Toyota Leads in Customer Loyalty
Toyota and its Lexus luxury division finished first and second in J.D. Power's annual customer retention study
by David Kiley
Autos
Toyota Leads in Customer Loyalty
GM Sales Stall in November
The New Entry-Level Cars
The Year Concept Cars Came On Small
What to Drive in Winter
Story Tools
post a comment
e-mail this story
print this story
order a reprint
digg this
save to del.icio.us
Toyota Solaras on display at Melody Toyota in San Bruno, Calif. Justin Sullivan/Getty Images
Toyota Motor (TM) may be experiencing its share of quality slips and bad press about not being as "green" as its reputation suggests, but Toyota customers have been re-upping with the Japanese automaker at a rate that makes rivals envious.
It was the second straight year that Toyota led all automakers in a study conducted by J.D. Power & Associates. Sixty-five percent of Toyota's buyers last year traded a Toyota for a new one. Toyota's luxury nameplate, Lexus, finished second, with 63%, followed by Honda Motor (HMC), at 62.8%.
Behind the Scores
"Toyota's high customer retention rate is particularly notable, considering that new-vehicle sales have declined in the past year," says Neal Oddes, director of product research and analysis at J.D. Power. (Like BusinessWeek, J.D. Power is a division of The McGraw-Hill Companies (MHP).) "Toyota maintains its high retention rates by providing high-quality vehicles and service to its existing customers, which in turn generates favorable word-of-mouth recommendations that attract new customers." says Oddes.
Toyota's performance in customer retention is impressive considering the industry average of just 49%. The highest scoring U.S. nameplate was Chevrolet, at 56%, owing mostly to the high loyalty rate among buyers of Chevy pickups and large sport-utility vehicles such as the Suburban. Ford Motor (F) scored 53%, much of that also owed to its pickup business.
The lowest-ranking automotive brands score poorly for different reasons. Mini, for example, scored second from the bottom mainly because Minis (BusinessWeek.com, 3/29/07) have been sold only since 2001, and not many are being traded in. Isuzu Motors (ISUZF) is the lowest-scoring brand, but that Japanese brand is barely in business at all. Pontiac was the lowest-scoring nameplate with no mitigating explanation for its poor rating of 28%. General Motors (GM) has muddled the brand for more than a decade with a mixed bag of disconnected products, poor resale value, and mediocre quality.
Jaguar and Land Rover were the poorest-scoring luxury brands in the Power study. Land Rover has scored poorly in Power's quality rankings for years. Jaguar has had poor resale value, as well as notable design misfires including the X-Type and S-Type. Ford, which owns both brands, is on the verge of selling the luxury nameplates, possibly to one of India's two automakers, Tata Motors (TTM) or Mahindra & Mahindra (MAHM).
BMW (BMWG) topped European brands for customer loyalty, at 58%. Mercedes-Benz (DAI) followed at 57%, Porsche (PSHG_p.F) at 42%, Audi at 41%, Saab at 34%, and Volvo and Volkswagen (VLKAY) both at 33%. The weakness of the U.S. dollar against the euro will make retaining customers even harder for European brands in the next few years as they are pressured to raise prices.
What Keeps Buyers Coming Back?
Marketing analysts say a solid record of quality and reliability combined with clarity and consistency of advertising keeps customers coming back. "There are still many companies that do not understand that consistency of image over time is as important as making sure the quality is up to snuff and the dealers are doing their jobs properly," says independent marketing consultant Dennis Keene, who advises companies on long-term brand strategy. "BMW not only performs on quality and design year in and year out, but it's communication as 'the ultimate driving machine' hasn't wavered since the early 1970s,"
Brands that are surging in customer retention after new-product and customer service blitzes include Suzuki Motor (SZKMF) and Mazda Motor (MZDAF), which have gained 19% and 9%, respectively, in the last 5 years. "The improvements that Suzuki and Mazda have made in vehicle appeal and quality have paid off in steady increases in their customer retention rates during the past five years, indicating that they have also been successful in changing customer perceptions of their vehicles, which can be a daunting task," says Oddes.
Auto executives disagree sometimes about the most important drivers of customer loyalty—quality, design, or customer handling. But one thing they agree on is that it's far cheaper to keep a customer under the brand umbrella than it is to convince someone to change brands
Friday, December 7, 2007
The seven pursuits of consumer India
The seven pursuits of consumer India
Hamsini Shivakumar
What drives consumption today …
The age of consumerism…
The McKinsey Global Institute states in its recent report (The Bird of Gold – The Rise of India’s Consumer Market) that India has now entered a virtuous long-term cycle in which rising incomes lead to increasing consump tion, which, in turn, creates more business opportunities and employment. Its consumer demand model for India shows that India’s consumption share of GDP at 62 per cent is closer to Japan and the US than to China. The aggregate consumption in India will grow in real terms from Rs 17 trillion today to Rs 34 trillion by 2015 and Rs 70 trillion by 2025. The contribution to consumption growth from urban India is estimated to be 68 per cent and rural India to be 32 per cent.
While the numbers indicate the growth potential, a more relevant challenge for marketers is to identify the underlying drivers of consumption – those ideas, needs and values which are resonating through the socio-cultural system as a whole – and thus would find their manifestation in a whole range of product categories. The simple premise is that the brands and categories that are aligned with these drivers would benefit significantly. Ancient India had defined kama (pleasure), artha (wealth and power) and dharma (virtue) as three important pursuits of life, three motivations behind a man’s behaviour. Being a religiously-oriented society, it was postulated that a rule founded by dharma has an authority superior to that founded on artha just as the latter has an authority superior to one founded by kama.
But all three points of view are equally legitimate and man is made in such a way that he is bound to consider all three as he functions in life. Manu, the ancient law giver, goes so far as to say that wisdom is to be found in a harmonious combination of the three prime motives of human nature. There are those who declare that the greatest good consists in virtue (dharma) and in wealth (artha); others say it consists in pleasure (kama) and wealth, or in virtue alone or wealth alone; but the true opinion is that it consists in the conjunction of all three.
Fast-forward 2,000 years to the complexity of modern society where kama, artha and dharma are still at play but this list has expanded considerably. An analysis of the socio-cultural context reveals a set of seven pursuits that drive consumption and seem likely to do so for some time. These are:The pursuit of upward mobility
This pursuit encompasses image- and lifestyle-consciousness. Status expression and making ‘individual’ style statements are the key pursuits here.The striving for expanding circles of influence in the social network
Indians have always lived in an extended family network and are well aware of the benefits of social networking. Today, middle-class Indians of all ages are engaged in creating a virtuous cycle of fame, influence, power and money. Technology is the great enabler here.The quest for lifelong vitality
The link between vitality, productivity and being a valued member of society has now been well established. Hence the desire to look young, be young and retain youthful vitality even in old age. Modern capitalism has definitely replaced the ashrama dharma ideal of the past.Pride in being Indian
Now that the middle-class has understood the link between heritage and capitalism, there is a huge resurgence of pride in being Indian, interest in our past and heritage at one level and a jingoistic pride almost bordering on parochialism on the other.Pleasure in the now
Kama is alive and kicking in the modern avatar of consumerism. Indulging the senses through shopping, travelling, eating out and every other form of hedonism is a hallmark of consumer societies everywhere and the modern Indian middle-class is no exception.A form of spirituality
It is spirituality that is suited to contemporary times. Prof Alan Roland, a noted American cultural psychoanalyst, postulates that every Indian has a spiritual side, whether latent or expressed.
Far from abandoning the spiritual quest, the modern middle-class is seeking new forms of spirituality suited to the times – witness the growth of Art of Living, Buddhism, Reiki, lectures on the Gita et al. This is in addition to practising religious rituals, following the family Guru and consulting astrologers.Expressing (a negotiated) individuality
Finally, as modern lifestyles and values give rise to greater individualism, the expression of it is still more about standing out and expressing one’s individual talents and passions rather than a pursuit of independence or self actualisation as postulated in Maslow’s hierarchy.
Brands and products that are aligned to these need vectors will see growth in the coming decade. Those that are not will have to work much harder to achieve ambitious growth.
Hamsini Shivakumar
What drives consumption today …
The age of consumerism…
The McKinsey Global Institute states in its recent report (The Bird of Gold – The Rise of India’s Consumer Market) that India has now entered a virtuous long-term cycle in which rising incomes lead to increasing consump tion, which, in turn, creates more business opportunities and employment. Its consumer demand model for India shows that India’s consumption share of GDP at 62 per cent is closer to Japan and the US than to China. The aggregate consumption in India will grow in real terms from Rs 17 trillion today to Rs 34 trillion by 2015 and Rs 70 trillion by 2025. The contribution to consumption growth from urban India is estimated to be 68 per cent and rural India to be 32 per cent.
While the numbers indicate the growth potential, a more relevant challenge for marketers is to identify the underlying drivers of consumption – those ideas, needs and values which are resonating through the socio-cultural system as a whole – and thus would find their manifestation in a whole range of product categories. The simple premise is that the brands and categories that are aligned with these drivers would benefit significantly. Ancient India had defined kama (pleasure), artha (wealth and power) and dharma (virtue) as three important pursuits of life, three motivations behind a man’s behaviour. Being a religiously-oriented society, it was postulated that a rule founded by dharma has an authority superior to that founded on artha just as the latter has an authority superior to one founded by kama.
But all three points of view are equally legitimate and man is made in such a way that he is bound to consider all three as he functions in life. Manu, the ancient law giver, goes so far as to say that wisdom is to be found in a harmonious combination of the three prime motives of human nature. There are those who declare that the greatest good consists in virtue (dharma) and in wealth (artha); others say it consists in pleasure (kama) and wealth, or in virtue alone or wealth alone; but the true opinion is that it consists in the conjunction of all three.
Fast-forward 2,000 years to the complexity of modern society where kama, artha and dharma are still at play but this list has expanded considerably. An analysis of the socio-cultural context reveals a set of seven pursuits that drive consumption and seem likely to do so for some time. These are:The pursuit of upward mobility
This pursuit encompasses image- and lifestyle-consciousness. Status expression and making ‘individual’ style statements are the key pursuits here.The striving for expanding circles of influence in the social network
Indians have always lived in an extended family network and are well aware of the benefits of social networking. Today, middle-class Indians of all ages are engaged in creating a virtuous cycle of fame, influence, power and money. Technology is the great enabler here.The quest for lifelong vitality
The link between vitality, productivity and being a valued member of society has now been well established. Hence the desire to look young, be young and retain youthful vitality even in old age. Modern capitalism has definitely replaced the ashrama dharma ideal of the past.Pride in being Indian
Now that the middle-class has understood the link between heritage and capitalism, there is a huge resurgence of pride in being Indian, interest in our past and heritage at one level and a jingoistic pride almost bordering on parochialism on the other.Pleasure in the now
Kama is alive and kicking in the modern avatar of consumerism. Indulging the senses through shopping, travelling, eating out and every other form of hedonism is a hallmark of consumer societies everywhere and the modern Indian middle-class is no exception.A form of spirituality
It is spirituality that is suited to contemporary times. Prof Alan Roland, a noted American cultural psychoanalyst, postulates that every Indian has a spiritual side, whether latent or expressed.
Far from abandoning the spiritual quest, the modern middle-class is seeking new forms of spirituality suited to the times – witness the growth of Art of Living, Buddhism, Reiki, lectures on the Gita et al. This is in addition to practising religious rituals, following the family Guru and consulting astrologers.Expressing (a negotiated) individuality
Finally, as modern lifestyles and values give rise to greater individualism, the expression of it is still more about standing out and expressing one’s individual talents and passions rather than a pursuit of independence or self actualisation as postulated in Maslow’s hierarchy.
Brands and products that are aligned to these need vectors will see growth in the coming decade. Those that are not will have to work much harder to achieve ambitious growth.
Making a world of difference
Making a world of difference
Ramesh Narayan
Vinita Bali of Britannia draws inspiration from those striving to make a difference.
Vinita Bali, Managing Director, Britannia Industries Ltd
Vinita Bali has crammed a lot of great work into her life. She has worked with fantastic brands like Cadbury’s, Coke and Sergio Zyman and has made sure she made a difference wherever she went.
In fact, making a meaningful difference seems to be at the core of this achiever.
After a long and envious stint abroad, she returned to India for personal reasons and took over the reins at Britannia at a phase in its corporate life that could be mildly described as turbulent. Vinita shrugs off any suggestion that she inherited a hot seat.
“I had at least two other options, but I saw this as a wonderful opportunity to work on a revered brand, and hopefully make a difference,” she says simply. But then, this seems to be Vinita’s style. Whether it was taking up an assignment in Lagos when others would have cringed at the thought of living in such a place, or taking over the operations in South Africa where in her words, she was “neither black or white”, Vinita is open to exploring the terrain, no matter how inhospitable it might appear, and then taking on a challenge which she would of course describe with characteristic modesty, as an opportunity.
After chatting with Vinita for about 45 minutes, I could only describe her as an explorer.
An intrepid traveller who revels in a restless nomadic existence in order to test the limits of new frontiers and understand what lies beneath the surface. A dyed-in-the-wool marketer with a noticeable clarity of thought, a penchant for the different, a commitment to her convictions and a charming smile.
Her professional approach is clear. She wants to be known by the contribution she makes to her job, not by the titles that follow her name or the zeroes that follow her salary. “Sure, money is important,” she says, “but I wanted to enjoy my work so I followed my sense of adventure and lived all over the world. I love to travel and love to explore new countries. By living in a country you learn so much about its history, and the culture of its people I am an experiential learner.”
This sense of adventure saw her learning Spanish during a stint in Santiago where what began as a necessity, in order to do grocery shopping, ended up with her conducting board meetings with bottlers of Coke in the lingua franca itself. Home is where the heart is for this leader who has a unique willingness to adapt to different places. She is equally comfortable in Bangalore where she is headquartered, Delhi where she spends weekends with her mother or Atlanta where she spent many memorable years scripting the marketing efforts at Coke.
So is there really a glass ceiling, I wondered aloud. “I haven’t personally experienced it,” she replied readily, “but have seen other people hit it. Given the great curiosity about it, it must exist. Don’t think about any ceiling. Just do what you like and enjoy doing it. All the rest will fall into place. If there is something I cannot influence or control, why bother thinking about it? I can influence people who work with me. I can influence their performance, so I will do it. If I don’t like doing something, I’ll just go find something else to do.”
Vinita has a lot of interests other than marketing. She has played the sitar, learned Kathak for 15 years and acted in plays. While studying at the Jamnalal Bajaj Institute in Mumbai, she was part of a theatre group that performed at Mood Indigo. And she loves Western and Indian classical music, and ghazals in particular. As if this was not enough, she loves reading and normally takes on a fiction and a non-fiction book simultaneously.
Vinita feels that advertising in India is at times great and at other times, eminently forgettable. Agencies seem to be responding to the national obsession with Bollywood and cricket by using film and cricketing stars to sell everything from soaps to health foods to cars. She labels this phenomenon as lazy marketing and lazy advertising. “Clients get the advertising they deserve,” she adds laconically.
When questioned about the responsibility that advertisers have while promoting products such as colas, chocolates and cookies, she is emphatic that marketing needs to be responsible and accountable. In India, she believes we are learning to live in what she calls a consumer democracy. At the same time she insists that we all need to be good consumers and demand our rights as consumers. “The “chalega” attitude has to end,” says Vinita.
Her advice to young managers is simple and delivered from the heart. “Do what you enjoy doing and give it your best. Continuously raise the bar on your own performance. Be true to yourself. Then you can be true to others.”
Though she grew up in an environment where she heard inspirational stories from her mother, and has been a great admirer of Gandhi and Mandela (whom she feels privileged to have met), she feels that these towering personalities inspire the masses. She herself draws inspiration from anyone who is doing something well, or anything that is done well: A great play, a great book, Lance Armstrong, Abeeda Parveen, Messner the heroic mountaineer, and even the maid with a drunkard as a husband who works tirelessly and selflessly to put her children through school, hoping to make a difference in their lives. Any or all of these inspire her.
Vinita sees everyday people as truly inspiring. And let me assure you Vinita, everyday people find you inspiring.
Ramesh Narayan
Vinita Bali of Britannia draws inspiration from those striving to make a difference.
Vinita Bali, Managing Director, Britannia Industries Ltd
Vinita Bali has crammed a lot of great work into her life. She has worked with fantastic brands like Cadbury’s, Coke and Sergio Zyman and has made sure she made a difference wherever she went.
In fact, making a meaningful difference seems to be at the core of this achiever.
After a long and envious stint abroad, she returned to India for personal reasons and took over the reins at Britannia at a phase in its corporate life that could be mildly described as turbulent. Vinita shrugs off any suggestion that she inherited a hot seat.
“I had at least two other options, but I saw this as a wonderful opportunity to work on a revered brand, and hopefully make a difference,” she says simply. But then, this seems to be Vinita’s style. Whether it was taking up an assignment in Lagos when others would have cringed at the thought of living in such a place, or taking over the operations in South Africa where in her words, she was “neither black or white”, Vinita is open to exploring the terrain, no matter how inhospitable it might appear, and then taking on a challenge which she would of course describe with characteristic modesty, as an opportunity.
After chatting with Vinita for about 45 minutes, I could only describe her as an explorer.
An intrepid traveller who revels in a restless nomadic existence in order to test the limits of new frontiers and understand what lies beneath the surface. A dyed-in-the-wool marketer with a noticeable clarity of thought, a penchant for the different, a commitment to her convictions and a charming smile.
Her professional approach is clear. She wants to be known by the contribution she makes to her job, not by the titles that follow her name or the zeroes that follow her salary. “Sure, money is important,” she says, “but I wanted to enjoy my work so I followed my sense of adventure and lived all over the world. I love to travel and love to explore new countries. By living in a country you learn so much about its history, and the culture of its people I am an experiential learner.”
This sense of adventure saw her learning Spanish during a stint in Santiago where what began as a necessity, in order to do grocery shopping, ended up with her conducting board meetings with bottlers of Coke in the lingua franca itself. Home is where the heart is for this leader who has a unique willingness to adapt to different places. She is equally comfortable in Bangalore where she is headquartered, Delhi where she spends weekends with her mother or Atlanta where she spent many memorable years scripting the marketing efforts at Coke.
So is there really a glass ceiling, I wondered aloud. “I haven’t personally experienced it,” she replied readily, “but have seen other people hit it. Given the great curiosity about it, it must exist. Don’t think about any ceiling. Just do what you like and enjoy doing it. All the rest will fall into place. If there is something I cannot influence or control, why bother thinking about it? I can influence people who work with me. I can influence their performance, so I will do it. If I don’t like doing something, I’ll just go find something else to do.”
Vinita has a lot of interests other than marketing. She has played the sitar, learned Kathak for 15 years and acted in plays. While studying at the Jamnalal Bajaj Institute in Mumbai, she was part of a theatre group that performed at Mood Indigo. And she loves Western and Indian classical music, and ghazals in particular. As if this was not enough, she loves reading and normally takes on a fiction and a non-fiction book simultaneously.
Vinita feels that advertising in India is at times great and at other times, eminently forgettable. Agencies seem to be responding to the national obsession with Bollywood and cricket by using film and cricketing stars to sell everything from soaps to health foods to cars. She labels this phenomenon as lazy marketing and lazy advertising. “Clients get the advertising they deserve,” she adds laconically.
When questioned about the responsibility that advertisers have while promoting products such as colas, chocolates and cookies, she is emphatic that marketing needs to be responsible and accountable. In India, she believes we are learning to live in what she calls a consumer democracy. At the same time she insists that we all need to be good consumers and demand our rights as consumers. “The “chalega” attitude has to end,” says Vinita.
Her advice to young managers is simple and delivered from the heart. “Do what you enjoy doing and give it your best. Continuously raise the bar on your own performance. Be true to yourself. Then you can be true to others.”
Though she grew up in an environment where she heard inspirational stories from her mother, and has been a great admirer of Gandhi and Mandela (whom she feels privileged to have met), she feels that these towering personalities inspire the masses. She herself draws inspiration from anyone who is doing something well, or anything that is done well: A great play, a great book, Lance Armstrong, Abeeda Parveen, Messner the heroic mountaineer, and even the maid with a drunkard as a husband who works tirelessly and selflessly to put her children through school, hoping to make a difference in their lives. Any or all of these inspire her.
Vinita sees everyday people as truly inspiring. And let me assure you Vinita, everyday people find you inspiring.
wall mart in india
Wal-Mart will improve quality, service’
Retail consultant John Williams, in India recently, talks to BrandLine.
Wal-Mart is known for changing the rules of the game. It will insist that manufacturers do business its way.
John Williams, Founder, J. C. Williams Group
Swetha Kannan
Retail consultant John Williams is certainly not carried away by the whole big Wal-Mart phenomenon. The retailer is no doubt known for its successful best practices, but there have been episodes which have put the brakes on Wal-Mart’s success story, he says.
Williams does have a word of caution for the retailer, especially on what to expect in India. He believes Wal-Mart will see success in the country provided it learns from its past mistakes (Wal-Mart had to pull out of Korea and Germany after it failed there) and adapt to local needs, says Williams, Founder, J. C. Williams Group, a retail consultancy firm based in Toronto. He was in Bangalore recently in connection with a retail seminar organised by Bangalore-based retail consultants RAMMS. (RAMMS and J.C. Williams are joint venture partners.)
Addressing a packed gathering, Williams, who has worked for five years with Wal-Mart in the past, explains that Wal-Mart has several challenges to face in India, such as huge diversity in culture, logistics and density of traffic. “India will be the most complex market it will enter. The structure and culture of the market place is enormously diverse. The market changes every 100 miles. India needs its own solutions. In India, Wal-Mart has to follow a different format because what works in Mexico or Canada will not work here, as political and cultural contexts are different in India,” cautions the retail consultant.
The entry of Wal-Mart does not have to be viewed as something evil, says Williams, as the company will improve overall “efficiency.” Brand Line caught up with Williams, who shares his thoughts on how the giant retailer will impact the retail scene in India, when it eventually does set up shop here. He also talks about the trends of the future such as private branding and in-store media. Excerpts from the interview:
How will the entry of Wal-Mart affect retailing in India?
Wal-Mart has a very hard-driving, hard-working culture. When Wal-Mart comes into India, it will lower prices. People will have to compete more aggressively. Wal-Mart will also raise efficiency and improve service.
Wal-Mart is known for changing the rules of the game. It will insist that manufacturers do business its way. You have to have a standard quality, bar code, competitive prices, back-up stock, good sales and service and marketing campaign. Wal-Mart will also create jobs, particularly on the manufacturing side. It will be an anchor for the whole community.
The model the retailer could adopt in India, apart from the cash-and-carry format ... What will work in India?
It’s cash-and-carry now. But with a growing Indian middle-class, there is room for different formats – big wholesale, super centres, discount stores, mini-marts, neighbourhood stores and other smaller formats. They will look at everything. They will put a store on the suburb, the highway and in the city. They will do a lot of different things.
Wal-Mart will hopefully hire Indians to run the business. If it’s smart and listens, it will adapt to local needs. I hope for Wal-Mart’s sake and the customers’ sake that it’s smart enough to learn from past mistakes.
What should local retailers watch out for? Are the protests against entry of large private players justified?
Although it may take away some business from everybody, it’s not going to affect the local vendors all that much. They will always have their steady stream of buyers. People will protest but competition is something they will have to deal with sooner or later. But this is good for the Indian consumer. And that is what the government should be interested in.
Indian retailers should study the best Western retailers like Target, Wal-Mart, Toys ’r Us and Staples and use them as business and logistics and purchasing models and follow what they are doing.
What is your take on private branding?
More and more stores are interested in private branding. It is led by companies like Tesco, Target and Wal-Mart. This is a way of getting better margins and differentiating from competitors. In fact, Canada-based Loblaws has such a powerful brand that it sells its food brand even to other stores in the US.
How important is in-store merchandising and television?
In-store merchandising is the most important element of marketing. That’s where most of the purchase decisions are made. And that’s where more and more retailers are spending their money, and spending lesser and lesser on mass media. There are great advances in in-store media. But while they relieve the clutter, if there is too much distraction, consumers leave the environment because it’s not comfortable. If it’s well done, it works. If it’s not well done, it’s a nuisance … it can become annoying
Retail consultant John Williams, in India recently, talks to BrandLine.
Wal-Mart is known for changing the rules of the game. It will insist that manufacturers do business its way.
John Williams, Founder, J. C. Williams Group
Swetha Kannan
Retail consultant John Williams is certainly not carried away by the whole big Wal-Mart phenomenon. The retailer is no doubt known for its successful best practices, but there have been episodes which have put the brakes on Wal-Mart’s success story, he says.
Williams does have a word of caution for the retailer, especially on what to expect in India. He believes Wal-Mart will see success in the country provided it learns from its past mistakes (Wal-Mart had to pull out of Korea and Germany after it failed there) and adapt to local needs, says Williams, Founder, J. C. Williams Group, a retail consultancy firm based in Toronto. He was in Bangalore recently in connection with a retail seminar organised by Bangalore-based retail consultants RAMMS. (RAMMS and J.C. Williams are joint venture partners.)
Addressing a packed gathering, Williams, who has worked for five years with Wal-Mart in the past, explains that Wal-Mart has several challenges to face in India, such as huge diversity in culture, logistics and density of traffic. “India will be the most complex market it will enter. The structure and culture of the market place is enormously diverse. The market changes every 100 miles. India needs its own solutions. In India, Wal-Mart has to follow a different format because what works in Mexico or Canada will not work here, as political and cultural contexts are different in India,” cautions the retail consultant.
The entry of Wal-Mart does not have to be viewed as something evil, says Williams, as the company will improve overall “efficiency.” Brand Line caught up with Williams, who shares his thoughts on how the giant retailer will impact the retail scene in India, when it eventually does set up shop here. He also talks about the trends of the future such as private branding and in-store media. Excerpts from the interview:
How will the entry of Wal-Mart affect retailing in India?
Wal-Mart has a very hard-driving, hard-working culture. When Wal-Mart comes into India, it will lower prices. People will have to compete more aggressively. Wal-Mart will also raise efficiency and improve service.
Wal-Mart is known for changing the rules of the game. It will insist that manufacturers do business its way. You have to have a standard quality, bar code, competitive prices, back-up stock, good sales and service and marketing campaign. Wal-Mart will also create jobs, particularly on the manufacturing side. It will be an anchor for the whole community.
The model the retailer could adopt in India, apart from the cash-and-carry format ... What will work in India?
It’s cash-and-carry now. But with a growing Indian middle-class, there is room for different formats – big wholesale, super centres, discount stores, mini-marts, neighbourhood stores and other smaller formats. They will look at everything. They will put a store on the suburb, the highway and in the city. They will do a lot of different things.
Wal-Mart will hopefully hire Indians to run the business. If it’s smart and listens, it will adapt to local needs. I hope for Wal-Mart’s sake and the customers’ sake that it’s smart enough to learn from past mistakes.
What should local retailers watch out for? Are the protests against entry of large private players justified?
Although it may take away some business from everybody, it’s not going to affect the local vendors all that much. They will always have their steady stream of buyers. People will protest but competition is something they will have to deal with sooner or later. But this is good for the Indian consumer. And that is what the government should be interested in.
Indian retailers should study the best Western retailers like Target, Wal-Mart, Toys ’r Us and Staples and use them as business and logistics and purchasing models and follow what they are doing.
What is your take on private branding?
More and more stores are interested in private branding. It is led by companies like Tesco, Target and Wal-Mart. This is a way of getting better margins and differentiating from competitors. In fact, Canada-based Loblaws has such a powerful brand that it sells its food brand even to other stores in the US.
How important is in-store merchandising and television?
In-store merchandising is the most important element of marketing. That’s where most of the purchase decisions are made. And that’s where more and more retailers are spending their money, and spending lesser and lesser on mass media. There are great advances in in-store media. But while they relieve the clutter, if there is too much distraction, consumers leave the environment because it’s not comfortable. If it’s well done, it works. If it’s not well done, it’s a nuisance … it can become annoying
Tuesday, December 4, 2007
dabur india
Dabur for Rs 10 bn turnover from lifestyle biz
Agencies
Posted online: Tuesday , December 04, 2007 at 1546 hrs IST
Font Size
Print
Feedback
Email
Discuss Save & Share Article What’s this?
Digg My Yahoo Fark
del.icio.us Newsvine Reddit
Rate This Article
New Delhi, December 4: Home grown FMCG major Dabur India said it is targeting a turnover of Rs 1,000 crore over the next three years from its beauty and lifestyle subsidiary - H&B Stores.
"We are aiming a turnover at about Rs 1,000 crore by 2,010 and around 150 H&B Stores. On an average, we are expecting a turnover of nearly Rs 22,000 per sq ft per annum from the outlets," Dabur India CEO Peter Braker told reporters.
The company is planning six retail outlets in the Delhi NCR region by the end of January and by next financial year the number would go up to 50.
"Currently, we are focusing on the Northern India and will soon open stores in Chandigarh, Amritsar and Ludhiana. We also have plans to open shops in Bangalore by January and foray in the Southern part," Braker added.
When asked how the company would compete with the existing retail outlets, Braker said, "We will offer products at a price which is 20-25 per cent cheaper than the Maximum Retail Price (MRP). This would attract the customers as this promotional price will be made available through out the year."
The company's market size is about Rs 25,000 crore and is now targeting customers in the age group of 16-45 years.
The retail initiative of H&B Stores is not only confined to selling only Dabur products, Braker said and added, "products of other FMCG majors, both national and international will be available in the outlet."
The store size would vary in the range of 1,200 - 6,000 sq ft. The company would be investing about Rs 140 crore for streamlining its operations by 2010.
The lifestyle retail section of the H&B would be operating under the brand name of 'new u'
Agencies
Posted online: Tuesday , December 04, 2007 at 1546 hrs IST
Font Size
Feedback
Discuss Save & Share Article What’s this?
Digg My Yahoo Fark
del.icio.us Newsvine Reddit
Rate This Article
New Delhi, December 4: Home grown FMCG major Dabur India said it is targeting a turnover of Rs 1,000 crore over the next three years from its beauty and lifestyle subsidiary - H&B Stores.
"We are aiming a turnover at about Rs 1,000 crore by 2,010 and around 150 H&B Stores. On an average, we are expecting a turnover of nearly Rs 22,000 per sq ft per annum from the outlets," Dabur India CEO Peter Braker told reporters.
The company is planning six retail outlets in the Delhi NCR region by the end of January and by next financial year the number would go up to 50.
"Currently, we are focusing on the Northern India and will soon open stores in Chandigarh, Amritsar and Ludhiana. We also have plans to open shops in Bangalore by January and foray in the Southern part," Braker added.
When asked how the company would compete with the existing retail outlets, Braker said, "We will offer products at a price which is 20-25 per cent cheaper than the Maximum Retail Price (MRP). This would attract the customers as this promotional price will be made available through out the year."
The company's market size is about Rs 25,000 crore and is now targeting customers in the age group of 16-45 years.
The retail initiative of H&B Stores is not only confined to selling only Dabur products, Braker said and added, "products of other FMCG majors, both national and international will be available in the outlet."
The store size would vary in the range of 1,200 - 6,000 sq ft. The company would be investing about Rs 140 crore for streamlining its operations by 2010.
The lifestyle retail section of the H&B would be operating under the brand name of 'new u'
Subscribe to:
Posts (Atom)