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Youth-centric brands such as KFC, Kurkure, Philips, HUL’s Axe integrate TV ads with Facebook apps to drive

NEW DELHI: Youth-centric brands such as KFC, PepsiCo’s Kurkure, Philips and

HUL

‘s Axe have extended their catchy television commercials into whacky Facebook apps to drive traffic in the virtual world and sales in the real world.

If the Philips app lets users try out all the different looks that John Abraham sports in its television campaign for male grooming products on themselves, Kurkure challenges people to find the right mix for its different variants by trying different ingredients, extending its ‘Ingredients of India’ television campaign. Thousands have signed up for these apps.

“With apps running on a parallel with TV commercials, the recall value for the brand improves drastically as consumers are directly interacting with the product,” says ad filmmaker Prahlad Kakkar. And brands say this media integration strategy has helped increase product recalls and boost sales.

Dhruv Kaul, director, marketing, at fast-food chain KFC, says, “Though it is difficult to measure sales through such apps, it has helped drive further engagement with our target group which is young adults and teenagers.”

In the latest KFC Krushers Kafeccino television commercial, a group of youngsters click the expressions of their friend as soon as she tastes the drink for the first time. Now, Kafeccino’s Facebook ‘Kool Hours’ app allows people to upload their photos and earn points for every picture and caption. As many as 2,500 users uploaded their photographs in seven days.

Around 47% of Indian Facebook users are in the 18-24 age group, according to Socialbakers, a company tracking social media statistics.

This makes the social networking site a prime destination for all youth-centric marketers. “A relevant app helps generate buzz about the product and becomes a popular topic of discussion in one’s peer group. The target group feels that they are ‘with it’,” says marketing expert Harish Bijoor, CEO of Harish Bijoor Consults Inc. “In that sense, it connects with their mindset easily,” he adds.

Philips would second that. The number of ‘likes’ on its Facebook page increased over 37,600 in a month since it introduced an app that allows men to try out the different beard styles as shown in its John Abraham-starrer TV ad for men’s grooming kit.

PepsiCo’s Facebook app for its Kurkure snack-based on its ‘Ingredients of India’ TV campaign with catch phrase ‘badal jaa’-also has created a lot of interest with some 20,000 users trying it.

Innovative companies can make hay this monsoon

By Gautam Talwar

The monsoon is upon us now, and whether you’re the kind that romanticises the rains or looks upon warily at puddles, the fact is this season can be challenging to some and beneficial to others.

This is the season when we begin to worry about water contamination and rain puddles that act as breeding grounds for mosquitoes. This is also when brands those offer water-purification and mosquito repellent solutions gear up for a season of brisk business.

Among brands in the mosquito repellant category, there’s a close competition at the top between Godrej’s Good Knight, SC Johnson’s All Out, and Reckitt Benckiser’s Mortein.

All three enjoy the top space within the Commitment quadrant in the Brand Asset Valuator (BAV) — the proprietary brand diagnostic tool from Rediffusion-Y&R.

Tortoise, on the other hand, once a leader brand in the category, seems to have lost its equity and is now positioned in the ‘fatigue’ space.

According to the BAV, Tortoise loses out on the perception cues of “progressive” and “upper class”, both of which are important drivers of ‘relevance’ and ‘esteem’ in the category.

Whatever be the reasons for its decline in brand perception, slow and steady is not winning this race.

As a mosquito repellent ointment, Dabur’s Odomos does well for itself in brand perception. It has the highest ‘differentiation’ score in the category. Is this explained by the fact that Odomos has restricted itself only to ointments?

If so, why has the same formula not worked for Tortoise? If we look closely at the brand usage, Odomos clearly lags behind the leader brands in terms of regular usage. Odomos is seen as an option rather than the preferred brand.

In other words, restricting the brand to only one format may be the reason Tortoise lost its ground over time to other brands that offered more usage formats. Hence, it may be time for Odomos to look at more perse and innovative formats to maintain its brand perception.

A new entrant this season in the mosquito repellent market is Piramal, with its Banditz range of mosquito repellent bands for children. It will be tested this monsoon, to see if it can successfully weather competition.

Moving to the purified drinking water category, the monsoon provides a clear value-proposition for brands in this space, with fears over water safety being a genuine concern. Each brand in the space promises the safest, purest drinking water possible.

We use the BAV to examine the consumer perception of these brands. Aquaguard has successfully established itself as the leader brand with best performance on the brand valuator pillars of ‘differentiation, relevance, esteem and knowledge’.

Among the challengers like Kent and Pureit, the battle is being fought closely. The BAV reveals that brand preference in this category is driven not only by reliability, performance, and trust, but also by innovative and energetic cues.

This indicates that innovation is perceived as being as important for the category as the guarantee of “the purest” water. As an example, note that HUL’s Pureit entered the water purifier segment doing away with the need for electricity or installation.

 

It helped to create a subcategory of non-electrical water purifiers. Perhaps this innovation may have been responsible for its quick and large equity in the market.

The brand which seems to be losing out, however, is Kent. It has been matched by Pureit on ‘knowledge’ and ‘preference’ scores, thus eroding the early-entry advantage of Kent. Perhaps it is time for Kent to look at innovation before it becomes too late.

Interestingly, the water purifier market has over the past few years seen increased competition with the entries of Tata Swach, LG water purifiers, Philips, Whirlpool, and Livpure. It remains to be seen what will be their game plan to catch up with the leaders.

The market is indeed heating up despite the monsoon showers. Brands will have to decide quickly whether they want to make the most this season or be left out standing in the rain.

(The author is chief strategy officer at Rediffusion-Y&R)

CAIT to meet FMCG compaines on e-commerce firms’ discount doles

NEW DELHI: After raising red flag over Flipkart’s Big Billion Day sale, traders body CAIT today said it will convene a meeting after Diwali with FMCG companies to discuss their concerns and product pricing.

“This is a serious issue which is adversely affecting the offline market to a great extent and therefore we have decided to hold direct talks with all such companies on this complex issue to understand as to how the online retailers are able to sell at a much lower price,” CAIT Secretary General Praveen Khandelwal said in a statement.

Confederation of All India Traders (CAIT) had earlier called for a probe in the business model and trade practices of e-commerce companies to find out how they are offering huge discounts during the ongoing festive season.

“Gauging the seriousness of the issue which has shocked the offline market all over the country, CAIT has decided to convene the meeting,” it added.

About 50 companies, including LG, Samsung, Sony, Philips, Reebok, Puma, HP, Titan, Casio, and Guess have been invited, it said, adding that a White Paper will also be prepared from the discussion which would be submitted to the Commerce and Industry Minister.

“There is an estimated loss of business in various segments from 20 per cent to 35 per cent in various segments in last six months and if the present trend continues, it is apprehended that the offline market will suffer a loss of about 50 per cent business by the end of Diwali festival,” it said.

There are apprehensions that either there is underpricing by the e-commerce firms or influx of material from grey market or some sort of funding to sustain losses, it added.

Philips leads race to buy Halonix stake from Actis

NEW DELHI: Philips India has emerged as the front-runner to acquire a controlling stake in lightings maker Halonix (formerly Phoenix Lamps) from private equity fund Actis for around Rs 300 crore as part of a two-step transaction which will also see the PE fund directly buying the general lighting subsidiary of Halonix and retaining it under its control, two persons familiar with the development said.

Listed firm Halonix makes lights for the auto industry while its subsidiary Halonix Technologies makes lights for homes and offices (general lighting). Under the deal under consideration, Halonix will sell its subsidiary to its current owner, Actis, at a price determined by two independent valuers and Actis will sell the parent company with the residual auto lighting business.

A person involved with the transaction said the deal was being structured in this way to ensure that the listed entity with the profitable auto lighting business was pested while the loss-making general lighting business remained privately held by Actis. Other options such as demerger or sale of the auto lighting business would have meant that the general lighting company would continue to be listed.

Actis owns 66% of Halonix and if the sale goes through, Philips will have to make an open offer to buy 20% additional shares from other shareholders. The value of the company is being pegged at `400-450 crore, which is more than its present market capitalisation of only Rs 313 crore. The person involved in the transaction said Actis was demanding an aggressive valuation as the buyer was getting the profitable auto lighting business without the loss-making general lighting pision.

Ownership of Halonix will give Philips an opportunity to sell directly to automobile companies. So far its presence in auto lighting has been limited to the after-sales market.

The Halonix website says it sells more than 48 million automotive halogen lamps each year to two and three wheelers, passenger cars, and commercial vehicles. The lighting business is crucial for Philips as it generates 35% of its Rs 2,700-crore turnover, much more than its consumer products and healthcare pisions. The Rs 7,170-crore lighting industry is growing annually at 12%.

The Actis spokesman and the Philips spokeswoman both said they won’t comment on speculation. Actis has appointed Enam Financial as its advisor for the sale and last month invited bids to pest controlling stake in Halonix. Federal-Mogul Goetze India and Havells India were the two other contenders who had evinced interest in the company but Havells backed out when it was told the general lighting business was not for sale.

Philips eyes to tap Indian street lighting market

NEW YORK: Dutch electronics firm Philips on Sunday said it plans to tap the Indian street lighting market for which it is developing a range of products to suit the requirements of the country.

“In India, there is an untapped market which is the street lighting. So we are really focused on developing the range of products which could be of true value for Indian street lighting and we are practically doing that right now,” Philips Light Asia Regional Business Director Nigel D’ Acre told media.

He said among the Asian countries, India and China contribute a major chunk to the company’s overall lighting pision sales and expects a huge growth coming from these regions as well. “We expect huge growth from these markets both in infrastructure and private investments,” he said.

D’ Acre also singled out the hospitals segment as another area to grow its lighting business as the company, which is pushing its LED (light emitting diode) products, as looks to ramp up its brand presence in India. “Hospitals in India are huge. So we see lot of opportunities there,” he added.

According to Frost & Sullivan, the overall Indian LED lighting is expected to reach USD 399.2 million by 2015 from USD 49.6 million in 2009 at an estimated annual growth rate of 41.5 per cent till 2014.

At present, 38 per cent of Philip’s lighting business comes from the emerging markets driven by healthy growth in India and China. In 2010, lighting business contributes about 34 per cent to the company’s overall revenue. Last year, the company’s total sales stood at 25.4 billion euro.

Besides, the company said it is also planning to increase its presence in India in the lighting space and create more awareness about LED products and solutions in the country. “We will ramp up our presence through education of LED lighting products, hold trade shows. Besides, we are putting in more technical people with LED expertise,” Philips Lumileds Director of Marketing Communications Steve Landau said.

Philips Lumileds is a part of the Philips Electronics, which makes LED products and solutions for the company. He said the company will carry out different activities in a variety of formats in order to create awareness about the LED lighting products and “we will support the industry by providing the kind of expertise required”.

Globally, Philips Lighting business has been driven by LED-based products, comprising 14 per cent of total sales (of lighting business).

Philips job cuts to impact India operations

KOLKATA: Dutch electronics major Royal Philips Electronics‘ decision to cut 4,500 jobs globally as part of an 800-million cost-cutting scheme will leave its impact on the Indian operations.

While the company said it is still working out the number of jobs which will be impacted in India, the cuts are mainly going to be in functions like IT, finance, real estate, human resource, manufacturing and supply chain.

Philips currently has some 9,000 employees in India, including its two global research facilities for lighting in Noida and software development at Bangalore and employees of companies it has acquired in India.

Two senior people, familiar with

Philips India

, said the number of jobs cuts in India could be around 200, which, however, the company did not confirm.

A Philips India spokesperson said the company will shortly undertake due diligence about the number of jobs impacted in India. “The job cuts will be affected over the next two years. We would have a better idea on the exact impact in a few months,” the spokesperson said.

Philips on Monday announced that it plans to save 800-million by 2014 with 60% of the savings coming from job cuts and balance 40% from other structural costs. Of the 4,500 jobs which will be impacted, 1,400 positions will be in the Netherlands.

India has been identified as a growth market for Philips and the company has been investing in the last couple of years, including strategic acquisitions in the consumer lifestyle and healthcare business. The company in calendar 2010 grew by 14% with revenues of 3,724.9 crore.

A company official said the huge growth potential in India would translate into relatively lower proportion of job cuts as compared to other geographies. “However, Philips being one of the oldest MNC in India with a lineage of more than 80 years, there are a lot of legacy positions and roles which are likely to be dropped now,” the official said.

Philips India is a leading player in the lighting segment and healthcare equipment, the second largest brand in home cinema and kitchen appliances, the market leader in DVD players and is growing its presence in the nascent personal care market. The company has also decided to make India its global hub for manufacturing value segment products.

Veteran television-set brands like Oscar, Beltek, Weston, Salora diversify to other businesses in wake of

KOLKATA | NEW DELHI: Remember Oscar, Beltek,

Webel

, Weston,

Nelco

, Salora, Bestavision or Crown? These were among the television brands that first gave Indian consumers a taste of outside world through the idiot box in the 70s and 80s before the reforms brought global brands such as Sony, Philips and LG to the country.

But today, unable to take on the multinationals that dominate the Rs 18,000-crore Indian television market with more than 90% share, most these domestic brands have shifted their focus away from television to newer businesses.

“Consumer electronics is a low-margin business and with the huge competition around, it is difficult to make money. It’s better to venture into more profitable businesses,” says Ashok Aikat, MD at Sonodyne Television, which has ventured into software business and also building IT parks and buildings.

Similarly, Tata-owned Nelco now works on VSAT connectivity, integrated security and surveillance, managed services, satcom projects and meteorological solutions, while West Bengal-government owned Webel has ventured into development of IT infrastructure and Beltek has become a bottler for PepsiCo’s Aquafina packaged water.

“There is no point fighting with deep-pocket companies like Samsung, Sony or Panasonic when the television technology is changing almost everyday,” says Atul B Lall, deputy MD and CEO at Dixon Technologies.

Promoters of Dixon, who also own the Weston brand, took a “strategic call” to shift to electronics manufacturing services whereby it contract manufactures appliances, televisions, lighting and energy products for clients including Godrej, Haier, Videocon and

Dish TV

, and designs products. The company now plans to file patents for its designs. “Around 95% of our revenue now comes from this business,” says Lall, adding that the business will touch Rs 1,000 crore this year.

Salora still continues with its television and even planning to roll out LED TV models, the business contributes just 15% to total sales as it has ventured into distribution and after-sales service of mobile handsets for brands like Sony, Motorola and HTC as well as wind energy.

The Rs 400-crore firm now plans to roll out its own brand of smartphones and tablets, and expand into the e-commerce space. “Even now after 35 years, the recall of Salora as a brand is very high, which we want to re-energise,” Gopal Kumar Jiwarajka, CMD at

Salora International

, says.

A section of the industry, however, feels using their old brand pull for newer businesses may not be successful in the long run.

“Electronic brands always have a close association with a product,” says Akai India Managing Director Pranay Dhabhai. “For instance, Godrej is associated with refrigerators and hence when they launched television it was not too successful,” he says.

It remains to be seen how successful old television manufacturers will become in newer businesses, says Dhabhai who recently relaunched Akai televisions.

Oscar and Crown, too, are trying to resurrect their television business and plan to venture into flat panel televisions.

“We are solely relying on word-of-mouth and the strength of our dealers who get good margins from us,” says Crown Television director Deepak Jhaveri, who has trimmed operations of the electronics business from 18 branches to just three. The promoters also run a successful jewellery and property business, which have become the cash cows.

Beltek, which started operations in 1972 and switched to manufacturing colour televisions in 1982 when the first colour transmission started during the Delhi Asian Games, too keeps its electronics business running although bottled water, digital broadcast equipment and real estate are its focus areas. “The money comes from other businesses, but we are keeping the electronics business running because of the emotions attached to it,” says Omit Verma, director at Beltek, which has expanded its electronics business into DVD players, home theatres and washing machines as well.

The company sells its own water brand Glacier and also does bottling for PepsiCo’s Aquafina.

Industry leaders, however, feel reviving old brands may find it extremely hard to compete with the multinationals.

“Some of the old brands may just remain as local brands in their respective markets,” says CM Singh, chief operating officer at Videocon, one of the old Indian brands that has survived the onslaught of Korean and Japanese brands. “Fighting LG, Samsung, Sony or Videocon with just a few models is simply not possible. You need a whole line-up which would be difficult for them,” he says.

Philips mulls setting up automotive lights facility in India

NEW DELHI: Global consumer durables major Philips is exploring possibilities, including acquisitions, to start producing automotive lighting solutions in India as it aims to double revenue to over Rs 300 crore from the country by 2015.

“We are currently producing general lighting solutions from two facilities at Mohali and Vadodara. Now we are looking at options to have a facility to manufacture automotive lights in India,” Philips Electronics India Director (Automotive Lighting) Sameer Sodhi told PTI.

The company is at present evaluating various options such as setting up a greenfield unit, rolling out products from the existing lights making factories or acquiring a potential manufacturer of automotive lights producer, he added.

He, however, declined to share details saying nothing has been finalised yet.

Currently, the company sells its automotive lights by importing from China, France, Germany and Poland.

When asked about the sales of the automotive lights, Sodhi said the lighting pision of Philips had a turnover of about Rs 2,000 crore in India last year and the automotive lights contributed around 8 per cent, which is Rs 160 crore.

“We are looking to double this (sales of the automotive lights) by 2015,” he said.

China is the biggest market for auto lights arm of the company in Asia, followed by Japan, Korea and India, he said.

“India is already doing very close to Korea. Within next 2-3 years, we will be the third largest market in the Asian pision,” Sodhi said.

The company sells its products to both vehicle makers as well as after-market. While the firm enjoys about 35 per cent share in the Rs 350 crore OEM market, it has a market share of 40 per cent in the Rs 150 crore Indian lighting after-market.

Sodhi said the lighting pision of Philips has introduced car interior air cleaning system and day-time lights in India.

Snap Networks creation Violet aims to take on Sony, Philips and Bose in consumer electronics

The next few weeks, the festival season, could decide the fate of an audacious Indian startup which is challenging some of the best-known consumer electronics brands in the world. If it succeeds, Violet could become a household name, alongside home entertainment giants such as Sony, Philips and Bose.

But it has a huge mountain to climb-convincing consumers that paying Rs 65,000 for a 3D home theatre system which looks like nothing they have seen before is a great bargain.

Snap Networks, the Bangalore-based creator of Violet, has already climbed two mountains in the nearly three years of its existence. It has a created a product which it says has no equal in the world. And Violet is Made in India from top to toe, with no trace in it of China, where most of the world’s electronic goods are produced. The really hard part–positioning itself in a barren, inhospitable part of the market–begins now.

“We have taken people by surprise so far. There is more to come,” says Ashish Aggarwal, the CEO of Snap Networks, who set up the company in 2009 after leaving a job as director of R&D at Harman Kardon, one of the world’s top audio systems makers. Aggarwal, 35, teamed up with L H Bhatia, former BPL executive who is providing some of the funding and much of the marketing expertise.

Snap Networks stands out for a number of reasons. In a country where product startups are rare, and consumer electronics startups rarer still, the company has demonstrated its ability to create valuable intellectual property and manufacture its device in India.

It has also shunned the safe option of licensing its IP, opting instead to carve out a space for itself in the unforgiving consumer electronics marketplace.

The company has relied on a group of eight angel investors who have backed Aggarwal’s dream.

“Given his passion and the size of the market it was a reasonably easy decision to make,” says Ashok Vittal, who has invested more than $ 50,000 in Snap.

From now until the end of the year, when consumer spending will be at its peak, Snap Networks will be making a big push with Violet, spending $500,000 (Rs 2.3 crore) in the process (the sum is almost equal to the money that it has spent in all its existence so far).

Snap will provide demonstrations of its product to potential consumers at their homes; market itself through dealerships, showrooms and online stores; and persuade builders to put in a good word for Violet when they sell their homes. But all this will be worthwhile only if it is able to establish for itself the allure of a brand that customers will want to possess.

“‘Who am I’ is a question they should be very clear about,” says Y L R Moorthi, a professor of marketing at the Indian Institute of Management in Bangalore.

“If they have the spunk to build a great brand, they can make it,” he adds.

The challenge for Snap is that it will be entering the wide-open spaces of a polarised market. At one end are home theatre systems for the everyman costing about Rs 15,000 apiece. And at the other are sophisticated pieces of equipment for audiophiles that cost at least Rs 1.5 lakh each. The danger for Snap is that Violet, at Rs 65,000, could appeal to neither.

Arunh Krishnan, an audiophile who works at a digital media and content company in Bangalore, says convincing his set will be a tough task. Large speakers enclosed in wooden cabinets are part of the “luxurious experience” of listening to music, he says, observing that the bulb-like design of Violet’s speakers is unappealing to him.

But Aggarwal says the challenge is actually an opportunity and Violet will appeal to both ends because it offers top-quality sound at a reasonable price.

“We knew that this paradox existed and want to break it. Polarisation is hurting consumers and dealers because it keeps volumes from growing.”

About 3,00,000 home theatre sets are sold in India every month and Snap wants a 10% share of this market by March 2013. In four months, it has sold 500 sets and is aiming for stable sales of at least 300 sets a month during the festival season.

Snap will target customers who could be attracted to Bose, Aggarwal said, because “the product that comes closest in appeal is three times more expensive.”

Krishnan agrees that Bose’s potential customers could be lured by Violet but the US company’s brand will be very difficult to fight.

Aggarwal, a specialist in digital signal processing, is determined to create a market for Violet and says he has refused offers from venture capital investors that would resulted in Snap licensing its technology for an assured fee.

“We are in this for the long haul.”

Even so, IIM-B’s Krishnan says Snap is well protected if things do not go according to plan because it can exercise the option that Aggarwal has rejected so far.

“In case there is a problem, there is always an insurance.”

Prices of LED lamps and luminaires halve over last 9 months

KOLKATA/NEW DELHI: Prices of LED lamps and luminaires have almost halved in the past 6-9 months, thanks to a fall in global prices of their chips and local production by Philips.

Light-emitting diode (LED) lamps—which are nearly three times more energy efficient and lasts six times longer than compact fluorescent lamps (CFL)—are now selling at as low as Rs 600, down from above Rs 1,000 earlier. They still cost much more than CFL lamps available at Rs 80-250. LED luminaire prices now start at Rs 2,000.

The price reduction is led by Philips, which has signed production contracts with local partners for manufacturing LED lamps and luminaires designed at Philips research centre in Noida.

“Local production will give a big boost to LED lamps and luminaires, since the high import duty varying between 10-30% can be directly passed on to the consumers,” Philips Electronics India Business Head & VP (Lighting) Nirupam Sahay said. LED chips, which are still not manufactured in India, attract 5% import duty.

LED segment accounts for less than 3% of the country’s organized lighting market estimated at Rs 7,000 crore and growing 25-30% a year. The CFL market is estimated at Rs 2,000 crore and LED at Rs 200 crore.

With prices coming down and awareness increasing, the industry expects the LED lighting market to grow rapidly, even though players such as Havells believe the market is too small to start production locally.

Havells imports LED lamps from US-based light maker Cree, but it has started assembling LED fixtures at its Neemrana factory.

“Instead of importing fully assembled LED fixtures, most companies are assembling it in India to increase value-addition and reduce prices,”

Havells India

President Sunil Sikka said.

LED prices are likely to ease by 10-20% annually due to fall in global prices, he said.

Philips, however, recently launched locally developed LED lamps of 5W and 7W and promised to expand its made-in-India portfolio. “We managed to launch the locally-produced 5W LED lamp at almost half of the existing market price to around Rs 600,” Sahay said. Philips was previously importing its LED lamps and luminaires from China.

Anchor Electricals, owned by Japan’s Panasonic, too bets on LED lighting as prices narrow with CFLs.

Anchor Electricals VP (Lighting) Sandeep Agrawal said that the increasing price of phosphor—a key raw material used in CFL lamps—may push CFL prices up. “As a result, prices will significantly narrow between CFLs and LEDs in next five years,” he said.

Anchor Electricals currently sells some 1.5 million CFLs every month. Other big players in the industry include Osram, Bajaj and Surya.