It is the most talked and happening topic of present time- Recession.
Lets have a clear picture about it :
Recession : In economics, the term recession generally describes the reduction of a country's gross domestic product (GDP) for at least two quarters. [1][2] The usual dictionary definition is "a period of reduced economic activity", a business cycle contraction. (Wikipedia)
Now if I put it is simple terms – We have a situation where Companies are not able to generate revenues because the source of revenue (in many cases the end consumer – common man) is not able to buy or use services . Thus it effects the spending of company which results in reduction in support function which over all transforms into misery of same common man.
Now if you see it in positive manner , companies start looking very seriously at costs that they are incurring, they start analyzing their ways of increasing revenues , they start looking at their exposure in market . If a holistic view can be considered we are actually doing what should be done if healthy business has to be run.
Now let me come to the topic that has been used for this blog.
Recession is certainly groundwork for growth because:
1>You start managing your recourses in best possible way which improves your ROI.
2>You start managing your stock effectively that helps you to rectify any problems in working capital.
3>You start reducing your exposure in market , which helps in cash flow.
4>You start looking at innovative ways of generating revenues which helps in long term growth.
So conclusion that I can derive is ‘’Recession is not that bad a process as it is seen, one should be able to adopt practices to sail through recession and carry it in good times also so that in next recession company is in auto mode’’
Tuesday, 23 December 2008
Sunday, 2 November 2008
Market meltdown - Tough Time
World is seeing one of the toughest times ever. Banks are going burst.Liquidity in Market is low. Governments are frightened and consumers are cutting their expenses.
This correction was on cards with the type of Surge World Economy saw in last 8 years.
India and China contributed the most.But china is entering this re-cession better prepared.Reason being:
1> No Dollar Debt: Due to dollar strengthening as there is shortage in market , lot of local currencies have shown fall. Rupee has depreciated by 25%. That means if you have 100 rs Loan in dollar sense you will have to pay 125 rs. And china has no debt so it will come out untouched.
2> Stock market Exposure to GDP : China has exposure of only 0.4% of its GDP to Stock Market, where as India has 4%.So when FII pull out their money GDP in India will be more effected in comparison with China.
3> Huge Foreign Reserves : although India also enter this new financial setup with good reserves but china enters with 3 trillion $ reserves which is amazing condition to be in.
These factors are important as only 2 winners in this crisis will be undoubtfully India and China.
World will witness new financial arena where players and their strategy will change.
The major issue of concern is the reason for this meltdown - Is this financial Failure or Capitalism Failure or DEMOCRACY FAILURE
This correction was on cards with the type of Surge World Economy saw in last 8 years.
India and China contributed the most.But china is entering this re-cession better prepared.Reason being:
1> No Dollar Debt: Due to dollar strengthening as there is shortage in market , lot of local currencies have shown fall. Rupee has depreciated by 25%. That means if you have 100 rs Loan in dollar sense you will have to pay 125 rs. And china has no debt so it will come out untouched.
2> Stock market Exposure to GDP : China has exposure of only 0.4% of its GDP to Stock Market, where as India has 4%.So when FII pull out their money GDP in India will be more effected in comparison with China.
3> Huge Foreign Reserves : although India also enter this new financial setup with good reserves but china enters with 3 trillion $ reserves which is amazing condition to be in.
These factors are important as only 2 winners in this crisis will be undoubtfully India and China.
World will witness new financial arena where players and their strategy will change.
The major issue of concern is the reason for this meltdown - Is this financial Failure or Capitalism Failure or DEMOCRACY FAILURE
Saturday, 20 September 2008
Cyclic Economy and Brand as Savior
It is clearly evident that world economy is going through a complete cycle.Is this the time when brands power will be tested? Yes.
Because consumer has now more choices and limited resources. Inflation has taken away extra share of income and now only counted penis will decide the success of Product.
So it will require a proper space in customer mind, so that at any point of decision marketing it has your brand as its first option.Now here is the twist. When Margin's are shrinking , how to effectively and profitably communicate to customer.
So any brand as a proactive investor has to keep check of economy.It has to predict the market scenario based on economy of world and take corrective action before it becomes a liability. Thats why big brands continuously keeps communicating to customer even in good times. It pays here when time is not good and margins have more than communication responsibilities.
We have a best example of this "Nokia".They built there brand when it was very tough working in the region.Nokia entered the Indian market in 1994. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conducive to the growth of the mobile phone industry.
The tariffs levied on importing mobile phones were as high as 27%, usage charges were at Rs.16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face tough competition from other powerful global players like Motorola, Sony, Siemens and Ericsson...
And now it is most powerful with region contributing 11% of its global revenues and by 2010 it expects India to be its NO 2 Market.
Now if they would had started escaping from expenses on communication in good times it would had been really difficult to face hard times and keep the pace of growth same.
As it is well said "You should spend your way out of trouble times not save your way of trouble times"
Because consumer has now more choices and limited resources. Inflation has taken away extra share of income and now only counted penis will decide the success of Product.
So it will require a proper space in customer mind, so that at any point of decision marketing it has your brand as its first option.Now here is the twist. When Margin's are shrinking , how to effectively and profitably communicate to customer.
So any brand as a proactive investor has to keep check of economy.It has to predict the market scenario based on economy of world and take corrective action before it becomes a liability. Thats why big brands continuously keeps communicating to customer even in good times. It pays here when time is not good and margins have more than communication responsibilities.
We have a best example of this "Nokia".They built there brand when it was very tough working in the region.Nokia entered the Indian market in 1994. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conducive to the growth of the mobile phone industry.
The tariffs levied on importing mobile phones were as high as 27%, usage charges were at Rs.16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face tough competition from other powerful global players like Motorola, Sony, Siemens and Ericsson...
And now it is most powerful with region contributing 11% of its global revenues and by 2010 it expects India to be its NO 2 Market.
Now if they would had started escaping from expenses on communication in good times it would had been really difficult to face hard times and keep the pace of growth same.
As it is well said "You should spend your way out of trouble times not save your way of trouble times"
Tuesday, 8 July 2008
NEW Customers - Middle Class - 1
It has been talked every where in world .
The basics are same, its cycle is fundamentally proved
Developing economy > People making more money > Wages increase > Middle class increase > Spending power increase > Increase in GDP > Economical development.
A new study by the McKinsey Global Institute (MGI) suggests that if India continues its recent growth, average household incomes will triple over the next two decades and it will become the world’s 5th-largest consumer economy by 2025, up from 12th now.
Now as the people will become richer and spending will take place. With this effect first stage will be making life more comfortable which will see the rise of spending in Housing , education , clothing . Then comes consumer goods and entertainment.
Only catch here is as the consumer will reach to the stage of consumer goods and entertainment , its spending strength will be much higher than the stage where he spent on Housing, education and clothing.
Now this is psychological that as and when the first stage becomes more visible, it becomes necessity.We have example of TV, initially it was an luxury but slowly with the spread it became a necessity and now Flat panels are at same stage.
It is a process as per my understanding :
Top down should look like this :
Luxury >> Addition >> Need >> Want
Now here this transition is also important for Companies with are into consumer demand products because when their products are in Luxury the equation is : less consumer and more premium price, but as it reaches Want equation changes : More Consumers and less premium price.Now a successful management will be one which is making profits in all circumstances and shows increase in profits as they move forward.
Marketing has a very crucial role to play in this. It is marketing that will decide the time line for each stage because it is them who will make the commitment and communication to consumers
The basics are same, its cycle is fundamentally proved
Developing economy > People making more money > Wages increase > Middle class increase > Spending power increase > Increase in GDP > Economical development.
A new study by the McKinsey Global Institute (MGI) suggests that if India continues its recent growth, average household incomes will triple over the next two decades and it will become the world’s 5th-largest consumer economy by 2025, up from 12th now.
Now as the people will become richer and spending will take place. With this effect first stage will be making life more comfortable which will see the rise of spending in Housing , education , clothing . Then comes consumer goods and entertainment.
Only catch here is as the consumer will reach to the stage of consumer goods and entertainment , its spending strength will be much higher than the stage where he spent on Housing, education and clothing.
Now this is psychological that as and when the first stage becomes more visible, it becomes necessity.We have example of TV, initially it was an luxury but slowly with the spread it became a necessity and now Flat panels are at same stage.
It is a process as per my understanding :
Top down should look like this :
Luxury >> Addition >> Need >> Want
Now here this transition is also important for Companies with are into consumer demand products because when their products are in Luxury the equation is : less consumer and more premium price, but as it reaches Want equation changes : More Consumers and less premium price.Now a successful management will be one which is making profits in all circumstances and shows increase in profits as they move forward.
Marketing has a very crucial role to play in this. It is marketing that will decide the time line for each stage because it is them who will make the commitment and communication to consumers
Sunday, 15 June 2008
Predicting Troubles
It has been long time since last post because of the work pressure.Today we will discuss clues or the indications that predict that there is a hard time ahead for a product line up.
We can broadly define it as the "Symptoms of Disaster"
1> You are not able to sell your product at the pre-defined and proven price points.(Mild)
2> Some one else can source your alike product and sell more than yours.
3> Some one else can source exactly your product from cheaper country and sells more than yours
4> Your inventory is piling up month after month.
It is very important for any Product manager to keep track of it and take action as and when possible.Especially when someone else is able to sell the same product in same market and you are not,
This is very uncomfortable condition and creates lot of troubles :
1> Margins start shrinking
2> Sales touch rock bottom
3> Confidence in the market is lost
4> Inventory starts increasing at unbearable speed.
5> New products are very difficult to launch.
There can be a short term solution as shock therpy
"You get the product to a price level,where others can not match and hurt them with stuck inventory"
"You buy the material from the market and create a temporary hollow, this gives you chance to think and act"
But all these methods are not permanent solution to this type of problem.As a organization it has to come from top and a strategic decision has to be taken.
If one product bleeds it takes the shine of entire product portfolio.And if the "start product portfolio" is in mess, whole category will be hurt,causing long term damage to company which might be Unrepairable in long term.
We can broadly define it as the "Symptoms of Disaster"
1> You are not able to sell your product at the pre-defined and proven price points.(Mild)
2> Some one else can source your alike product and sell more than yours.
3> Some one else can source exactly your product from cheaper country and sells more than yours
4> Your inventory is piling up month after month.
It is very important for any Product manager to keep track of it and take action as and when possible.Especially when someone else is able to sell the same product in same market and you are not,
This is very uncomfortable condition and creates lot of troubles :
1> Margins start shrinking
2> Sales touch rock bottom
3> Confidence in the market is lost
4> Inventory starts increasing at unbearable speed.
5> New products are very difficult to launch.
There can be a short term solution as shock therpy
"You get the product to a price level,where others can not match and hurt them with stuck inventory"
"You buy the material from the market and create a temporary hollow, this gives you chance to think and act"
But all these methods are not permanent solution to this type of problem.As a organization it has to come from top and a strategic decision has to be taken.
If one product bleeds it takes the shine of entire product portfolio.And if the "start product portfolio" is in mess, whole category will be hurt,causing long term damage to company which might be Unrepairable in long term.
Tuesday, 20 May 2008
Inventory Control - The Mantra for Successful Marketing Part 1
It has been a while .. So one thing that has touched me to my core in Product management is Inventory control.
To start with i will quote my legendary Managing Director Mr Probir Mukherjee "Orders should wait for goods,goods should not wait for orders"
When i fist heard this i was sitting in my monthly ordering cycle.And this thing touched me to deep.
It is absolutely necessary and important to have goods in inventory but to what extent is the beauty of business.Although it depends on the industry you are in.
In consumer durables i think 90 days is the best time period.Anything above it is a loss and thats what my MD indicates in his statement . While if you take case of beauty products (one of my friend is Buyer for same), they keep inventory for 360 days for many products , reason being the volume gives them cost advantage to very high extent.
I feel the inventory in all cases can be divided in 3 main categories.
A> Sting Inventory
B> Comfort Inventory
C> Killing inventory
A> Sting Inventory : when we start loosing orders for not having goods , this state we not only loose top line but other articles which could had been pushed are also not sold. This is one of the most uncomfortable situations because targets are not met and the market share is lost to competitors.
B> Comfort Inventory : This is the idle and most appropriate state where not only orders are met on time , but also we are able to keep cost of carrying goods in control.Means i am able to meet demand and can also go for expansion as i have buffer of 2 more months.
C> Killing Inventory : Here comes the most dangerous stage.It has many implications
1> These is always a cost attached to the inventory that has been carried
2> There is a very good chance that by the time you sell, the model is
outdated
3> New launches have the effect as old model is already in stock.
4> Price pressure is there. As cost is continuing SKU starts attracting
provisions.
We can go on and on for the same. The extent of damage is different for different industries but there is a considerable damage.
Basically there are few remedies for the same .
1> Proper forecasting
2> Channel strength analysis
3> Product profitability and life cycle analysis.
We can touch on each point in subsequent blogs.
To start with i will quote my legendary Managing Director Mr Probir Mukherjee "Orders should wait for goods,goods should not wait for orders"
When i fist heard this i was sitting in my monthly ordering cycle.And this thing touched me to deep.
It is absolutely necessary and important to have goods in inventory but to what extent is the beauty of business.Although it depends on the industry you are in.
In consumer durables i think 90 days is the best time period.Anything above it is a loss and thats what my MD indicates in his statement . While if you take case of beauty products (one of my friend is Buyer for same), they keep inventory for 360 days for many products , reason being the volume gives them cost advantage to very high extent.
I feel the inventory in all cases can be divided in 3 main categories.
A> Sting Inventory
B> Comfort Inventory
C> Killing inventory
A> Sting Inventory : when we start loosing orders for not having goods , this state we not only loose top line but other articles which could had been pushed are also not sold. This is one of the most uncomfortable situations because targets are not met and the market share is lost to competitors.
B> Comfort Inventory : This is the idle and most appropriate state where not only orders are met on time , but also we are able to keep cost of carrying goods in control.Means i am able to meet demand and can also go for expansion as i have buffer of 2 more months.
C> Killing Inventory : Here comes the most dangerous stage.It has many implications
1> These is always a cost attached to the inventory that has been carried
2> There is a very good chance that by the time you sell, the model is
outdated
3> New launches have the effect as old model is already in stock.
4> Price pressure is there. As cost is continuing SKU starts attracting
provisions.
We can go on and on for the same. The extent of damage is different for different industries but there is a considerable damage.
Basically there are few remedies for the same .
1> Proper forecasting
2> Channel strength analysis
3> Product profitability and life cycle analysis.
We can touch on each point in subsequent blogs.
Saturday, 3 May 2008
Micro marketing
Marketing in present world is not only very competitive but decisions in present time are taken after considering even the very small or nascent factors . This gave rise to new fundamental called Micro Marketing.
Macromodela descriptive model, designed to communicate, explain or predict some real system or process, in which there is a dependent variable and a relatively small number of independent, determinant variables.
This can be explained well with an example. Say for example i am a company which has 3 major brands and each brand has approximately six products.This gives me the range of 18 different Products.Now if each Product has 3 SKUs i have total reach of 18*3 = 54 .
Now i operate in a region having 5 states and each states have 20 vendors and each vendor or the customer point has its own unique feature.Now i will make plan for each 100 (20*5) touch points . I will fix targets for sales and also analyze the actives for each touch point.
This helps me to monitor and differentiate problems that each sku is facing in each customer touch point.Now i can not only take any action specific to some touch point but also i can analyze the feasibility of each outlet.
So now companies are going towards Micro Marketing where Dependent variable has less independent variables . This leads to greater control in the system.Any control engineer (i am one ) will explain you better.
Macromodela descriptive model, designed to communicate, explain or predict some real system or process, in which there is a dependent variable and a relatively small number of independent, determinant variables.
This can be explained well with an example. Say for example i am a company which has 3 major brands and each brand has approximately six products.This gives me the range of 18 different Products.Now if each Product has 3 SKUs i have total reach of 18*3 = 54 .
Now i operate in a region having 5 states and each states have 20 vendors and each vendor or the customer point has its own unique feature.Now i will make plan for each 100 (20*5) touch points . I will fix targets for sales and also analyze the actives for each touch point.
This helps me to monitor and differentiate problems that each sku is facing in each customer touch point.Now i can not only take any action specific to some touch point but also i can analyze the feasibility of each outlet.
So now companies are going towards Micro Marketing where Dependent variable has less independent variables . This leads to greater control in the system.Any control engineer (i am one ) will explain you better.
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