Eating out in India

The Indian food retail industry is close to Rs.4.5 lakh crore, but only 2% of it constitutes organised sector. In such a scenario, it is tough to focus on value, and this means recently most of the organised fast food chains are focusing on volumes for growth.

The focus has moved from a menu with limited variety and expensive options to one with a wider variety on the menu and prices even as low as Rs.25/-. This is for those chains which are set at targeting youth - the college goers whose one time canteen meal would be limited to ~Rs.25/-.

Chains like KFC are infact also likely to position themselves as breakfast and after-dinner joints and not just meal hang-outs and is also considering home delivery. A move towards healthier grilled options and not just the deep fried hi-cal version of the chicken are also on the cards. All these will hopefully help them achieve their target of 500 stores across 50 Indian cities (right now the count is 150). Yet another challenge that these chains pose is that of retaining constant prices across stores/ cities when the input costs especially real estate widely vary.

Some of the competitors for KFC viz MCD, south african Nando and more local ones like Bangs, Hot Chix, Chic punch, BFC are eating into its share.

Meanwhile MCD which currently owns 240 stores, is shifting focus from children (through it's Ronald McDonald) to adults. It plans on moving from vibrant red and yellow as brand colours to the more muted ones which are likely to appeal to adults. Its offerings have evolved from the more kiddie friendly burgers and fries to include Mc. Spicy (Veg and Chicken variants). Mc.Flurry - a dessert filling enough to tide you between meals appeals to the adult palate with combination of textures - creamy(ice cream), chunky (chocolate bits), grainy (oreo) and serves as a meal by itself. Right now only prototypes in Delhi and Mumbai are experimenting with the new outlet colours, changed logo. And it is likely to go viral in the next 4 yrs.



Some quick facts about MCD :

• MCD opens a new outlet every 4 hours
• Serves over 46 million customers each day (0.5 mn just in India)
• It has sold well over 100 million burgers till date
• Ronald McD has different names based on the country - Uncle McD in Singapore, Donald McD in Japan (which has 3000 stores!!! - the largest market for MCD after US)
• US is the largest market with 14000+ stores
• In some places the items on the menu vary based on tastes and demand eg - rice burgers in Hongkong, Spaghetti in Philippines, Beers in Germany & Spain

Skeptics are not sure moving from a position of a store that appeals to kids to that for adults, will continue to enjoy strong franchise among kids. Hopefully it won't alienate them :)

Design Studios

Constantly innovating...

Brands viz Lenovo, Renault, Google, Yum restaurants all have an innovation centre. No age barriers - all you need is to be able to think out of the box, get creative....constantly. This is what helps companies invent, innovate and engage customers. Gone are the days when the RnD folks in their glass cabins hardly interacted with the customer. A recent instance I can recall, is when a company selling hair oils and shampoos decided to home visit the consumer and was aghast to see that there were some who put shampoo on their hair few hours before actually washing it off. This one would never know had one not entered the household and done a customer contact.

Huge monies are spent on innovation rooms/ design studios - to make them inspiring....a green patch (to soothe the senses), ample pure air, lots of space, the evils viz coffee/ tea, may be an area to stimulate thought for the smokers. Every company has studios across the world, primarily because the same design may not work across the world. There is an element of customization; which is important and that local flavour gets added on when the studio is local to the selected market.

What is new today, is forgotten tomorrow. Life is truly fast paced

Dating and mating

'Dating and then mating' - this is not about us humans, but about brands.

There used to be a time when there were brand loyalties, but a recent survey which conducted bathroom audits, proves otherwise. There were multitude of shower gels, toothpaste and soap brands found in two bathrooms which housed 3 ppl - pa, ma and a 10 yr old.

What this goes to show is that no longer is it true that 70% shop out of habit. Infact, what is now going to help the brand is whether it is present in the line of sight (say, at supermarkets), how well it is dressed up(packaged) vs its competitor, what zumba zumba (*remember the Reliance comm gym ad*) does it offer.

Customers now shop for similar rather than the same brand- either would do- a vaseline or a nivea, a Pantene or a L'Oreal or a Dove, a lifebuoy or a Santoor white, a pepsodent or a colgate.....so brands now need to build their muscles----so is it going to be a 6 or 8 pack for yours ?

Advertising and labeling

Advertising to children has always irked me. Pester power no doubt, but why at the cost of such innocent lives?! We are only helping shrink their childhood further - as if we did not do enough already.

Recently I read about some initiatives by Kraft foods, where they consciously refrain from advertising to below six year olds and to the older bunch six through eleven, they only use what may be referred as 'benefit for you' products which abide by the stringent norms laid by the food authorities. These are products that pass stringent nutrition norms. Isn't that a good initiative!

Another process they follow is a specification of 8 key ingredients in all products on the label - energy (calories), protein, total carbohydrates, sugars, fat, saturated fat, dietary fiber and sodium. They use front-of-pack labeling that delivers meaningful information at a glance and fits local needs.

Jobs-to-be-done marketing

I read this article recently and loved the idea of a 'jobs-to-be-done' marketing.

Apparently ~30,000 new consumer products are launched each year. Of these 95% fail to make a mark. Problem ? They all create products slot them into a product category or by a consumer demographic. Not every product works that way. Infact most don't.

A case in point. A company launched a milk shake targeted at a specific demographic. Post launch they conducted a survey to list out the characteristics of an ideal milkshake - thick, thin, chunky, smooth, fruity, chocalatey etc. It was found that most consumers picked up the milkshake because they all had a long boring commute between home and work and had to keep themselves busy, also make the commute more interesting.

Now that the Company realized the job to be done, it was easier to respond by creating a morning milkshake which was thicker and had more chunks of fruit - this lasted through the commute and also made it more interesting.

That's how the 'jobs-to-be-done' mechanism works.

Some indigenous examples I could think of :

• Daag achey hain campaign- by Surf Excel
• Learn English campaign- by Tata Sky
• Maggi moving from just be instant noodles to noodles which are also nutritious (vegetables and atta)

The Indian Retail Story

Organized retail India is ~7% of the total retail industry. This includes food, beverages, clothing, personal care, electronics, food services, furn
iture, furnishings, health, sports goods, books, music and other typical departmental store items.

It seems like a growing retail story is having its share of hiccups in the form of :

• Finding. training and retaining talent
• Legal and bureaucratic hurdles
• Developing and leveraging the right know-how
• Using collaborations to scale up and for investment in back-end

How will overcoming these hurdles help :

• it will benefit the key stakeholders : producers, employees, consumers
• Producers : the farmers will receive higher margins than they do now, owing to many intermediaries between them and the consumer. A likely increase of 10-30% in their incomes
• Employees : by improving their economic, social and financial status.
  
• Consumers : who get to save ~5-10% on their monthly expenses through access to better deals, wider variety and better quality

The Indian retail story can have a happy end only through Global Integration and Financial Inclusion. Inclusion the true sense would be mean 'Economic inclusion' - through higher wages, 'social inclusion' - through acceptance in society - a nondiscriminatory attitude and 'financial inclusion'- through better access to financial channels It has always been believed that the growth in services sector (more specifically IT, BPO) is giving the country that much needed boost to help improve its GDP ; really ?


May not be. There is a mismatch in the demand and supply of labour. While most available labour is educated upto Class XI or below ; the need in the BPO / IT sector is for the XII+ educated individuals. So what 'demographic dividend' are we talking about.
If indeed we need to club this divide, it is the consistent growth in the retail sector that will help bridge this gap. This is the sector which looks for employees with less than XII class education. They are trained and even get high growth in their incomes and better social status.

So, why not lobby hard for the India Retail Story to lead the India Economic Growth Story and root for Inclusive Growth!

Consuming Middle India

Recent past has seen a drop in exports in teas, coffees, spices, fruits viz pomegranates. Interesting ? Thanks to the increasing incomes of the middle class, there is higher consciousness about 'what they consume'. The richer crust of middle India finds brands with the export quality sticker more suited for consumption be it - green tea, pepper, coffee from the finest beans , milk and dairy products etc.. The exporters of these items find it more lucrative to sell to Indians who are willing to pay more than the foreign counterpart. An indicator for increased consumption is the price increase for milk is ~20% while the demand has increased by ~7%. The perception is that 'higher price' = 'better quality'

Infact there is also growing demand for fruits like pomegranates owing to their medicinal properties and 'general goodness' to health. The middle class Indian does not mind paying over Rs.200/- for a kilo of pomegranate.

Is that a good or bad sign, I wonder. Isn't this going to affect food inflation?! Any thoughts ?

Naked Communications

Hey I bet I will get many more page views with this title for a post. However that is not exactly why I chose this title.
I recently read about this agency- Naked Communications which is headquartered in some place outside of Asia. As they state - "we don't pitch for clients and nor do we buy media". Well then what do they do?
They believe in simply understanding the clients problems and providing them solutions. Err! so what do agencies do...that's exactly what. Pitching for accounts and buying media is one way of providing solutions. Is it not?
Anyways Naked Communications considers setting shop in Mumbai shortly - so any of you waiting to providing solutions to client problems are free to apply. As for the rest what the hell have you been doing taking a brief from the client?!
Well sarcasm aside; a few examples of their work that they provided in the article -

1. The Nike ad - run run....where the ad incites the onlooker to run (across London)
2. Dulux paint ad - where they moved the positioning of the Company from a paint manufacturer to a "Colour Chemist". They apparently found that 70% of those who get their homes painted, repaint some bit of it within the next month simply because they were not quite happy with the shade compatibility with the decor. After Naked suggested, the client got themselves a website which helps the customer to upload the pictures of their home and experiment with different shades online. I liked the idea.
3. Nokia Nseries - Naked made Nokia place the phones in specialist music stores since they are marketing the product as meant for the music lover (why a mobile phone if you love music, is an ipod not good enough!)

The one thing that the article mentioned which I couldn't but agree. "We don't believe in targeting customers".....targeting is not something a customer would like done to him.

And lastly - 360 deg advertising (which is definitely the buzz word today) is not something Naked believes. How would you like to be hounded all the while by a brand? I couldn't agree more.