LEC 2. WHAT is "MARKETING"?

The answer to the question marketing is very simple...... Marketing is the creation of "value"...... Creation of value for someone so that they pay happily and come back for more later..... I am telling you this word "value"....... probably the most important one in management and mkting........ So marketing is much more than selling... Selling is only the final transaction..... Marketing involves:

1.   Identifying a market segment (you cant sell everything to everybody….. look at Rotomac and Mont Blanc). Segmentation can be done on the basis of Geography (would you sell Pringle in Kerala??), Demography (What do you think…. How much would a person earning Rs. 10,000 spend for buying a pen….. Don’t consider my case!!!), Psychography (Based on lifestyle, attitudes, values…. Look for an example!!) and Behaviour (How do you use a product, How does one drive?, How price sensitive is your target segment?)

2.   Targeting simply means to identify the one target segment that holds the most promise for you. You need to identify that the needs and wants of which segment matches well with the capabilities of your organization. Maruti too could have targeted the higher end market but they did not and chose to cater to the “economy” segment and rest is history. Targeting is more like your birthday cake being cut into slices and you choosing the one with the cherry. Pick up the segment that not only matches your strengths, holds enough potential but is also within comfortable reach to service.

3.   Positioning (creating an image of your product and your company in the consumer’s mind)……. Your product features, its price, where is it available…… all these will contribute to its “image”…. Don’t you agree??? Imagine Prada available in Phase 10 Mohali!!! Of course you cannot know positioning till you know of two guys called Al Ries and Jack Trout!!! Please do me a favor and look them up!!

You will see that the above given three will need you to decide upon the following decisions:

1.     What to make?

2.     Whom to sell it to?

3.     At what price?

4.     How much service will they expect?

5.     What do I brand my product as?

6.     Do I brand it at all?

7.     What do I say in my ads?

8.     Where do I give my ads?

9.     Do I give ads at all??

10.  How should I treat my customers?

11.  What should I ask them?

12.  Till when should I keep talking to them?.............................................

The list  is endless….. Asking these questions are in my opinion marketing…….

To understand the meaning of the term marketing it is important to analyse why we needed it in the first place. Till the late 1800s and early 1900s (The Industrial Revolution), consumption guided production. That means that people used to produce what they needed and since international trade had already started, some stuff would be procured through import. But in most cases the imported goods would be what we can call “lifestyle” or “luxury” goods like tobacco, silk, precious metals etc. Therefore in simple terms we can say that demand dictated what would be produced or procured….. OK??? Then came the industrial revolution and an increased movement of people across large distances, that too obviously due to increasing technological developments like the steamboat….. Now two things happened:

1.   Due to the industrial revolution, people could manufacture the same stuff but in extremely large quantities. Obviously you would need to “sell” all that you could make to convert the ability to produce into money…. Right??? The good thing was that at that time, the number of people who would need anything that could be manufactured was huge……. Take for example, a product called lens….. I am sure you will agree ever since people have lived on this planet many must have been experiencing reduced eyesight too…… So the need for spectacles was always there….. Till the ancient Assyrians (look up “Lens” on Wikipedia….amazing) invented the lens, no one had an idea that you could “magnify” something…… So the demand for a product called spectacles did always exist but no one, not even the consumers knew that they “needed’ something like that….. Therefore when spectacles began being produced, they would be gobbled up as soon as they would be made but the problem was that it must have been extremely time consuming and slow to grind lens manually and then set them into frames…… So production was the biggest limiting factor. So the demand would always have been far greater than the supply. So when industrial revolution gave the manufacturers the ability to use power (electric or mechanical), tools and machines to manufacture glasses in large numbers, they would have been faced with an ever hungry market and the more people they could reach, more they would have been able to sell….. right??? This example is also an example of “Latent Demand”…….. find out what that is…..

2.   The second thing is in my humble opinion, a more important occurrence……. Imagine you are living in India at the beginning of this century……. You are a commoner with just enough money to make ends meet (that used to be the case with max people in India)…… You have a bad eye sight and you see that the local Zamindaar who too had a bad eye sight has procured something from a far off land that can make him see properly!!! Wow!!! But the problem is that he had to shell out more money than you would earn in your life time……. A very sad, frustrating and common experience for many even today……. Don’t you think so???? Remember how it feels like when you see something you dearly wanted being purchased and used so casually by others….. Orra, D90, Semaster, Harvard, Columbia, V-Rod, SUV, Seychelles, Alaska…. This feeling would have been felt by many who could not afford to buy but yearned to do so…… Where does marketing fit in???? Arrey….. You have a market that is primed, fertile, bursting with desire….. do you have the innovativeness and timeliness to tap such huge virgin markets??? Explore the story of Nirma and how one gentleman; Karsanbhai Patel beat the hell out of a global giant…HLL!!

The point is…… By late 1800s and early 1900s, people had the capacity to design, manufacture and transport products in ways that did not exist earlier….. So we can say that during this time, we got the capability to “create new utilities” not only by creating new products (design utility, functional utility etc…..) but also the Price Place Utility!! How???? The more a manufacturer could manufacture, the economies of scale meant that his manufacturing cost went down dramatically, add to that the developments in transportation reduced the cost of inputs dramatically…… Therefore the selling price of most things fell sharply to become affordable to common people all across the globe!!! That is the price utility!! As for the place utility…… it is simple, you could make you product reach the end user further away that you could earlier!!!

So the world saw what would be later called the “Product Orientation” form of marketing…. Most of the guys (business men and academicians) were more concerned about manufacturing, production, costs, efficiencies etc…… In a way marketing till this time was a stepchild of Economics……

This went on like that for decades…… The manufacturer and seller were the kings….. The consumer had to buy what ever was manufactured at whatever cost at whichever place!!! Then came WW 1 and WW II…. I will not go into the details, but at the end of WW II the industrialized nations had an incredible amount of manufacturing capacity left idle……. In war these manufacturing capacities were needed to keep the forces supplied, now that the war was over, you faced an incredibly fast decrease in guns and ammo!! These units then migrated to manufacturing products for civil use and here too, the production was so large that “selling” became necessary…… So the “Selling Orientation” emerged in late 40s and Early 50s…… The focus shifted from manufacturing to the ability to “sell” that was being manufactured…… By the way can you think of any company that was set up specifically for the wars and later had to shift to consumer goods??? Some should come mind immediately:

·    BSA (Cycles…. The kind Maj. Rahul used to fly on in school!!) was Birmingham Small Arms company!!

·    Our “tashan” Bullet!!! Royal Enfield was the best gun manufacturer of the time!!! By the way the so called revolt of 1857 was according to the most accepted version of history began as a result of animal fat coated cartridges made by Lee Enfield!!

·    You must have seen your Dad banging away on his “Remington” at work!!! They I guess still make some of the best known high power rifles…..

·     Others: BMW, Rolls Royce, Harley Davidson!!!!

The 1970s saw the birth of what we call as the “Marketing Orientation”. By this time many bigwigs in the field of marketing began saying that it is the customer who “should’ be at the centre of marketing and it should be the consumers needs and wants that should dictate what will be made, marketed and how…… In way the commentators were saying that the “customer” should be the ultimate consideration while designing any marketing strategy….. Be it the product design, features of the product, its price, the packaging, where will you make it available, what will be said in its ad……. In simple words all the four Ps which Dr. Kotler gave should be focused on the consumer satisfaction of consumer needs…… that automatically meant that organizations now needed to “know” the consumer better…… Not only for understanding their needs and then designing products accordingly…… but to see how they reacted to the products……. That gave birth to marketing research as well…….

So what we call marketing today emerged in the late 1970s and this concept too has evolved over time. The growth in technology and media, the increasing understanding of the consumer psyche, new research etc…….. has brought in many developments to the concept of marketing. We have seen emergence of concepts like Service Marketing, Customer Relationship Management, e marketing, ERP etc…… All these changes and developments are reflected in the changing definition of marketing……..

The American Marketing Association (Did you visit their site??) in Oct 2007 gave the following changed definition of Marketing: 

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

So this is the current accepted definition of marketing and the academic answer to the question, What is Marketing…….

What I think of marketing is walking the tightrope to create situations that will make all the stakeholders (the consumer, the suppliers, wholesalers, retailers, the company owners, management, the government and of course you too!!) happy. Why do I call it the “walking the tight rope”?? Remember if you say that the aim of marketing is to make the consumer happy, that will be a problem as the shareholders are not investing money for “making people happy”…….. They need returns….. So in efforts to make consumers happy, you forget to fatten the bottom line…… you have had it!! Similarly to keep your bosses happy if you start indulging in questionable practices, then the government may get unhappy…… then there are the suppliers, the dealers and wholesalers, the retailers …….. a product will have to provide value to keep all of them happy!!!!

That dear students is Marketing!!!

Please try to analyse the definition, look up demand and try to find out if there is a difference between marketing and selling…….

 

Lec 1: What is the Market?

I am starting a new "lecture series" aimed at teaching the basic fundas of marketing (or at least what I think about them) to my better half....... She knows marketing..... Hell she is into it..... But her new found love for teaching and her her self declared need to know "My Version of Things" is the motivation behind this effort..... So why blog it??? I am assuming it might prove useful to any one of you guys who want to get back to basics of marketing..... a very rudimentary and simplified version!!

But please be warned.......... These are my opinions and they may not necessarily and in many cases they wont conform even to Mr. Kotler (With due apologies Sir)........ I will post a series of lectures..... Here is the first one on my take of the term "market"

LEC 1. WHAT is "MARKET"?

Any study of marketing and its allied subjects should begin with the academician developing an answer to the seemingly innocuous and simple question like, What is “Market”? But Aashima, you would be surprised that even seasoned faculty and researchers find it difficult to give an acceptable answer to this question!!!

The “oversimplified” explanation would be that “Market is place where buyers and sellers get together to buy and sell”.

The Economic definition would be: “Market is a structure that allows transaction between buyers and sellers.” In this case transaction stands for exchange of goods, services and information for money of equivalent value.

The Sociological view point would be: “The market is a social institution comprising of relationships that allow exchange and transaction of goods and services”

The problem with this “oversimplified definition” is that the term is being explained only as a geographical location where a physical transaction is taking place. But the term “market” has been used to describe other socio economic entities too. For example…. You meet a business man and ask hi how he is doing and invariably (at least these days!!) the answer will be, “Market bahut mandi hai”… Now he is using the term market to describe “demand”. Another limitation of the simplified explanation is that it fails to accommodate net marketing, marketing where “value” may be exchanged but no physical good may have been bought or sold, and most importantly the definition fails to highlight the fact that the market is “platform of social interaction” (social is the key word here).

Therefore the criticism of the oversimplified definition is that it fails to integrate the economic view and the social view. It also fails to accommodate emerging concepts like the web based marketing.

Keeping all this mind, I prefer to define market as: “Market is a socio economic institution that allows for creation and exchange of value.”

The words “exchange instead of transaction and the word “value” instead of goods and services have been brought in. Of course we begin the definition by calling “market’ a socio-economic institution. If you try to analyse any purchase or sale you may have made in your life involved interactions between human beings (which is the obvious part of the definition) and an interaction of social relationships and phenomena.

Let me clarify……

The “Social – Economic” Linkage

You buy something from Sec 17 and in another case you buy something from Amazon.com….. In case of the Sec 17 purchase, you will have definitely had to interact with a number of people to just complete the transaction….. At least you would have had to interact with the shopkeeper!! So at least in this case it is easy to see, how the market involves interaction of people. In case of Amazon.com, the person was faceless or as in ebay he or she might be a total stranger connected to you by the net. So in case of web based examples, the interaction between people has been taken online. This is quite like talking to some one in person and talking to some one on the phone. So market is definitely a social institution.

Explanation of the economic view is simple and you would do well to remember that before marketing came into independent existence, it existed as a part of economics. The economic angle to describing the market involves an appreciation of the fact that even though you and the shopkeeper in sec 17 shared a social relationship, it was a temporary relationship which created to facilitated to complete the exchange. Now exchange, transaction and value are core economic concepts. So market is an economic institution too.

One more thing that you need to keep in mind while discussing the “social – economic” linkage is that whatever we have done over the past many decades in the name of “marketing” has been heavily influenced by the sociological variables and whatever we have done in the name of marketing has most definitely affected the society itself…… Think about it…. Think of examples…..

Why “Value”?

Value is also one of those funny words which have separate meaning in English, Economics and Marketing!!! But why I love the word is that it is able to “adapt” easily in all three areas and in fact I consider it the one word that is able to bring al three together! Let me illustrate……. Remember the cup I used to like so much and which ultimately became one Rahul’s first victims…… What would you understand if I said that the cup was very valuable” to me….?? Am I trying to say that it was “valuable” as in expensive????? Or am I using the word value as “Value = Benefit/Cost???? These are the English and the  marketing view on value…… I am not even beginning to talk on the economic’ view as it will open a huge Pandora’s box (Imagine they have a theory of value!!!)

But whatever be the usage, We bought the cup, we paid something for it….. today I am sure I will be willing to “pay” a lot more if someone offer it me again….. What do you say????

In the definition the word value has been used to indicate that whether you buy a physical product or service, you do that for the “value” it provides to you and you “pay” what you deem fit considering the value it provides…… I hope it is clear…..

And how do you "create" value??? Easiest and a very simplified answer to this would be that you provide what the customer needs, when he needs it and whereever he needs it. Of course the emerging face of marketing asks one to do more. In fact, Marketing, in its current form has only begun after you have been able to deliver the goods to the consumer. elivery of value can be said to have taken place only if you have created a "customer experience" far greater than what your customer expected, greater than what any of your competitor could have offered and sustain that level of service for the entire time the customer associates with your company..... Whew!!! And you thaought that marketing was only selling!!!

Why “Exchange”

According to AMA (American Marketing Association www. Marketingpower.com), the definition of “exchange” is, “All activities associated with receiving something from someone by giving something voluntarily in re-turn.” What I like here is that it introduces “voluntariness” to the definition and as you may agree, the ideal market would be where every trade is voluntary, no coercion or force at all….. On the other hand you will find that the definition of transaction is too cold, non social and too economics oriented….. According to Wikipedia…. Transaction is, “An agreement, communication, or movement carried out between separate entities or objects, often involving the exchange of items of value, such as information, goods, services and money.” I am sure you agree with me!!!

So my answer to the question, what is “Market” would be: “Market is a socio economic institution that allows for creation and exchange of value.”

Find out

1.    Metamarket

2.    Marketplace Vs Market space

62 hrs in Mumbai

I saw the beginning on Nov 26^th and I was there at the end on Nov 29^th. I wish I could have been there, with the guys……. No senseless bravado but it was frustrating to be a helpless spectator. Now that its over, Now that the shock has transformed into seething anger, It is time to raise some questions.

 

Who were the terrorists?

I don’t know. But if the media and the security forces are to be believed, they were individuals from Pakistan who had come via a trawler, then a fishing boat, then rubber dinghies to Mumbai. Even though the mail claiming responsibility for the attack mentions “Deccan Mujahedeen”, it is believed to be a front for the “Lashkar” terror syndicate.

 

How did they reach Mumbai?

The indications so far are that they travelled by a Pakistani trawler then they hijacked a fishing boat of the coast of Porbunder in Gujarat, they killed the guys on the boat and abandoned it off the coast of Mumbai and travelled by rubber dinghies to Mumbai.

 

Did they have help from someone India?

Apart from the inept politicians an failed intelligence network, Yes, they most definitely had someone on the inside too. The security forces and the government have also accepted as much. My logic is pretty simple; You cannot carry that amount of ordnance that would have been used to hold of the Indian security forces for the amount of time that they did in the backpacks they were carrying. I would also surmise that they already had terrorists inside the Taj and Oberoi, either as guests or as workers. You see, they displayed intimate knowledge of the layout of both the facilities.

 

So, Was Pakistan involved?

Yes and No.

Why No?....... Pakistan is a country and quite like ours, they too have a very diverse set of people, beliefs, values and motivations. As not every Indian is responsible for the crime that Indians commit, not every Pakistani is responsible for the actions of certain radical groups in Pakistan. I have had the chance to interact with a few people from across the border and any educated citizen of India should expect, they are no different from us.

So even if the terrorists were from Pakistan, it would be unwise to stereotype and blame a nation for the acts of few of its citizens.

Why Yes?........ It is common knowledge that the most elaborate “terror farms” exist in Pakistan. Originally a west sponsored and supported response to USSR in Afghanistan, today these terror schools are motivating, training and sponsoring terrorists to fight wherever they deem necessary. So it was as the government puts it, “Elements in Pakistan” not necessarily overtly supported by the government but still originating in that country.

So the bottom line is that radical Islamist terror groups “based in Pakistan” were responsible. But that does not mean that Pakistan itself was the sponsor of this attack.

 

Why is Pakistan such a hotbed of terror activities?

Pakistan is a land of people who are quite like us. In fact, I have had the opportunity to meet many Pakistanis and most I found were unbelievably polite, beautiful and cultured. Yes, they do have those vitriolic spewing illogical idiots, but then we have so many of them in India that we should not mind. We cannot take the oral high ground as we have also been brought up on the staple that “Pakistan is the enemy”. They are just like us, only that the percentage of radicals over there is higher and they are louder than the normal, sensible and liberal.

The problem lies in what Pakistan had to go through ever since its independence. The following factors are very important.

1.       Military Rule.

2.       The underdeveloped democratic systems.

3.       The presence of extremist organizations.

4.       The weak economy.

Pakistan has seen four military rulers and has remained under military rule from 1958–71, 1977–88 and from 1999–2008. The military had an agenda of its own and they remained focused on India. Unfortunately the civil and democratic institutions never had the time to develop. The biggest problem however is that Pakistan was “used” by the west and today whatever we are facing is the fallout of that. The so called western democracies once supported, funded and supplied radical forces based out of Pakistan to drive USSR out of Afghanistan. The Pakistani establishment also did not mind that as US support on many issues including the Kashmir issue was a great benefit to them. The Pakistani military was eyeing Afghanistan for “strategic depth” which they were lacking in any confrontation with India. The western countries, especially the USA used these desires Pakistan had and in return they used Pakistan to establish factories to create and train “Mujahedeen” to fight USSR. Not only did they support, they actually armed them to the teeth. Once USSR left Afghanistan, Pakistan inherited a vast number of “Jehadi” forces who had extreme views, armed and trained. All of a sudden they had no enemy to fight. You cannot expect a whole generation of radical fundamentalists to lay down their weapons and return to a normal life only because you want them to. The monster USA had created was hungry and it had no prey left. The looked around and found the issues of Kashmir, Bosnia and the “US imperialism”.

The west used Pakistan, created the terror factories to fight USSR, and then abandoned Pakistan. Now we all suffer the consequences.

 

Was it an intelligence failure?

Yes, it seems so. Reports have now emerged that there were enough indications to ring the alarm bells and it seems that the information got lost in the labyrinthine Indian bureaucratic maze connecting independent agencies like the police, RAW, IB, the Coast Guard and the NSA. Mr. Shivraj Patil, the former Home Minister had himself in a speech warned of the sea route being used for terror attacks as back as 2006. Months and days preceding the attacks saw increasing number of indications that something like this was being planned but unfortunately the government agencies involved failed to coordinate and collate the reports which would have indicated a clear and present danger.

Yes, it was an intelligence failure.

 

Why is the Indian polity drawing so much flak?

Quite simply put, because of their incompetence, their tendency to use such tragic events as political platforms, their callous comments and their partisan behaviour. Some notable points:

·      The Home Minister failing to provide answers to increasingly deteriorating law and order in India. Just try to recollect the number of attacks India has seen in the past few months.

·      The Maharashtra government failing to act on credible threats.

·      R. R. Patil commenting that “Such small incident or two keep happening in big cities”. His logic was that the terrorists had plans to kill 5000 people and since they managed a score of only 180, it is no big deal.

·      Vilasrao Deshmukh taking his actor son and Ram Gopal Verma along on the first official visit to the spot after the terror attacks and him constantly alluding to the centre and Sonia Gandhi to save his skin.

·     Failure of the PM and leader of the opposition Mr. Advani presenting a united front. Mr. Advani was not accompanied by Dr. Singh to Mumbai, which he should have and Mr. Advani chose to miss the crucial all party meet to discuss the situation and future course of action. On his arrival in Mumbai, Mr. Advani actually said that “this government had failed as the attacks during the NDA tenure were not this big!!”

·      The CM of Kerala insulting the family of a fallen hero.

·     Mr. Mukhtar Abbas Naqvi using derogatory language to insult civilian protestors questioning the competence, integrity and intentions of the political establishment.

 

What is the lesson for students?

Please do not be misguided by rhetoric and sensationalism. Please study the whole problem and develop a holistic and balanced view on the issue of terrorism in India. Do not make the mistake of blaming any one religion or community for terrorism. Extremists and terrorists come in all shades and colors.

This is the time for you to initiate a process of constructive dialog. I am sure if the future citizens of India can break free from the hype, the stereotyping, the rhetoric, the sensationalism and the hatred for each other cultivated by our political masters, this will become a peaceful and secure place to live.

Indian Economy, MNCs and Foreign Products: A Reflection

Logic of International Trade

A long time ago, the world was a simpler place. Almost each country or kingdom used to depend upon whatever it could produce. Then some brave people started exploring and many countries discovered each other. During their exploration, they also discovered that many of the new places they had discovered had goods which they had never seen or heard of before. Imagine how Alexander the great must have felt like when he tasted a Banana for the first time at the banks of river             Satluj! Many of the explorers also saw that there were many things that were very difficult to produce in their own country but was available in abundance in the new lands they had discovered. I saw the reactions of some students from Punjab when they first visited Kerala and saw that cashew and black pepper growing in abundance in our backyard! The explorers took some of the new and exotic stuff back home and earned a lot of money from selling that. All countries understood that it is better to procure what was difficult to produce and export what was easy to produce as somewhere else, it is difficult to produce the same thing and that the are willing to pay for it. In technical language we call it the “Theory of Comparative Advantage”. Soon international trade was born. Long before these debates on globalisation, MNCs etc. began, India like many other countries was actively involved in trade. We used to import a lot of stuff and we used to export a lot of stuff too. Imagine, we had so many kings and all of them had so many queens, now we needed to import a lot of silk from China to dress all those beautiful ladies! Similarly, we had lot cotton, spices, gold, diamonds etc. and many countries in the west and east paid a lot to traders to get them the material from India.

The East India Company and the British Rule

My father is a communist at heart and contrary to what it may seem, I too am a socialist, if not a communist (Yes, communism is different from socialism!!). Most of the Left oriented people and most of the uneducated masses look upon the modern multinational and transnational companies (yes, they are different) as modern reincarnations of the East India Company! Any foreign company is viewed with suspicion and ethnocentric (be Indian buy Indian type attitude) orientation is common.

It is correct that companies like East India Company who came to trade often had the invaders in tow and soon a business deal would become something more serious. If you look at history, everybody without exceptions was doing the same thing at that time. Do you really think that the kingdoms in India were very people friendly and were helping the people? Then why do we single out the British or the East India Company? Simple….. Because they could do it and we could not.  Then the question arises, why were we conquered? The answer is again pretty simple; while most of the western countries were busy utilizing science and to build boats, ships, print books, use the compass and travel, we were busy doing something else. We were busy discussing how it was against the religion to cross seven seas! We were busy building and strengthening feudal and casteist social systems. We were busy because India had more that a 1000 kingdoms and each was busy fighting the other! So the British came, they saw and they conquered. We never had a strong leadership to counter them. See…. So Simple! The revolt of 1857 and names like Rani Jhansi are very romantic, but it is truth that most kingdoms were fighting for their freedom, freedom to keep doing what they had been doing in the past. In fact you should know that India as we know it today came under one flag only after 1857, when Queen Victoria was proclaimed the empress. Till then were small principalities fighting each other.

Even though the British did rule us for 200 years or more, we need not curse them for that. Yes they took away diamonds from the Taj Mahal, they took away the Koh-i-Noor. But I really don’t think those diamonds would have helped us in any way. Instead look at what they gave us. They gave us great dams, roads, bridges, medical technology, education system, civil services, the postal system, the railways and most importantly, they gave us English! Of course you can debate that they hurt us by partitioning us, but I will say thank God they did! Otherwise whatever is happening in the NWFP and the tribal areas in Pakistan would have been happening to us! Yes, you can debate that the education system they gave us is inferior, I say prove it. In my opinion the educations system in India is very good but the sheer number of people means that there are so many failures to see around us and far few success stories. But you see, the population is our own gift to ourselves!

The Indian Economy: A Brief Flashback

When India got free, the government was left with a huge nation with a huge population to take care of. The economic policy our leaders designed was heavily influenced by the colonial experience (which was seen by Indian leaders as exploitative in nature) and by those leaders' exposure to Fabian socialism (look up Fabian society). Unsurprisingly the government policies were protectionist in nature to give maximum encouragement to the domestic industry. The main emphasis was on reducing the import bill and ensuring food security by driving agricultural growth. The planning and regulatory functions were centralized and a huge public sector came up. Obviously, we needed the PSUs as the private sector at that time did not have the money or the will to participate in nation building exercises! 

 

I can bore you wit the details of how the socialist model in India was different from the more radical model in Russia (USSR at that time) and how Friedman disagreed with the policies of how McNamara made fun of us!! But the fact remains that even though the government policies were borne out of necessity and were (we assume) designed with national interest in mind, it failed to offer India anything more than the ever so shameful Hindu rate of growth (3-4%... by the way why is it called so??)

We stagnated. Protectionism bred incompetence and state monopoly gave birth to a socially accepted “corruption-incompetence” complex.

The so called process of liberalization actually began way back in the 1980s, but the real concerted, overt and public effort began in 1991. Successive governments have tried to do whatever they could to liberalise in the face of coalition politics, powerful lobbies, vote banks and a massive inefficient aged public system. Overall the efforts at liberalization, privatization and globalisation (LPG) have been in spurts and often as compromise formulas even then, since 1990 India has emerged as one of the wealthiest economies in the developing world; during this period, the economy has grown constantly, but with a few major setbacks. This has been accompanied by increases in life expectancy, literacy rates and food security. I guess that is a fairly good outcome considering the point of start and the magnitude of the task!

Are Not Using Foreign Products the Answer?

The mail that made me do this write prescribes the use of products made in India by companies that are purely Indian as a panacea for all the troubles our country is facing. Unfortunately this is wrong. The multinational companies are a result of the obvious advantages we disussed in the very beginning of this article. The impact of MNCs on host countries is very much open to debate. In many cases many MNCs have acted as villains (eg of Union Carbide) comes to mind and in most cases, MNCs have provided growth in employment, income and standard of living to the host countries. Yes….. you should always remember, globalisation like any other business strategy without consideration for the local community or a “human face” will always result in trouble. Of course the mere size of multinationals in developing marketslike India makes them very powerful. There is this concept called “Threat of Market Withdrawal” where a big MNC can hold a country to ransom by threatening to pull out and thus collapse the market. But in a fairly mature democracy like India with so many checks and regulators in place, the probability of any company resorting to that is remote. Moreover, modern multinational understand one simple truth: Do not cut the branch you sit on and do not kill the goose laying the golden eggs. The size of the Indian market for any product is so huge that right from auto to IT and now even nuclear MNCs would love to be in India. What do they bring? Great products, excellent services, competition (which ultimately helps you…. The consumer) and of course great jobs! Again you can debate that the MNCs are spoiling the culture etc. but I am sure most of the readers of this piece are mature enough to stay away from such meaningless rhetoric.

 

·         I will take an example and let it be Coke. According to the mail, if you drink Jaljeera instead of Coke, the money you send stays in India and all will be well!

 

Coke is manufactured by Coca Cola India Ltd. and yes the parent company is a foreign company. They came to us as they like the massive thirst of the massive population of India. Now imagine the number of people who are directly employed by Coca Cola India and imagine the kind of money they earn. Now compare the money they earn to what they would have earned in a “pure” Indian company. Imagine the number of businesses, big and small, that use Coke to earn money.

Where do you think an MBA like you working with Coca Cola or a dhabawala serving coke wil spend the money the earn I am sure a very large percentage in the Indian market. So the economy of which country is benefitted? I am sure you are logical enough to say: India! So what if the parent company earns money after providing money making opportunity to so many Indians?

Yes…. You can argue that they used unclean water for production. Again, they use the water that is available and if they are going out of their way for clean water in EU, that is because clean water is there and the strict EU regulations makes it mandatory not a matter of choice. Now ask yourself, why cannot we make a law that explicitly forces them to use clean water? And why the hell do we not keep our lakes, rivers and ground water clean. By the way do you know that traces of pesticides are commonly found in mother’s milk in Indian women??? Imagine the stuff we eat and the stuff we drink. Why blame the MNCs for this? So how would you saving Rs. 10 and drinking Jaljeera help the economy. In fact if you save rather than spend it is trouble for the economy (remember leakages??). It is your spending that runs the economy. Now consider this: Instead of drinking the Jaljeera, why not package it, brand it and export it as an exotic Asian drink and earn foreign exchange for the country. Doesn’t it make sense?

The troubles facing India are far more complicated to be solved with such simple solutions. Our economy is doing fine! We are looked upon with respect now. Yes……. there are minor hiccups on the way but they are not serious. Ok……… at the way the Indian economy held its own during the current global meltdown.

Not using foreign products is not the answer. Hell…. We are not even asking the right questions. I personally am not worried about the Indian economy one bit. What worries me is the rising fundamentalism and extremism, the rising example of lawlessness, corruption, the politicians…… I can go on and on….

But I am sure I have made my point…… Let us not spread myopic ideas. There is no foreign” market now. I own products that are made in Japan, Germany, USA, Malaysia, Taiwan and India and I live in a city. LG and Samsung have huge markets in rural India. These days you do not buy a TV only because it is “Phoren”, you buy it because it is good and yet cheap. Remember now each customer anywhere in the world is equidistant from sellers anywhere. So if Sony can come to India to sell TVs, Videocon is free to go Japan too. But have you ever wondered where Japan buys iron ore from to make such magnificent products and sell them in India??? 

Is National Anthem in Praise of George V?

Why do we have Jana Gana Mana as our National Anthem? After all according to one school of thought, it was penned to honor the King of England……

As one of my good students has asked me if this is true…… I must confess, I don’t know. But I will quickly add, I don’t care. For me, Jana Gana Mana….. is one piece of verse that stirs up patriotism and nationalistic pride. Imagine, in a world where almost everything we see or hear makes an incremental addition to “our” desires, ambitions, fears, insecurities…… anything that can make me feel good about the country is more than acceptable.

But, It is in honor of an English King!!! One might argue. But then come to think of it, if memory serves me correctly so is the Gateway of India, and half of Lutyen’s Delhi we are so proud of. Would you guys want to pull down the Parliament House too??? After all the British made it to sit there and rule India. Oh!! How about the beautiful Vice Regal Lodge in Shimla???

If I am not wrong, the British occupation of India began when the mughal occupation of India ended and if I am not wrong, mughal occupation lasted longer and they were foreigners. So…….. I guess, Taj Mahal has to go, so does Fatehpur Sikri, the Red Fort…….. we can go on......

Controversies are always there…… about anything and everything. Look into the national anthem, song, animal, flag….. you will find one thing or the other to criticize….. and many do. There was an episode in mid eighties, when a well meaning gentle man filed a PIL to get the name of “Sindh” deleted as it is in Pakistan now….. Then there was a controversy that the national song is actually a religious song and non hindus need not / should not / not made to sing it. Our flag contains green, which is characteristic to a particular religion and if fundamentalists have their way, they will change it to saffron.

My message to my student. I do not know if our national anthem was penned to honor George V. But I know how it feels when you listen to it on Republic Day.

Look at this ad. Try to understand. Respect your national anthem. Respect your nation. Respect yourself.

The Siachen Rendition

The Rehman Version!

4Ps, 4Cs and CCDVTP

The concept of 4 Ps has been here since the late 70s courtesy Dr. Kotler and since then anyone who has done any degree or diploma in management has studies it. So complete is its penetration it is not surprising to come across non MBA people being aware of it. In fact, IIPM, which is known to be non conformists and innovators call their flagship magazine 4Ps!!

Then why did revered Dr. Kotler need to stir the pot and come out with CCDVTP. Of late he has come very close to debunking the whole concept of 4 Ps itself. But considering that the staple text on marketing by Kotler stll carries the stuff and considering others like Professor Jagdish Sheth are still busy bringing out 4 As rather than debate the Ps, the dated concept of marketing mix might be in for a silent, gradual low key burial.

What was missing?? Nothing much. In fact it was working pretty fine….. Yeah, a new found “focus on the consumer”, “experience is everything”, “holistic marketing” etc. was making it difficult to continue using 4 Ps without a massive overhaul. Consider this: Every marketing text since the 80s has been screaming that customer should be the focus and in the same breath they were talking of marketing strategy without the consumer anywhere in the equation (Do you see consumer anywhere in 4 Ps??). Yes, the 4 Ps Vs 4 Cswere definitely a step in the right direction, but even the concept of 4 Cs was based on the interpretation of 4 Ps rather than wiping the slate clean and inking strategy from the scratch.

CCDVTP is what Kotler now calls is marketing and it seems to make a lot of sense.

·         C: Create

·         C: Communicate

·         D: Deliver

·         V: Value

·         T: Target Market (to the target segment)

·         P: Profitably

So according to CDVTP you crate value by conceding of, designing and manufacturing a product which will seek to satisfy an observed need in the segment of the market you are targeting. Of course creation of value is not enough, you need to communicate it to your target audience by the way of product design, features, UMP (unique marketing proposition, again USP vs. UMP!!), the price, service levels and extent, the positioning etc….

Delivering the value is self explanatory. In fact effective delivery at the desired location is itself a major value addition. This becomes even more important considering that distances in the virtual world have died but the physical distances still remain. So it has become infinitely easy for me to reach a seller online, place my order and pay through my papal account. But the moment money goes out, the countdown begins. The seller better be fast, so what if he is book seller somewhere in Philadelphia and I am in India. Now the seller has to deal with the real distances and the sometimes (in act often,,,, or maybe always) un realistic expectations of the customer!!! So delivery is a very important part of the setup.

The “T” stands for your target market. I am sure we all know what a target market is and I am sure most of us will accept that technology has made it easier to tap into target segments easier and at the same time more complicated!!). In fact now service organizations are being matched by manufacturers to manufacture in “batches of 1”!! Consider logging on to Dell’s site and custom building a DELL PC!!

P is of course for profitably. Needless to say, business is business. You do not make and sell stuff to please people. You do it to make money. Yes, you would love to make money and to see the customer happy. Why? So that he comes back, brings a couple of friends along and you make more money!!! In this new age, all business organizations have access t the same technologies and market resources. The costs of manufacturing and operations have been controlled so tightly that corporations are almost at the limits of squeezing the last drop out of every penny. Profitability has become a variable that needs to be kept in focus right from the very beginning. Ad hoc and isolated actions to “boost” profitability by “cutting costs” often results in sub optimal marketing conditions.

The CCDVTP as you can see is more “targeted” and “specific”. It talks of a specific action (creating value) by the organizations to specific people (the target segment).

So CCDVTP it is!!! At least till me or Mr. Kotler conjure up some other ore exciting combination of letters!!!