According to him “5 times as many people read the headline as compared to those who read the body copy. So unless your headline sells your product you have wasted 90 percent of your money”!

Be it print or television ads, long after you have seen them, it’s the “words” that linger on in your memory. Great punch lines sometimes even become a part of our daily lingo. “Hum Santro waale hai,”, or “utterly butterly” keep popping in conversations like many more such punch lines. “Daag achche hai” made kids lives more fun, with Daddies explaining mommies about the joys of childhood & the stains that accompanied it. Mommies smiled and answered don’t worry “Mummy ka magic chalega”

WORDS ARE ALL WE HAVE

Yes, the one who can master the art of juggling words and getting the right mix is the master persuader and the best salesman. It is not important if your words are technically correct or the sentence grammatically perfect; but the words should work for the brand and make it memorable. What language you speak is also important Ford Icon became the “Josh”: machine in India, Coca Cola associated itself with “Thanda” which colloquially means a cold drink in India. Times of India’s award winning advertisement “A Day in the life of Chennai” used words like “Naaka Mukka” which worked fabulously for it meant “tongue nose” – a Tamil expression using people to let their hair down.

Well worded expressions are always winners. Energizer batteries used the strap line “Never let their toys die”. Pillsbury frosting stated “Spreads as good as it tastes”. Even before one used the product the words already helped you visualize the benefi ts of it. No wonder they could beat competition.

Some words which otherwise would be termed as gibberish seem to have worked well for a lot of situations “Hoodibaba” worked well for Bajaj Caliber. The product may have nor done well but “Wakaw” immediately brings to mind coke’s product: “Vanilla Coke”. Apart from Hrithik Roshan it was the “mast” punch line of Tata Sky “isko laga dala toh life Jhinga lala” which made the brand name popular. These words catch the attention which is the primary purpose of an advertisement. Budweiser used the same trick with its “Whassup!” award winning ad campaign. Sometimes gibberish really works – think “Dhan te nan” the foot tapping number from the more Kaminey. You must be able to think of a “Dhan te nan” headline or punch line for your advertisement to rock.

THE GOD OF SMALL THINGS

Tuesday, August 11, 2009
THERE WAS A TIME WHEN BIG MEANT ECONOMIES OF SCALE; BIG PLANES WERE BETTER AND BIG COMPUTERS WERE WOW. BUT ALL THAT HAS CHANGED. SMALL IS THE NEW BIG; ESPECIALLY IF THE GUY BEHIND THE SMALL IS THINKING BIG!!

“If you cannot do great things, do small things in a great way,” said Napoleon Hill. This got me thinking about the significance of “small.” It’s the “small things” that have been changing and influencing our lives. Back in the 1960’s everyone was making big long cars. Doyle Dane Bernbach was hired by this company to create a campaign to promote an ugly looking car. It took a small headline to shake up the whole automobile market and changed all the existing rules of advertising forever. The headline read “Think Small”. Bernbach’s “Think Small” advertisement for the Beetle car was actually an exercise in thinking big. This ad catapulted the Beetle into fame and sales of the car (which no one gave much chance to succeed) actually broke all records and expectations. Not surprising then that in the list of the top 100 advertising campaigns, Volkswagen stands tall at the very top with its “Think Small” campaign that Bernbach created in 1959.

In fact, it was the “big” that drove Detroit into a ditch. GM, Ford and Chrysler had been America’s symbol of economic might and prosperity. They totally ignored the small and concentrated on big cars only. But it was the small and fuel efficient cars of Japan that helped them capture the US car market. In August 2008, the American car industry saw a drop in sales by 11%. Japanese carmaker Honda, on the other hand, out performed the sliding US auto industry with its US sales up by 1.2%. In 2007, Americans bought 55 light trucks for every 45 passenger cars. In July 2008, the ratio inverted and so did the fortunes of car companies. It’s the ones who focused on “small” that survived.

Toyota was another company that grew in an unprecedented manner and dominated the global car-market. Its hybrid car model, Prius became a best seller. But today, all is not well at Toyota City in Japan. The company has been hit badly by the slowdown. All eyes are focused on Akio Toyoda, the grandson of Toyota’s founder Sakichi Toyoda. In his first press conference ever, he said that the company had over extended itself in an effort to make big cars for the American market, forgetting completely that it was “small” which was responsible for its success. It’s time the company went back-to-basics and revamped its strategy, he said. Toyota City wanted to become like the Detroit of America – with car sales plummeting and unemployment increasing, the city is scarily coming close to fulfilling its dream.

It’s time to turn to “small” to survive. For that’s the way Ford has been able to survive. It’s the only US automaker that has not filed for bankruptcy because among other things, the first thing it did was sell off its big nonprofit table cars Jaguar and Land Rover to Ratan Tata. Alan R. Mulally, Ford’s CEO knew that the future was “small” and with this sale, Ford secured its future. In July, its sales rose 2.3% from last year, thanks to the increase in demand for small, fuel-efficient cars! The news made Ford the first among the major American carmakers to report a sales increase in the US this year. Small creates big impact – remember the atom bomb and how it altered Japanese and world history forever.

SMALL MONEY BIG DIFFERENCE

“Be faithful in small things because it is in them that your strength lies,” believed Mother Teresa. It is this faith that led this company to raise millions of dollars annually for children around the world. Since 1991, this small idea has helped this company raise over $70 million. Yes, it’s the UNICEF’s “Change for Good” campaign that was started with a simple premise that people who travel and have left over foreign coins or notes would probably never use them again. This way UNICEF found a way to turn this normally wasted money into millions of dollars for helping the underprivileged children. All that travelers were required to do was to give their spare coins in an envelope to an in-flight personnel on their way back home. Flights distributed promotional materials showing celebrities supporting UNICEF in this initiative. Till today, this small idea of small change continues to work, making it one of the world’s best known CRM campaigns.

More than charisma, it was a steady flow of funds that was responsible for Barack Obama’s victory. He used the Internet to raise money like no one could ever imagine. He turned his campaign website into a 24 hour deposit box that filled up slowly but steadily as “small” donation trickled in. He raised half a billion dollars online with 90% of the transactions coming from people who donated $100 or less, while 40% came from donors who gave $25 or less. No other campaign in the world has managed to create an impact as big as this one.

It was Muhammad Yunus’ “microfinance” and small loans to poor farmers that helped fuel his big dream of changing the fate of the poor and perhaps someday make poverty history. In 1975, he realised that by giving a mere $27 he could change the lives of 42 people of a village. He started the Grameen Bank that gave small loans to the “poor-uncredit-worthy” and changed the fortunes of one village after the next. He and his bank today have loaned more than $100 million and changed the lives of thousands forever. As the artist Van Gogh said “great things are done by a series of small things brought together.”

SMALL IDEAS BIG RESULTS

This man started a trend of sorts at Harvard. Everybody now wanted to find an idea and drop out of Harvard. Marck Zuckerberg founded Facebook while he was studying at Harvard in 2004. He never knew that a small university project could cause such an explosion and ‘blow away’ every youngster’s mind on this planet.

Many big businesses started as “small” projects. Bill Gates did it in the 1970’s; Sergy Brin and Larry Page started Google as a project in Stanford; Yahoo and Cisco System too were Stanford projects. Seeing the potential of “small” beginnings, in 2007 Harvard discarded its ancient rule of prohibiting students from running companies from their dorm rooms. If you know where you are going it is of no significance how small your start is. As Fidel Castro said, “I began a revolution with 82 men. If I had to do it again, I’d do it with 10 or 15 and absolute faith. It does not matter how small you are if you have faith and a plan of action.”

It started with a $5,000 loan, that helped him lease a garage and a copy machine. Today Paul Orfalea has converted it into a business we all know as Kinkos – with more than a thousand business centres worldwide.

A piece of paper, pencil, some imagination and a small loan of $500 was how this company started. Walt Disney, inventor of Mickey Mouse, built a huge empire that today is one of best and oldest standing companies in the world. Don’t forget, it all started with a mouse.

SMALL STARTS SOMETIMES FINISH BIG

Wal-Mart started in a small town in Arkansas in 1962. It was this novel idea of opening a department store in a small town, when everybody else was rushing to open shop in the big cities, which led to the tremendous growth of this retail giant. Big cities were crowded, expensive, had tougher competition and were running out of good real estate options.

In contrast, small towns had none of the above problems, besides also having consumers that were delighted to find someone who cared enough to open a departmental store in their otherwise boring town, and especially one that was comparable to stores in bigger cities.

BEST DEALS COME IN SMALL PACKAGES

It was Chik shampoo that first introduced India to sachets in the 1980s. Earlier shampoos were available in large bottles. A change in packaging increased the market size dramatically. It worked especially well in the rural market – a market that is growing faster than the urban one. Every multinational that wants to grow is repackaging its goods into smaller units. If Colgate has its toothpowder in a 10gm sachet, sugar is now even available in a Rs.2 pouch, jam in a 10gm sachet and just 2 slices of bread are now sold in a single pack. Marketing them in small sizes, increased their market.

The magic of small was understood best by Estee Lauder. She did not have a huge advertising budget usually required to sell cosmetics. So she decided to package her cosmetic items into small size packs and distribute them as gifts to potential consumers. Not only did she manage to capture a huge market share, but also started a totally new trend in marketing.

Try sleeping with a mosquito and you will never underestimate the power of small things and the big differences they make. Napoleon was the greatest French Emperor and he was short. Kylie Minouge is not too tall either, but has done the biggest music counters. And it is not the big, but the small screen that worked wonder for Ekta Kapoor and her saas- bahu serials.

Frustrated by the high cost of film production, some Nigerian filmmakers turned to making home videos taking advantage of the affordable digital filming and editing technologies. Suddenly, movie making became affordable. Today, all films are produced using digital video technology. Colloquially known as Nollywood, Nigeria’s film industry is the second largest film industry in the world in terms of number of films produced per year. They churn out 200 videos for the home video market every month!

Small things do great things. A small leak can sink a ship, a small invention like the TV remote can change life forever. When phones shrank to mobiles and skirts shrank to minis, many swore that the world became a better place to live in. So if you want to go far and make it big, master the small first.

Forty years ago, on 20th July, humankind landed on the moon. It was Neil Armstrong’s one small step that changed the world. A journey, however long, starts with a single small step. Don’t undermine the power of small. And to really succeed, become the god of small things.

SRK India's Biggest Brand

Thursday, July 30, 2009
Entertainer, brand endorser, producer, businessman, cricket club owner or the ever-friendly neighbourhood guy Rahul... brand SRK ROCKS!

Come to IIPM, I’ll see you there,” says Shah Rukh Khan with that famous smile of his. And even as the big day nears, the excitement at the Indian Institute of Planning & Management (IIPM) is fast turning into a frenzy. The man, who is famous for his unlimited energy, seems to have infused some of it into the staff and students too, for no one seems to be going home (or sleeping) for days now! It’s work, work, work everywhere – every detail being looked into, everything being checked twice, just to be sure there are no goof-ups on D-day when the business quiz would be held and of course, no one is complaining!

SRK is someone who features regularly in Bollywood discussions, and also boardroom discussions, for a simple reason – the man is not just an actor, but an intelligent actor. He is not just a brand ambassador, but an intelligent business man (probably the economics background helps!). Every word, every statement, every comment is well thought, well reasoned and most of all, well worded. He is one of those rare celebrities who can never be outwitted! Not surprising then, that he features regularly in my write-ups and lectures in advertising. What is it that makes SRK such an interesting case study for MBAs! Let’s explore SRK, the brand.

ART OF WAR

There is a world famous book by the same name written by Sun Zi in the 6th century B.C. A book so old, yet imparting wisdom as relevant and useful even today that helps leaders and managers workout their business tactics. A famous quote from the book goes like this, “Know your enemy, and know yourself and victory will always be yours.” SRK seems to have understood this pretty well and has fought all his wars successfully. Of course, we are not taking about the Amitabh-SRK spat or the Salman- SRK imbroglio or even the Vidhu Vinod Chopra-SRK duel. We are not even referring to the Aamir-SRK face-off or the war between producers – distributors and multiplex owners that Shah Rukh helped put an end to. We are talking about the brand wars that he fights regularly and wins almost every time.

In 2005, ITC Foods announced that Shah Rukh Khan would be the brand ambassador for its flagship brand Sunfeast, endorsing the entire range of snacks under the brand umbrella. In 2003, when Sunfeast was launched, no one in the industry thought that the brand could make any major dent in the market share of its competitors’ – the old and mighty Parle and Britannia, who had dominated the country’s biscuit business for years. But ITC played its cards carefully. First, it brought in the world’s most revered cricketer Sachin Tendulkar to endorse their biscuit. “Sachin’s fit-kit” was an amazing idea and a surefi re hit. Next, the company roped in the evergreen charmer Shah Rukh Khan. Biscuits mean children, but SRK’s presence meant not just influencing children, but people across age groups. ITC Food’s strategy worked. According to A. C. Nielson’s retail sales audit of March 2006, both Britannia and Parle started losing volumes significantly. A worried Parle hastily roped in Hrithik Roshan to endorse its “Hide & Seek” brand. The move did not work. SRK won the hearts of consumers and the sun began truly shining for Sunfeast.

Take the laptop market. HP roped in Shah Rukh to endorse its range of brands from Compaq to sundry printers, with the famous tagline, “The computer is personal again.” This caused a flurry of high profile branding in the PC segment. Lenovo roped in Saif Ali Khan as its ambassador. Acer got Hrithik. Yet, SRK ruled this market. Interestingly, when it comes to being a pioneer and offering consumers the latest technology, it has always been Acer that has come up tops and with the most unique offerings. Think of it, Acer was the first to launch a Ferrari laptop range, a gemstone range designed by BMW designers and many such innovations. However, with SRK endorsing Compaq, Acer did not stand a chance. People perceived Compaq to be a better brand and HP held on to its market leadership. When the Badshah enters, you stand no chance.

OF BUILDING BRANDS

Every marketer knows how tough it is to build a strong brand and how long it takes. Yet, there are some who make it seem like a cake-walk. It’s common knowledge that when SRK entered Bollywood he knew no one. In fact, he knew nothing except that this is where he would rule one day and so he did. Today brand SRK is so powerful that anything it touches turns to gold. When India was introduced to the world of club cricket, not many thought the Indian Premier League (IPL) would work. It did. However, it has worked better for some, as compared to others. Yes, you guessed it right. It has worked best for SRK. In May this year, UK’s Intangible Business released the IPL Brand Value Scoreboard 2009 that measures the strengths and weakness of the eight IPL Franchises. Shah Rukh Khan’s Kolkata Knight Riders (KKR) topped the charts with a Brand Value of $22 million followed by Delhi Daredevils. No team excites the audiences more than Kolkata Knight Riders. Even when it loses a match, it doesn’t fail to excite valuers. As per Richard Yoxon, Director, Intangible Business, “Winning games is not enough to build a successful sports brand. Teams need to engage the local community, attract star players who inspire a wide audience and develop a strong marketing communications programme.” The various factors that it measures to determine a brand’s strengths include popularity of team, loyalty of supporters, owners equity viz. a measure of the impact the franchise owners have on the brand, brand awareness, et al.

KKR beat all its rivals and reserved the top slot for itself, despite a dismal performance during IPL Season 2. Look at the team’s partners. Hyundai (the country’s second largest car manufacturer) is the ‘Traveling Partner’ of Shah Rukh’s team; Sprite is the ‘Pouring Partner’, Nokia may have cut 1,700 jobs worldwide and is supposedly still on a cost cutting spree, yet this year it went all out to associate itself with KKR. After all, Nokia has been voted as the second most visible brand during IPL last year next to SRK’s KKR. Guess it just made good business sense to associate with a winning brand then. This time round, Nokia even decided to pack in more KKR value added services, like cricket scores, player interviews, games, et al. It is the dynamism of this one man that has made KKR such a big brand in a short span of time. Not surprisingly, Kolkata Knight Riders have also become the favourite brand ambassador of a lot of Kolkata based companies. After all, how long could they manage with Mithun da and Saurav Ganguly. SRK has managed to charm his way into the hearts of a lot of Bengalis and brands don’t want to miss the wave. Kolkata based Rs.190 crore Linc Pen signed up SRK in Dec. 2008 and renewed its contract immediately. SRK gave them likeability in the market. After all, if people associate with SRK, they would automatically do the same with this brand.

ONLY SRK WORKS

When Fair and Handsome, the fairness cream for men, was launched, Emami knew that the only person to play the role of brand ambassador effectively for an innovative product like this, could be Shah Rukh Khan. There is no shortage of brands today and no shortage of celebrities. Yet, very few associations seem to work. Many a times, the celebrity in question tends to overshadow the brand. It is indeed quite common for people to remember the celebrity, but conveniently forget the brand. In an oft-quoted survey, when people were asked which brand of suiting did Nawab Pataudi (you may now know him as Saif’s father) endorse, almost every respondent said “Raymonds.” After all, Pataudi was the complete man, a positioning that Raymonds had carefully crafted for itself. But Pataudi’s bill had been in fact footed by Grasim! Now think of the “Sunshine Car”. I bet that the first name to pop-up in your mind would be of Santro. The second? Shah Rukh! Be it Sunfeast or Santro, SRK always brings the sun out for brands. So when Sona Chandi Chyawanprash wanted to take a bite from the Rs.130 crore chyawanprash market in India, it found Dabur (with 60% of the market share) blocking the way. It was going to be a gigantic fight and a giant was precisely what Sona Chandi needed to tide over its worries. They got in SRK, knowing that only he could trigger their sales and they were right. The brand saw a 28% increase in their market share soon after.

At a time when companies are dropping their celeb endorsers (Tiger Woods recently ended his 9 year relationship with GM) to save costs, some companies know they cannot do without their brand heroes. A good marketer knows that it’s not just a good product, but good perception about the product in the minds of consumers, which makes all the difference between success and failure. And SRK has perfected this art of making himself and the brand likeable.

Marketers know it, which is what makes SRK not just the king of Bollywood, but also of endorsements. With 39 brands in his kitty, he was the highest endorser (in terms of number of brands) for 2008. But the count does not seem to matter for SRK. Rather, he believes, it’s better to burn out than to rust out! Over 39 brand endorsements, 1 billion fans and 1 highly valued cricket team... guess it all adds up to 1 fact – SRK is the biggest brand in India!

Nothing is permanent

Wednesday, July 15, 2009

Conventional wisdom says ‘entry barriers’ should prevent new players and brands from upstaging their older and more established rivals. Yet, the marketplace is littered with example after example of new brands that have successfully climbed Mount Everest. How do they do it?

Nothing is permanent-in life, relationships and business! This eternal truth is brilliantly demonstrated by the rise, fall and rise of brands in the marketplace. Leaders of yesterday have become laggards today; and might become leaders again tomorrow or even disappear altogether. Students of economics and management are taught that every market has ‘entry barriers’ that make it very difficult, if not impossible for new players and brands to compete with and outperform older and well established rivals. But, what fascinates more than the so called entry barriers is the frequency and intensity with which new brands conquer more established rivals across the world. There are literally hundreds of such examples across sectors, geographies and segments. What makes the new entrants overcome formidable entry barriers and beat market leaders at their own game?

In contemporary times, technology and innovation play a key role in transforming late entrants into global power houses. Back in the early 1990s, when I was a management student, Microsoft was the unchallenged global leader. The advent of the Internet saw Yahoo first challenge the supremacy of Microsoft. Back then, nobody had heard about a word called Google. And yet, it is Google that is the undisputed and virtually unchallenged global brand in the business today. Bill Gates and his team at Microsoft have poured billions of dollars to create a search engine that can beat Google. No luck so far. And of course, it does appear as if the once powerhouse Yahoo is gently fading into history. And who knows, the rate at which new technology is evolving, the next generation might see a brand bigger than even Google!

Technology has played a key role in one of the biggest brand wars of the last decade or so. Going back to my days as a student, Motorola used to be familiar and awe inspiring brand name. Telecom was then – it still is – the market with the biggest promise and potential. But, we had only vaguely heard of mobile phones and Nokia was of course a name that probably only a few hardy souls in Finland were familiar with. The company was originally involved in manufacturing paper, pulp and rubber! But now, Nokia is the undisputed mobile phone and telecom global brand leader while Motorola is struggling of stave off bankruptcy. Quite clearly, brand Nokia has been more successful in harnessing mobile handset technology than Motorola, despite the huge head start

Technology and successful marketing of the consumer benefits delivered by the new technology can also explain why a relative newcomer dislodged an iconic brand in India as the unquestioned market leader. Back in the 1980s, Bajaj Auto ruled the Indian two-wheeler market. The Indian market was then overwhelmingly dominated by scooters with motorcycles coming a distant second. But that was the time Japanese two-wheeler brands like Suzuki, Yamaha and Honda made an entry in India. The Hero group tied up with Honda and launched the Hero Honda motorcycle. It was arguably the first ‘fourstroke’ bike in India and delivered superb fuel efficiency. The early Hero Honda ads brilliantly sold this value proposition to Indian consumers with the now legendary tagline – ‘Fill it, Shut it, Forget it’. Last year, Hero Honda sold more motorcycles than Bajaj and TVS together and is perhaps the largest motorcycle company in the world now. Sometimes, established brand leaders are demolished in the marketplace by new rivals because of sheer complacency and inability to move with the times. I will give one global and one Indian example to show how pervasive this tilt towards complacency is. Once upon a time, General Motors (GM) – along with Ford – virtually ruled the world of automobiles. Brands like Chevrolet and Pontiac had become gold standards when it came to customer loyalty and brand equity. By the time Toyota started selling its cars in the United States, the giant GM did not even deign to acknowledge the potential new rival. After the oil shock of the seventies, Toyota focused increasingly on fuel efficiency and smaller sizes while GM continued with gas guzzlers. The result: GM had to eventually fi le for bankruptcy in 2009 while Toyota is the gold standard today when it comes to quality and customer satisfaction in the automobile industry.

Let’s now go to the once Imperial capital of the British Empire, Kolkata in the early 1980s. Investors had already started fleeing West Bengal and the city was in seemingly terminal decline. The unchallenged brand leader in the newspaper market in Kolkata was The Statesman, which was the favourite morning tea companion of Kolkata residents for decades. The Ananda Bazaar Group took a huge gamble and decided to launch The Telegraph to compete with The Statesman. Before the latter could shrug off complacency, The Telegraph had used contemporary style, design and better coverage to emerge as the number one newspaper brand in the city. Today, Kolkata has even The Times of India and The Hindustan Times; but it is The Telegraph which is the brand leader while The Statesman is an old and ageing relic of the past.

Sometimes, changes in societies and lifestyles can cause seismic changes in brand hierarchies. For decades, Adidas and Reebok ruled the global sports footwear market; with virtually every athlete participating in the Rome Olympics in 1952 sporting an Adidas. In the United States, Reebok had emerged as the favourite. Then the ‘cultural revolution’ swept across America in the late 1960s and the baby boomers of America started becoming very ‘sporty’ and health conscious. In came an unknown brand called Nike that brilliantly rode this new found American love for fitness, jogging and health. Without any doubt, Nike – with its now famous Swish – is the undisputed brand leader in the world. Both Reebok and Adidas have struggled and even merged back in 2005 to be able to compete more effectively. But Nike has not budged from its position as the number one.

Many such brand conquests can also be ascribed to the relentless leveraging and use of one of the key elements of 4Ps – price. In the early 1960s, Bentonville, in the state of Arkansas (the state that gave Bill Clinton to America!), was unknown to most Americans. That was when Sam Walton was quietly fashioning the ultimate retail revolution. Since the early days of Sam Walton, Wal-Mart has relentlessly focused on low prices as the key strategy to lure customers and keep them loyal. When Walton started his legendary career and Wal-Mart, now one of the largest companies in the world, the brand leaders in retail were giants like Sears Roebuck and JCPenney. By the time Wal-Mart was quietly capturing suburban America in the 1970s, Sears Roebuck was attracting attention by building the then tallest building in the world in Chicago in 1975. Today, Sears Roebuck and JCPenney are fading relics of American capitalism while Wal-Mart continues to ruthlessly – and often controversially – use low prices to remain the brand leader.

Back in India, two relatively unknown and unrelated companies too used price as a fabulously successful weapon to frighten and dislodge existing brand leaders in the 1980s. Surf was the reigning brand in the Indian detergent market and had demolished virtually all rivals in the marketplace (P&G entered the Indian market much later in 1992). In came an unknown brand called Nirma that was single mindedly focused on low price. The massive success of Nirma frightened the living daylights out of honchos at Hindustan Levers who fought a rearguard action by launching low cost Nirma rivals like Wheel. Around the same time, an entrepreneur named Gulshan Kumar and his brand T-Series were giving music lovers in India a reason to hum in contentment. The then market leaders HMV and Polydor were used to charging exorbitantly for LP records and cassettes. T-Series sold cassettes for Rs.10 when HMV was selling them for at least Rs.40. T-Series hasn’t looked back since.

Of course, there is that rare occasion when a once formidable brand slips and tumbles and is written off as history – only to re-invent itself and re-emerge as a global powerhouse. You guessed right! I am talking about Apple that was the darling of computer and software lovers and geeks in the 1980s. Apple virtually died as a brand in the 1990s. And then came the iPod! The message is clear for entrepreneurs. You can beat formidable brands. And you can even revive them!

THIS IS IT

Wednesday, July 1, 2009
During his 1993 Super Bowl Performance of Heal The World, Michael Jackson elevated the mood of an entire stadium with just a single song. That’s the power of live music. To excel, artists today and tomorrow will have to carefully cultivate the same art of carrying the audience along for the musical joyride...

11 tickets per second! That was the selling rate of tickets for the ‘This is it’ tour at the O2 arena in London of the legend called Michael Jackson. All shows were sold out in a matter of minutes. According to its organisers ‘This is it’ became the fastest selling tour in history with people as far away as Japan, Belgium and Dubai, queuing up to purchase tickets, some even willing to pay up to $700 for tickets bought from secondary markets. This, inspite of knowing that the tickets are non-refundable even if the shows got cancelled. Michael Jackson’s planned 50- show run at the O2 Arena in London would have been the highest-grossing single concert ever. More than $85 million worth of tickets had been sold for the shows, which were to begin July 13. If staged as per schedule, they would have been Jackson’s first solo shows in twelve years.

MUSIC WILL NEVER BE THE SAME AGAIN
Yes! For many of us, who have been crazy fans of Michael Jackson since his “Thriller” days, the world of music has altered forever. But it is true that the music world has also changed in more ways than one. Music used to be heard on gramophone records, then on cassettes, which gave way to CD’s. Now, of course, is the era of digital music with the iPod and the internet playing a big role in the way music is distributed and heard world over. Digitisation got with it a new evil – the rise of “pirated” music. Piracy is so rampant and pirates are so good that there is hardly any difference between the original and pirated versions of music scores. In fact, pirating is so prevalent in China that legitimate stores too sell pirated CDs. Chinese artists today hardly make any money from CD sales. Not just in China, but world over, artists are not making money from CD sales, although CD sales in themselves are increasing. The moment an original CD is made, pirates are already out on the streets with their cheaper and equally good quality version. So much so that musicians today consider CDs as just another way to promote themselves and their music. If their music is liked, then they have a chance of making money via other means. Their popularity could get them product endorsement deals and a chance to appear in commercials. More importantly, artists, musicians and rock stars these days are relying more on live shows to earn money. Think about it. Back in the 1940’s musicians had protested that recorded music would ruin the live concert business, then the largest source of revenue for the music industry. Today, once again, live concerts are proving to be their biggest revenue earners. The business model of the music industry is changing fast. Internet downloads and pirated CDs have brought down the perceived value of music. Eventually recorded music will make no money. Live concerts, on the other hand, seem to be back with a bang and are here to stay. Live music, and the experience it guarantees is difficult to replace. The feeling of the beats on your chest, the screaming fans, the crazy hysteria, all of these are things you cannot pack in a CD. It was this ‘hysteria’ that fans wanted to be a part of when they heard that Michael Jackson would be performing for the world – one last time. This was truly the last opportunity for many to experience the thrill of listening to the century’s greatest rock star – live!

ALL ABOUT MUSIC VENUES AND MUSIC
The most exciting thing in life for a music fan is seeing his or her favourite band live. It’s this excitement and thrill that many companies are using to earn moolah for themselves. With live concerts becoming the lifeline, many artists are now moulding their careers differently. Instead of signing record labels, they are signing up with concert promoters like ‘Live Nation’, which today has become a major rival of music companies like EMI, Sony Music, Warner Music Group, et al. Famous artists like Madonna, U2, Shakira, choose to sign deals with ‘Live Nation’ rather than music companies, making the former a powerful force to reckon with. In February this year, ‘Live Nation’ merged with another giant Ticket Master to create ‘Live Nation Entertainment’. The two biggest names in live entertainment have not just created history, but a monolithical empire that would monopolise the business of live entertainment. Of course, a lot of eyebrows are being raised, but it just goes on to prove how important concerts have become today. According to Nigel Parker, author of the book Music Business, many consumers now seem more inclined to regard live performance as the defining experience of modern music. According to Parker, “The importance of live performance is underlined by the fact that the biggest-grossing live performers of recent years include veteran seventies performers such as Eagles, Rolling Stones & Pink Floyd, whose record sales no longer match their capacity to draw huge live audiences.” Before the business of recording sound started it was live music, today ‘live’ is back in business.

LIVE MUSIC IS BIG BUSINESS
Yes, concerts are money spinners for all and sundry! Now big artists are bypassing recording companies to associate themselves with concert promoters. Madonna entered into a $120 million contract with ‘Live Nation’, becoming the first major artist to endorse the auction and resale of her concert tickets on the internet. Shawn Corey Carter, better known by his stage name Jay-Z decided to end his long time relationship with record label Def Jam and made another $50 million deal with ‘Live Nation’ – creating a record of entering into one of the biggest music contracts ever awarded. Michael Rapino the CEO of ‘Live Nation’ foresaw the future of the music industry and today sits on a very successful business model. He started it as Clear Channel Communications and discovered the benefits of “Instant Live” recordings in 2004. A live performance was recorded directly during the show, burnt on CDs and sold to the audience as they left the venue. And so ‘Live Nation’ was formed in 2005 as a spin-off from Clear Channel Communications.

Today, there are websites offering you subscription services where you can listen to and experience live music concerts happening anywhere in the world, right on the computer screen in your bedroom. Surely, nothing can get bigger and more glamorous than a live concert. Who can forget the Live 8 concerts? Three billion people watched Live 8 in July 2005. It was the greatest show on earth. It promised to make poverty history and the world sang together in hope and happiness.

The future of music is indeed ‘Live’ and no one can prove it better than Michael Jackson himself. The mere announcement of his concert had the power to send the world of music into a tizzy and people over the world united to hear their favorite performer (in person) one last time. To excel in the business of music today, you need to have the persona to carry the audience with you during a live performance. You need to be a Michael Jackson who knew exactly what it took to drive his fans crazy – be it his moonwalk, his white gloved hand, his hair or his dance moves. This is it!

MARKETING GOES BEYOND

Wednesday, June 17, 2009

The best of products and marketing campaigns may fall fl at when it comes to the customer. And this may be despite the best of market research backing them. But a marketer who understands the customer’s mind can utilise the 4Ps strategy in a more optimal manner; leading to stupendous results

It’s turning out to be a year of new launches, making the market place more interesting and competitive. Palm launched its glitzy mobile phone “Pre” making Apple really shaky and nervous, with Apple wanting to sue it for copying the iPhone touchscreen. Microsoft has launched, rather relaunched its internet search engine with a new name Bing – planning to take Google headlong in the battle of the “searches”. Yes, this time – innovation seems to be the key to survival. But will plain innovation be enough to make a product survive?

THREE STORIES TO ILLUSTRATE

1ST STORY

100 students at MIT’s Sloan School of Management were shown an advertisement of the magazine – The Economist. It was a subscription ad, urging readers to pick the type of subscription they wanted to buy or renew. Three offers were on display:- 1st Offer: Internet subscription for $59 2nd Offer: Print subscription for $125 3rd Offer: Print and Internet subscription for $125

Out of the 100 students, 16 students opted for the first offer, zero students for the second, and 84 students went for the third offer. Now no one in their right minds would even remotely think of going for the second offer when at the same price, you got a bigger and better bargain when you selected the third offer.

So the researcher Dan Ariely decided to do away with the 2nd offer (after all no one went for it in the first round); this time again, 100 students were asked to fill up the subscription form. The results spoke a different story; 68 students chose the first offer of $59 for Internet only, while only 32 chose the $125 subscription, which offered the combination of print and Internet. While it appeared to be the most lucrative option the first time, what was it that made it look so lackluster the second time?

2ND STORY

It was a basement-run operation when it started. Today it’s grown into a huge business with branches spread all over the world. The company is Amway Corporation. The company has used a technique whose power is indisputable. It calls this BUG. Before you draw up any conclusions, the BUG in nothing but a collection of Amway products – the furniture polish, detergent, shampoo, deodorizers etc. all put together in a specially designed tray. Each salesman is trained and instructed that he has to necessarily leave this BUG in the prospects house for 24-72 hours, without charging her anything or putting her under any obligation to buy. She was just expected to try the product. When the salesperson returned to collect the free samples (BUGs), most of the customers bought at least one product. The BUG, true to its name, was working like magic. What was it that suddenly made the same products so good, that all sales shot up so fast?

3RD STORY

An owner of a jewellery store found that she was unable to sell a collection of turquoise jewellery. She tried as hard as she could, but nothing worked. As a last resort, during the peak tourist season, she asked her saleswoman to put a note on the turquoise jewellery section announcing “Everything at ½ (half) price”. As expected, everything was sold within a few days. However, the shocking part was that the saleswoman had not heard her correctly and instead of putting everything at “½” she had put them at “2x” i.e. double the price. Why did it all sell?

MIND GAMES

In the first story of “The Economist” subscription, the 2nd option of $125 for print subscription was included (even though it sounded totally illogical at first glance) to send 84 out of 100 people to reach out for the 3rd option. The 3rd option seemed like a “steal” when compared to the second. The 2nd option acted as a decoy – for when the decoy was removed the choices changed completely. As humans we always compare especially when we are not sure of what we want (and most of the times, with so many choices around adding to the confusion, we are not sure, not clear which is the best). This superbly intelligent advertisement of The Economist gently pressured us to go for the more expensive option by making it look most lucrative in comparison to the other option!

In the 2nd story of Amway’s sudden increase in sales the success had nothing to do with improved quality of the product, or price change, but rather the use of a “trick” to which mankind has succumbed to since time immemorial. It’s the magnetic power of the word “FREE”. Yes, “free anything” is always welcome. Amway combined “free” with “reciprocity”. The “reciprocity rule” says Robert Cialdini, binds us into doing something in return for a gift received by another. Amway’s “free trial” put many customers under obligation to buy – at least on product.

In the 3rd story, the unintentionally high pricing worked wonders on the minds of the buyers. High priced jewellery is always associated with high quality. So just when the owner of the jewellery shop thought that a reduction in price would rid her of these products which refused to sell, it was the obnoxiously high price that did the trick.

DID ANYONE MENTION PRODUCT?

A whole lot of new and interesting products are being launched this time. In 2005, more than 1,56,000 new products were launched, which boils down to a new product being released every 3 to 4 minutes. Yet, when it comes to remembering brand names, we remember only some and use even fewer ones. The rest all disappear sooner or later. Almost 80% of all products launched fail. Many a times they are not necessarily bad – it’s just that something fails to click in the minds of the consumers. Gone are the days when just offering a product of great quality was sufficient to ensure its success. It is the “image” that conjures up in the minds of the consumers which is most important today. We call this image – a “Brand”.

Back in 1996, British Airways went though an expensive re-branding exercise. In a bid to get a new look, the company changed the tail-fin design of its planes. Instead of sporting the colours of its National Flag, the Company started using different images – to make the airlines look more international. The British hated it. They wanted Britain’s flagship airline to look more British. Richard Branson didn’t miss the opportunity. He sensed the dissatisfaction of the people and immediately painted Union Jacks on its aircraft with the slogan – “Fly the Flag”. BA was forced to return to its old design – if it wanted to stay in business.

A supermarket operator one day realized that his cheese was not selling well. He put out the cheese and invited customers to cut off slivers – as free samples. He sold one thousand pounds of cheese in a few hours.

In today’s world, marketing is “perception building”. You need to understand why people reach out for a product. Those who have used a Nokia phone would rarely switch to a Sony Ericsson. Not because the latter is bad but because they are so used to the way Nokia phones function.

As a marketer, today your primary job is not to look at what your product has to offer but rather what is it that will motivate your target audience to buy your product.

HOW DO I KNOW WHAT WILL WORK?

Yes that’s the million dollar question. The answer to it is not easy; sometimes the quickest answer people give to this question is – do market research.

Ford Motor Company once asked Americans what features they wanted the most in their cars. Keeping all the points in mind, the company came up with the “American car”. It flopped.

In the 1970’s, Pepsi introduced the “Pepsi challenge” where consumers were blind-folded and asked to taste the two colas and give their preference. Most of the participants preferred Pepsi. Pepsi used these research findings and announced to the world that the “Pepsi generation” had arrived and Pepsi was the choice of the young and happening. A totally shaken up Coke decided to change hurriedly to keep up with the times and worked on a new flavour. The test-marketing brought a positive response from the market and in 1985, the New Coke was launched. What seemed like a flawless move turned out to be the worst blunder in the history of Coca Cola. Sometimes, consumer research fails to reveal the true emotions and passions of the people. Coca Cola was the “Real thing” and no one wanted a “New” flavour. They loved the “Old” and Coca Cola had to bring back its original flavour. The moral of the story is – marketing is a battle of perceptions, not products. So “listen” carefully. Sometimes a product may succeed even though research reveals no demand for it. Steve Jobs never, ever does any market research; yet the man and his inventions have changed the world. No amount of market research could have revealed the need for a home-computer when Steve Jobs started creating it. The consumers had no idea that a mobile phone could be made to look like an iPhone. No amount of market research would have let Akio Morita predict the thundering success of the “Walkman”. Yet all these inventions created history, or rather changed history!

A clever marketer is one who knows when to rely on his gut feel. A clever marketer is one who has his hand on the pulse of the consumer. He understands and believes that a brand is defined as “a bundle of audience perceptions about a product or service”. Gone are the days when just making a good quality product would ensure sales, gone are the days when you could beat competitors on the basis of just an ad, correct price and good distribution. Today you need to have the ability to understand the consumer’s mind and plan your 4Ps - price, product, place, promotion accordingly.
After all, marketing today goes beyond the understanding of the 4Ps.