05/10/2011 Apple rejects Samsung's offer to end tablet row

Apple Inc has rejected an offer from Samsung Electronics Co to settle their tablet computer dispute in Australia, possibly killing off the commercial viability of the South Korean firms new Galaxy tablet in that market. Apple says Samsung's Galaxy line of mobile phones and tablets slavishly copied its iPhone and iPad and have launched an international legal battle which is expected to hurt growth at one of Samsungs fastest-growing businesses. Samsung, whose Galaxy gadgets are seen as a major threat to Apples devices, rejects the claims, but has been seeking a quick settlement in Australia, so that its new Galaxy 10.1 tablets can be launched there in time for Christmas. But a lawyer for Apple told the Federal Court in Sydney on Tuesday Samsungs latest offer, made last week, provided no basis for a settlement and it wanted the court to rule on its claim that the Galaxys touch-screen technology infringed an Apple patent. The main reason we are here is to prevent the launch (of the Galaxy tablet) and maintain the status quo, Apple lawyer Steven Burley told the court. An Apple victory in Australia could hurt Samsungs bid to close the gap with Apple in the global tablet market, with a crucial US court ruling expected next week. Samsung told the Sydney court if it could not secure a ruling within about two weeks, the opportunity to launch its new tablets in time for Christmas would be lost and that it might as well take its time to argue the case well into 2012. If we cant get a decision out by mid-October, there is no urgency, said Neil Young, a lawyer for Samsung, adding it might take until March to fully prepare its

legal defence. In that case, he added, the Galaxy 10.1 in the Australian market would be commercially dead. Samsungs latest Galaxy tablets, powered by Google's Android operating system, have already been blocked in Germany, while some smart phone models have been blocked in the Netherlands. Samsung had hoped to launch the new Galaxy tablet in Australia in late August or early September. But this has been repeatedly delayed as it awaits the Australian court's ruling. The ruling could come this week, a federal court judge had said last week. Last week, Samsung agreed to withdraw two features from the Galaxy 10.1, leaving just one disputed Apple patent over touch-screen display technology. This patent deals with how finger movements are used on tablets to generate a software command. Samsung and Apple are suing each other in nine countries over 20 cases, with few of them holding as much significance as the California court ruling expected next week. Samsung may seek legal measures to ban sales of Apple's new iPhone, a source familiar with the matter has told Reuters. Apple fired its first salvo in April by suing Samsung in California, saying the Galaxy lineup devices infringed on its mobile technology patents and design. Samsungs smartphone business has been growing furiously, powered by its flagship Galaxy lineups. Some analysts expect Samsung to overtake Apple in unit terms as the world's No.1 smartphone vendor and report record profits from mobile business in the July-September period. Samsung, due to report its third-quarter earnings guidance later this week, saw smartphone sales soar more than 500 per cent in the second quarter, easily eclipsing Apple's 142 per cent growth, though Apple sold about one million more units.

One step at a time

The new ad campaign for Nissan Micra focuses on one special feature of the car in each of its ads. Picture this: Ranbir Kapoor driving around the streets of Mumbai, lip-syncing to a 70s Hindi film song, passing the citys famous landmarks, and enjoying a smooth drive on the empty roads. Wait. Empty roads? In Mumbai? Thats the catch. You dont have the luxury of driving on wide, empty roads in todays cluttered cities. So what does one do to make driving less stressful? Buy the Nissan Micra of course! That is the essence of the new television commercial (TVC) for the car, that comes with the tag-line Drive Simpler. Live Better.

Created by ad agency TBWA India, the ad takes a route different from conventional car ads that portray the subjects as status symbols or objects of desire. Instead of harping on the looks or all the state-of-the-art features in one go, the TVCs for this car like to take it one step at a time. The brief given to the agency was to clearly establish the uniqueness of Nissan brands in the consumers minds in a clutter breaking and in a simple but memorable manner, says Dinesh Jain, CEO, Hover Automotive India, the marketing and sales partner of Nissan Motor India Private Ltd (NMIPL). The hatchback segment is pretty competitive in India; so it is important to promote the product features, says Anand Ramanathan, an analyst with KPMG. And this is precisely what sets the ads apart. Nirmalya Sen, managing director, TBWA India, says, When the Micra was launched our campaign focused on the innovative features of the car. Now that it has been established, we want to highlight how driving the Micra can be a pleasant experience.

NMIPL, a 100 per cent subsidiary of Nissan Motor Ltd Japan, was incorporated in India in 2005. The Micra, a late entrant in the Indian hatchback/small car segment, is the companys first locally manufactured car and was launched in July 2010 with two TVCs that highlighted one product feature each. The company seems to be taking the same strategy forward with two new ads this year that again take up one feature at a time. But the first question that comes to mind is, is there room for new products in the crowded hatchback market in India? The hatchback segment has matured over the years and its fiercely competitive. However, its far from being saturated. There is room for more vehicles that enhance the value for money proposition, says Jain of Hover Automotive India. The uniqueness of the Micra lies in its ability to offer a product with features that are segment first, coupled with competitive pricing that sets a benchmark for the industry. There is untapped potential in the segment and we definitely are one of the formidable players here, he adds. The race is on The size of the overall automobile market in India is estimated at Rs 2,15,000 crore and is around 15 million units in volume; of this, roughly 2.3 million vehicles are passenger cars and utility vehicles. The small car/hatchback segment comprises approximately 60 per cent of the passenger vehicle market. The segment witnessed an average annual growth rate of 18.5 per cent between 2006 and 2010. The premium segment of the hatchback market is growing steadily and is led by the Maruti Suzuki Swift; Hyundai i20, Toyota Liva, Ford Figo, Honda Jazz, Fiat Punto etc follow in that order. Maruti Alto is the leader in the overall compact car category. Hyundai i10 is a distant second and Maruti WagonR the third. Overall, Maruti, Hyundai and Tata Motors command roughly 85 per cent of the compact car market. Nissan holds less than 1 per cent share of this market, according to 2010-11 figures released by the Society of Indian Automobile Manufacturers. The double digit growth numbers in compact car segment has led to a large traction with new players entering the category and existing players launching newer models. All the major players have also announced capacity expansion plans, informs Ramanathan. The factor critical for success would be a wellspread dealership network like those of Maruti, which has over 985 sales outlets, Hyundai which has 470 and Tata which boasts of a network of over 620 sales outlets. Being a new player, Nissan may take time to build such an extensive dealer network, he adds.

In other words, the battle lines have been drawn and the war is expected to be intense. But Nissan is confident. Our product has one of the best in class fuel efficiency. Features like the intelligent key and push button start/stop that are otherwise available only in high-end luxury cars like BMW, Mercedes etc are available on the Nissan Micra. Thus, it offers more value for money than others in the segment, says Jain. Focus on the USPs The ads for the Micra highlight such unique features. While last years ads focused on the intelligent key and push-button start features, this time the TVCs focus on the short turning radius of the car and its high fuel efficiency. Both the ads use old Hindi film songs in the background and are shot as flashbacks. The simple point we were trying to highlight was, while we cannot change the condition of the city, we can make driving around a better experience, says Sen of TBWA India. Thats why we used the flashbacks, to show the time when there was less traffic on the roads and fuel price was low, and how driving the Micra is like going back in time, Sen says. The ads describe the pleasures of city driving in the good old days, adds Jain of Hover Automotive India. So can the TVCs propel the Micra, with a price tag of Rs 4.13-Rs 5.45 lakh (exshowroom, Delhi), into the top league? Noted auto columnist Murad Ali Baig feels that it will take a bit of time till the Micra and Nissan develop a critical mass with their image. Ramanathan of KPMG feels while these are not breakthrough ads, they serve the purpose of catching the viewers attention. In terms of concept, they have very successfully tried to put the spotlight on the product instead of Ranbir Kapoor. The features they highlight are also relevant to the urban audience. Nissan has three other products in the auto luxury segment in India, the Nissan XTrail (SUV), Nissan Teana (luxury sedan) and the Nissan 370Z (sports car), besides the recently-unveiled made-in-India product, the Sunny. We are serious about our operations in India. Of the proposed investment of Rs 4,500 crore, we have already invested Rs 2,300 crore. The remaining will be spent on plant expansion, product pipeline, brand awareness, retail expansion etc, thus reinstating our focus on India as one of the most promising markets for Nissan Motor Company, Japan, notes Jain. The car seems to be doing well so far. Between its launch in July 2010 in the petrol version and in December 2010 in a diesel avatar, it managed to capture 5 per cent share of the market.

Playing Catch-Up(Panasonic Consumer Durable Market) Preeti Khicha / Mumbai October 3, 2011, 0:50 Ist Panasonic has a long way to go in playing catch-up in market share. But the company believes it is off to a good start For many of us the brand Panasonic conjures up images of batteries and home audio systems. This is precisely the perception that Panasonic wants to change. It now aspires to be a household brand that straddles most if not all segments of the consumer electronics industry in India. And this ambition is evident in the aggressive product launches and high decibel advertising surrounding the brand in the last two years.

In 2010-11, the consumer lifestyle division of the company recorded a turnover of Rs 1,700 crore (the overall turnover of the company was Rs 3,200 crore, which includes its business-to-business division and turnover from the recently acquired Anchor Electricals and Sanyo). With the size of the consumer electronics market pegged at Rs 45,000 crore per year, this translates into a market share of just under 4 per cent. Across categories, its market shares stand in single digits. NUMBERS COUNT Panasonics share across segments (consumer lifestyle division) in per cent Market Segment share Television 8.5 Air conditioner 8.5 Digital camera 4.5 Refrigerator 2.0

Washing 2.0 machine Healthcare NA Personal NA grooming Source: Industry Estimates; NA: Not available This surely is nothing to write home about for a company that has been in India since 1995, as long as the chaebols have been around. But experts say in the first leg of the journey in India, the focus was missing. Panasonic retailed under the National-Panasonic brand National being the brand used by Panasonic Corporation (formerly Matsushita Electric) to sell home, personal and industrial appliances, a brand name that was phased out in Asia, the last market it was used in, around 2004 operating through a limited product window that included CRTVs (cathode-ray televisions), LCD televisions, plasma televisions and some kitchen appliances. This changed when Daizo Ito was placed at the helm of Panasonic India in 2008. The new focus on India becomes evident when one considers the categories the company has entered into over the last two years. Today, the brand straddles flat panel televisions and home entertainment, home appliances (air conditioners, washing machines, refrigerators and small cooking appliances) and beauty products. Aiming high But Panasonic still has a lot to prove. The battle for shares in the fiercely competitive consumer electronics market is going to be tough. Panasonic wants to compete in a space where the Korean companies LG and Samsung have cemented their position with aggressive pricing and a wide range of products. And their targets are no less ambitious. LG, for instance, is targeting revenue of Rs 20,000 crore in 2011 and expects its India operations to overtake its sales in Korea in the next four years. Compatriot Samsung is also aiming to double its revenue from India to Rs 48,000 crore, according to reports, in the next three years. If thats not enough, Japanese companies like Sony and the US-headquartered Whirlpool are stepping up their efforts for leadership in certain segments. Not to be left behind, Indian street fighters Videocon and Godrej have upped the ante with feature-led products backed by never-before after-sales.

Panasonic India Head (sales and marketing) Manish Sharma, who is spearheading the rebound, is aiming for the companys turnover to touch Rs 22,000 crore by 2015. Going forward, the company is betting on flat panel televisions (sold under the Viera brand), that bring in over 40 per cent of revenue, to be the largest driver of growth, while air conditioners (25 per cent contribution) and digital cameras (10 per cent contribution) will be the other two focus areas. The remainder of its portfolio which includes washing machines, refrigerators, small appliances, personal grooming and system sales still bit contributors, will get a bigger thrust at a later stage. Panasonics focus on televisions can be explained by the fact that the market for consumer electronics in India is skewed towards televisions, which account for 60 per cent of the total sales. The catch here is that more than 60 per cent of the market is accounted for by CRTVs, a segment Panasonic exited globally a few years ago, and in India last year. For LG, for example, close to 50 per cent of its India revenues from television come from CRTVs. That does not worry Panasonic. Our objective is to upgrade the lifestyle of Indian people. The idea is to appeal to people who aspire to buy an LCD but can afford a CRT, says Sharma. Thus, to woo the potential flat panel consumer, it launched a 32 inch television in mid 2010 that was 15 per cent cheaper than the average flat panel. It managed to keep the price low by skimping on features like HDMA ports which consumers do not typically use. Panasonics strategy may well work in the long term a CRISIL 2010 report indicates, in the television market, the growth of LCDs, LEDs is going to be faster, and the low priced CRTVs are going to dwindle gradually. Taking a page from the books of its Korean rivals, Panasonic has learnt that dumping international products in India is not going to cut ice with the Indian consumer. As the head of one of the product lines at LG points out, local innovations have been the largest reason for its success in India. So, in LCD televisions, Panasonic rolled out its first India-specific innovation last year called the Sound of India, which places huge emphasis on bass as Indians love it. We also added the USB port to the television as our research revealed Indians like watching movies without connecting a DVD player. Going forward, the television portfolio will continue to see more India-specific innovations with the next round of launches slated for April next year. This is not to say that the premium end of the market will not deserve attention. When it comes to unveiling products, Panasonic has a two-pronged approach to the

Indian market local innovations to drive volumes and bringing in international ranges to drive the aspirational image of the brand. According to a senior hand at LG, straddling different price points from entry level, to mid and premium has helped it maintain leadership across almost every segment of the consumer durables market. Panasonic would do well to follow a similar strategy. Thus, for the premium segment, it has rolled out close to 23 models in April this year. We are developing applications like moneycontrol.com, bigflix.com to justify the use of internet on televisions, vis-a-vis on smart phones, says Sharma. In plasma televisions, Panasonic is the leader with 50 per cent of the market. Other focus areas Air conditioners is the second area where Panasonic is betting its money on. Here too, there are players like Samsung, LG, Voltas and Videocon that have built strong portfolios and brand equity over the years. Rather than going the whole hog, Panasonic will concentrate only on the split air conditioner segment, owing to a global decision to exit the windows AC business last year. Sharma explains, Until a few years back, window ACs dominated the air conditioner market; but the trend is slowly reversing and split air conditioners are getting popular. According to industry estimates, of the 3 million ACs sold in 2011, 60-70 per cent are split. With 40 models of split air conditioners, the company hopes to storm the market. Last year, our AC sales grew 130 per cent, which is four times the industry growth rate. This segment too will see its share of local innovations. It has developed the Indiaspecific Cube AC, which was launched last season. Sharma says at Rs 16,900, it was only about Rs 1,500 higher than a window AC. Many consumers buy a split AC not only because it is silent but also because it is a status symbol, explains Sharma. It has surpassed expectations and already contributes to 30 per cent of our total AC sales, and you can expect similar innovations to hit the market next year, he notes. To address the needs of premium consumers, the company has launched Eco Navi, a global innovation for consumers who are willing to invest a little more initially to save on energy costs later. Gaining a foothold in digital cameras the third pillar of its business will perhaps be the most difficult. While the company is launching several entry-level models, Japanese compatriots like Nikon, Canon and Sony already have a stronghold in the 2.68 million units market. For Panasonic, the focus on digital cameras (retailed under the Lumix brand) serves a broader purpose. Our products will target the youth of the country and ensure Panasonic is a brand in their

consideration set, says Sharma. Like cameras, Sharma is also counting on personal grooming products to position Panasonic as a youth brand. Unlike other segments, Panasonic is treading cautiously in refrigerators. A CRISIL 2010 report points out that the direct-cool segment will continue to retain its dominance in the refrigerator market, which is in contrast to the trend in other appliance segments, where products with newer technologies are witnessing higher growth. Panasonic has done well by keeping its faith in direct-cool refrigerators, a segment which is almost obsolete across the world. It has tied up with Value Appliances to make direct-cool refrigerators, which constitute 70 per cent of refrigerator sales in India. We introduced three models four months ago and will introduce another five models this year, says Sharma. For the record, for both LG and Samsung, refrigerators are the largest contributors to the business after televisions. In frost-free, Panasonic will bring in its international range. Our differentiation here is that, unlike most competitors, all our frost-free refrigerators have a bottom freezer which is preferred by Indians to store vegetables. In washing machines, the semi-automatic ones will be locally manufactured while the fully automatic machines will be imported. The product mix, to a large extent, explains why 60 per cent of the companys sales come from the top 11 cities. However, once the entire range of direct-cool refrigerators and semi-automatic washing machines hit the market, Sharma believes, the revenue mix will be less skewed towards the urban areas. Also, with Panasonic launching products that are priced across the spectrum, penetrating deeper into the market will be easier. Reaching out Besides product innovations, Panasonic has a lot of catching up to do in terms of reach. Like its peers, Panasonic is counting on exclusive brand shops, which currently bring in 18 per cent of its sales, to reach out to consumers. We currently have 140 brand shops and are growing faster than our rivals, claims Sharma. Sharma says he has noticed a slow change in the mindset of distributors and dealers. Traditionally, stocking depended on the rebate offered. Thus, it was the distributors headache to put in the money and effort to sell. Today his stock is our stock, so the scenario has changed. Brands that can ensure sell-out from counter to consumers will be the winners, says Sharma. We have a Panasonic preferred partner programme where we support our sub-dealers to improve the ambience of their stores. We provide them with good display stands, in-shop training assistants

etc, says Sharma. About 2-3 per cent of the sales turnover is earmarked for this activity. Panasonic is also putting a lot of emphasis on after-sales service. We want to increase the number of service centres as quickly as our retail footprint, says Sharma. It had 250 service centres last year and is taking the count to 400 this year. Panasonic recently set up an experience zone in Mumbai which displays its entire product portfolio in India (including both consumer and professional businesses). Last year, a 22,000 square foot experience zone, Lifescape, focused on the consumer products division, was set up in Gurgaon (near Delhi). Here we showcase products that are not available in the market. For example, a massage chair or a water heater. We want consumers to realise we are a complete brand, says Sharma. In multi-brand retail, the retailer/distributor often pushes products depending on margins; this is not the case in exclusive brand outlets. India is not a replacement market for consumer electronics, and hence you need to allow first time buyers to experience the product. Thus, experience zones can help drive visibility, notes Purnendu Kumar, vice-president, retail and consumer goods, Technopak. At a time when other players in the segment are wooing consumers with highdecibel advertising, Panasonic can ill-afford to remain idle. It has earmarked Rs 400 crore for communication this year. In India, sports and Bollywood have a huge following and these two will be the two pillars of our communication, says Sharma. In the last two years, the company has roped in Ranbir Kapoor for Viera televisions, Katrina Kaif for home appliances and Diya Mirza for Eco Navi air conditioners. For categories like digital cameras and personal grooming appliances, Panasonic will pursue a regional specific strategy the youth, the company feels, relates more closely to such a strategy. It has thus roped in Jacqueline Fernandez, Koyel Mallik and Kajal Agarwal to promote such products. As a late entrant, Panasonic has its task cut out. Generally, it is a challenge to dislodge consumers from brands they have been loyal to. The Indian middle class consumers do not like to experiment much and rely heavily on word-of-mouth and history of after-sales service. Panasonic has to invest significantly in these, points out the head of a rival firm. The biggest challenge for Panasonic lies in the fact that its sales are skewed towards televisions and air conditioners. The company brass believes this might change once the new facility in Jhajjar, Haryana, is up and running. It is investing

$300 million (Rs 1,400 crore) for this facility, which will manufacture air conditioners and washing machines.

Sony TV's eureka moment Varada Bhat / Mumbai October 5, 2011, 0:32 IST
KBC has done to the channel what it did to Star TV a decade ago. Sony is trying to make sure that the magic doesnt fade away. Its been a dream run for Multi-Screen Media (MSM) whose flagship channel Sony Entertainment Television has held on to the number two position among Hindi entertainment channels for six weeks in a row. Besides, four of its shows have been among the top 10 most-watched programmes.

Thats heady enough. But the MSM brass is clearly aiming higher. The network launched its music channel Sony Mix last month and is planning to launch a premier sports channel by next year. Amidst all this, the network is believed to be in negotiations to buy out Ramoji Raos ETV Network, which has a bouquet of 11 channels. So whats working for MSM, which runs Sony, Set Max, Sony Pix, Bengali movie-channel Sony Aat and Sony Mix? The answer is pretty obvious: Kaun Banega Crorepati (KBC) hosted by Amitabh Bachhan. Sony is using KBC as a tent pole property one that holds up the rest of its programming by attracting viewers and getting them to stay on for other shows. N P Singh, MSMs Chief Operating Officer, says, the weekends were always good for us. But Monday to Thursday needed a strategy change. KBC gave us the needed push.

The two other serials that acted as catalysts were Bade Achhe Lagte Hain and XFactor. All these are the results of two years of hard work and continuous market research to try and adopt a new strategy for MSMs flagship channel. We wanted to improve our fiction programming. We decided to focus on women during weekdays and also make content that was appealing to the entire family, says Sneha Rajani, Sony Entertainment Television's EVP and Business Head. Though Sony has been known for its innovative programming such as Boogie Woogie, Indian Idol, Big Boss, Fear Factor and fiction shows like CID, Aahat, Heena, etc, somewhere things didnt click as the network failed to cash in on its success and consolidate the brand across various genres something that rivals Star India, Zee and Viacom 18, did with great effect. A desperate MSM had earlier revamped its entire programming and launched several new shows and tied up with Yash Raj Films for television content. But most of these fiction shows had to be pulled out due to poor response. Then in 2010, KBC happened. The Big B did the same magic for Sony what he did to Star Plus a decade back. Riding on its success, the channel launched other fiction shows. Rajani says research had found certain amount of viewer-fatigue. The audience wanted something fresh. That is when the idea of Bade Achhe Lagte Hain came about. The audience needed something more mature, she adds. The combination has seen Sony steadily climbing the GEC ladder. It is now a close second with 270 Gross Rating Points (GRPs), while Star plus leads the pack with 289 GRPs, according to data provide by TAM Media Research for Week 39 ending September 28. Having tasted blood, Sony will launch three to five new shows both fiction as well as non-fiction in October-November. Also, the broadcaster has brought all its properties under one umbrella identity with all of them sporting the brand Sony on their logo. Existing Channels like SAB TV will also see some programming change and a slew of new shows. Getting into high-definition TV and the regional space are the other key things on the agenda of the management. If the deal with ETV goes

through, it will give MSM a very strong foot-hold in the regional space , says an industry insider. Media planners say the channel has also started doing packaged deals across the network so far, only rival Star India has done this. What it needs to improve now is the ad rates. The average rate on Sony for a 10-second spot is Rs 15-20,000, while for Star, Colors and Zee the rate varies between Rs 20-35,000. However, a senior executive from a rival channel is not impressed.The real challenge for Sony will be post-KBC. One has to see whether it will be able to sustain its rating in the long run. Non-fiction gives a lot of spikes, but then the viewers also go away, he adds. He may have a point, but MSM is unlikely to give up so easily this time.

India to be Reckitt's OTC production hub Surajeet Das Gupta & Priyanka Singh / New Delhi September 30, 2011, 0:45 IST
CMD Sethi details ayurvedic plans, new channels for pharma products; may sell some Paras brands. British consumer goods major Reckitt Benckiser, which bought over local start-up Paras Pharmaceuticals for a staggering Rs 3,260 crore last year, is converting its acquired Baddi plant in Himachal Pradesh into a global hub for manufacturing over-the-counter (OTC) pharmaceutical products.

The facility, which the company is refurbishing with an investment of a couple of hundred crore rupees, will export Reckitt brands as well as domestic Paras brands such as Moov, DCold, Krack, Itch Guard and Dermicool. Popular Reckitt brands in India include Dettol, Mortein, Disprin, Strepsils and Cherry Blossom.

The move is significant as the UK-based company now has Rakesh Kapoor, an Indian who has worked in the country, at the helm as its global CEO. Kumar was in India last week with his board members and met top distributors and company executives. That reflected the growing India focus of the company. Currently, much like global peers Procter & Gamble and Coca-Cola, India accounts for less than five per cent of Reckitts global sales. The intent, apparent from the Paras acquisition (which many billed as overpriced) and now turning Baddi into a global base, is to leverage the countrys huge domestic market and low-priced manufacturing to work out a competitive edge for the UK-based company. Its big markets in the US and Europe are witnessing anaemic growth. The company is also planning a major foray into ayurvedic product categories, which would help it reach outlets beyond pharmacies. It is also strengthening its foray into the OTC pharmaceuticals space with the launch of Gaviscon, a heartburn and indigestion remedy supported by a new distribution sales force. Breaking his silence after Paras was integrated into Reckitt, Chander M Sethi, chairman and MD of Reckitt Benckiser India, says: We are investing a lot behind Paras. For instance, we have invested massively, upwards of hundreds of crores of rupees, in our manufacturing plant at Baddi and it will soon become one of our global hubs for OTC pharma supply. It will be a hub for India as well as exports, including those of Paras products. With health-conscious middle-class Indians turning more and more towards naturebased remedies like ayurveda, Reckitts newfound focus here is no surprise. But, there is more to it. Ayurvedic variants of its fast moving products like Strepsils would help it get a toehold in the grocery store distribution, a no-go area with the traditional active pharma ingredient-based products that can be hawked only through chemist shops. Some of the Paras brands already have ayurvedic ingredients, so surely we are looking at ayurvedic products, adds Sethi. Giving details of the Paras integration process, Sethi says one major area is the integration of the sales force. Most of them have been integrated, and about 30 per cent of the employees have found jobs elsewhere. I believe in a major acquisition like this, where we dont have a single court case on us, we will not use the term generous, but we have been more than fair, says Sethi Sethi says his company has introduced some alternative distribution channels recently as part of the Paras acquisition. So, for instance, in the top 25 cities

metros and mini metros a separate distribution channel takes care of the requirements of pharmacies. Secondly, it has introduced Gaviscon in Tamil Nadu through medical representatives yet another new channel for promote pharma products. This new channel will be used to introduce more and more OTC pharma products by the company. These include Musinex, Nurofen and Lemsip. However, Sethi hints at the possibility of the company selling out some of the personal care brands it acquired from Paras. Responding to a question whether the company will sell some Paras brands, Sethi says, It would be premature to comment on this. But, the portfolio of any company is and should be continuously under review.

Bisleri's growing thirst for volumes The mineral water brand's focus this year is to go after the home consumption market with a host of innovations Preeti Khicha / Mumbai September 30, 2011, 0:56 IST
Bisleri seems to have had enough of clichd images of mountains and springs. In its latest television commercial, the mineral water brand has used humour (save yourself from a monster by offering him Bisleri) to drive home the brand message: stay protected with Bisleri water. Bisleri is spending Rs 50 crore for the latest brand campaign. Though some are critical, (Ignite Mudra Head Sudarshan Banerjee says the premise of the campaign is a little far-fetched), others say the humour works well.

However, in the branded bottled water space, getting the communication right is like skimming the surface. The larger task at hand is managing distribution. In a segment where margins are wafer-thin, driving volumes is critical. However, for Bisleri, reaching out to consumers is difficult as distribution costs are high. In

view of the bottles being bulky, and the product price low, the per unit cost of transportation is quite high. This is where regional bottlers, with their manufacturing base within a radius of 100 km eat into Bisleris share. But Bisleri has managed to get something right. Even today, Bisleri continues to be the leader by a long margin in a market where beverage behemoths Coca-Cola (with Kinley) and Pepsi (with Aquafina) have been flexing their muscles. In the branded Rs 3000 crore bottled water segment, Bisleri has a dominant market share of close to 40 per cent. Compare this with Kinley which holds nearly 10 per cent or Aquafina which has close to 15 per cent. To cement its position, Bisleri has invested in a geographically diverse manufacturing model. From a footprint of 22 plants five years ago, the number has grown to 52. A wider network has helped reduce logistics cost, thus allowing us to make deeper market penetration, says Anjana Ghosh, Bisleris director (business development and human resource). Bisleri water currently reaches 150,000 outlets within the country. Bisleri also scores over its rivals in its direct distribution model, where bulk packages are delivered at the doorstep. As an analyst at a leading brokerage firm, who has worked with Bisleri, says, It is the first mover advantage in the direct selling channel that has helped Bisleri maintain its edge. Direct sales, which bring in 50 per cent of the business, will continue to be the growth driver, while the retail and HoReCa (hotel, restaurant, cafe) segment will play second fiddle. Ghosh says a reason for success in the direct channel has been timely service. As is well known, bottled water distribution requires a daily distribution model. The company has a fleet of 2,500 vans that operate out of warehouses. Homes and offices can set their watch coinciding with the arrival of the Bisleri van, says a confident Ghosh. And it is the efficiency of the field force of 2,500 people and a 500-600 strong management team driving the back-end that ensures this punctuality. Within the direct channel, Bisleris focus this year is to go after the home consumption market. For this, Ghosh is looking to place vans in certain localities where consumers can call and order water packs. We have some vans in Mumbai, but we want to scale up the business and take this concept to housing societies, explains Ghosh. Currently the vans service consumers during the day, but the company is sorting out the logistics to introduce a night service. After Mumbai, Bisleri plans to take this model to Delhi.

Earlier this year, the company launched Bisleri hubs to drive home consumption. These are local stationery shops and dairies which exclusively sell Bisleri water, while support in terms of delivery vehicles like tricycles are provided by the company. There are 120 such hubs in Mumbai. The company also wants to expand the exclusive Bisleri Shoppes, 20 of which are already in Bangalore. We want 100 outlets by end of the year, says Ghosh. Exclusive stores will help overcome the issue of undercutting of margins common in general trade, and also allow the company to experiment with new products like Bisleri ice cubes. KPMG analyst (consumer) Anand Ramanathan though questions the viability of exclusive stores and believes it might be difficult to get enough footfalls. It might be wise to extend to services like a juice bar which revolves around the quenching thirst proposition. Coming up with the right stock keeping units has also played a part in Bisleris success. Today, Bisleri has the largest portfolio of bottle sizes (seven) starting from 250 ml and going up to 20-litre. We want to sell convenience, says Ghosh. Each size serves a different purpose, whether it is the 250ml pack for consumption onthe-go or the 2-litre pack while travelling. So does the increasing action in the water purifier market worry Bisleri? Every water purifier manufacturer is claiming they are better than competition, creating a doubt in the consumers mind. Thus, we are benefiting from that, quips Ghosh. The company will soon launch a 15 litre pack for the in-home consumption market. The 20 litre pack was too bulky for the retailer to make home delivery, says Ramesh Chauhan, chairman, Bisleri. Chauhan pays careful attention to packaging. The new 15 litre pack will have a rocking base allowing consumers to easily tilt the heavy bottle while pouring water. This is an insight Chauhan picked up from a Belgian water brand Spa Reines packaging. Chauhan, the man who created brands like Thums Up, Gold Spot and Limca, before selling them to Coca-Cola, candidly says, I am not an original thinker, but like to learn from others. And this certainly appears true when you see the collection of different international water brands that line Chauhans office shelf.

KIT: Chocolate market in India Strategic tools for the practising manager Technopak Advisors / New Delhi September 26, 2011, 0:21 IST The chocolate market in India is pegged at Rs 2,000 crore and is growing at a rate of 18-20 per cent per annum. The global chocolate market is estimated around $83.2 bn. The industry is extremely fragmented in terms of range of products. The two giants Cadbury with 70 per cent and Nestle around 25 per cent have been instrumental in building up the chocolate market in India with huge investments in product development, advertising and brand building.

The key growth drivers are tradition of gifting sweets in India, shifting in consumer preference from traditional mithai to chocolates, rising income levels and attractive pricing which is suitable for every pocket. The entry into this market requires a large capital investment for branding and production facilities. Also, facing the major international players with established history and success is difficult. The key challenges that the chocolate market is facing in India are inflationary pressures on raw material prices, lack of government initiative, high entry barriers due to duopolistic market and price-sensitive consumer.

ITC: At your doorstep Saumya Prakash / September 26, 2011, 0:12 IST
ITC wants to try its hand at fruits and vegetable vending. It has introduced mobile pop-up stores in Hyderabad that offer consumers the convenience of doorstep delivery of a wide assortment of fruits and vegetables as well as a modern shopping experience including electronic weighing and billing, use of credit cards

for payment etc. The company plans to expand beyond Hyderabad after the initial feedback. According to reports, pilots have also been done in Chandigarh and Pune to understand these markets. Choupal Fresh Retail stores were initially piloted in Pune and Chandigarh to understand the differences in consumer shopping behaviour in different cities. Once that objective was achieved, the pilot continued in Hyderabad only. The Choupal Fresh Pop-Up format leverages the learnings from the management of the retail stores.

The Choupal Fresh stores sell vegetables and other food products for half-a-day on an appointed day, at common areas in a gated community. The company representatives have drawn up a timetable after discussing the timings with residents associations. Choupal Fresh Pop-Up stores is an idea that combines the convenience of vegetable push carts and the shopping experience of modern retail stores from a consumer perspective. A larger share of consumer price is ploughed back to the farmer due to the lower costs along the value chain, says S Sivakumar, divisional chief executive, agri-business division and member, corporate management committee, ITC Ltd. He says the concept will benefit the consumer as well as the farmer while building a viable business model for the company. The pop-up stores combine the best of both the worlds, he adds. The Choupal Fresh stores are serviced by a strong back-end of farmers in clusters of villages around Hyderabad. The F&Vs are sold at market prices. While the consumers appreciate the door-delivery convenience offered by the pushcarts, the limited range of F&V on offer and management of quality and wastages were the challenges. Further, the geographic spread of houses in residential localities required frequent movement of pushcarts by the operators; this meant operationally complex and financially unattractive business, says Sivakumar. Arpita Mukherjee, a professor at the Indian Council for Research on International Economic Relations, believes that the new retail model is indeed beneficial for the customers as it combines the benefits of both organised and unorganised retail. The advantage is consumers dont have to spend hours bargaining with the local vendors and the chances of getting cheated are rare. But the success depends on

how well the supply chain is arranged as F&Vs are consumed and purchased on a daily basis. Also, the chain is fragmented in our country. Indians dont have big cold storage freezers like the Western countries. Thus, only time will suggest how successful this model be. All in all ITCs new move makes us think in western direction, making our lives more organised.

Steve Jobs dies: Quotes from late Apple founder here are some key quotes from Steve Jobs, the legendary co-founder and former chief executive ofApple Inc, who died on Wednesday after a years-long battle with cancer. COMMENCEMENT SPEECH AT STANFORD UNIVERSITY, 2005

"Remembering that I'll be dead soon is the most important tool I've ever encountered to help me make the big choices in life. Because almost everything -all external expectations, all pride, all fear of embarrassment or failure -- these things just fall away in the face of death, leaving only what is truly important. Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart." "Your time is limited, so don't waste it living someone else's life. Don't be trapped by dogma -- which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice." New Apple iPhone 4S: Full coverage on the latest smartphone

ALLTHINGSD

CONFERENCE,

2010

"There's nothing that makes my day more than getting an e-mail from some random person in the universe who just bought an iPad over in the UK and tells me the story about how it's the coolest product they've ever brought home in their lives. That's what keeps me going. It's what kept me five years ago, it's what kept me going 10 years ago when the doors were almost closed. And it's what will keep

me

going

five

years

from PLAYBOY

now

whatever MAGAZINE,

happens." 1985

INTERVIEW

WITH

"I don't think I've ever worked so hard on something, but working on Macintosh was the neatest experience of my life. Almost everyone who worked on it will say that. None of us wanted to release it at the end. It was as though we knew that once it was out of our hands, it wouldn't be ours anymore. When we finally presented it at the shareholders' meeting, everyone in the auditorium stood up and gave it a 5minute ovation. What was incredible to me was that I could see the Mac team in the first few rows. It was as though none of us could believe that we'd actually finished it. Everyone started crying." INTERVIEW WITH FORTUNE MAGAZINE, 2000

"In most people's vocabularies, design means veneer. It's interior decorating. It's the fabric of the curtains and the sofa. But to me, nothing could be further from the meaning of design. Design is the fundamental soul of a man-made creation that ends up expressing itself in successive outer layers of the product or service." "My position coming back to Apple was that our industry was in a coma. It reminded me of Detroit in the '70s, when American cars were boats on wheels."

Affordable tablet computers will change media consumption Today, a tablet computer that costs just 3,000 will debut in India, making it the cheapest in the world. In combination with ubiquitous high-speed mobile broadband that will roll out sometime next year, these little devices will change the way India consumes media - newspapers, television and radio, apart from content that has, in any case, been consumed online. New ways of doing business - e-commerce and financial transactions online - will become far more widespread. As the rural electrification programme steadily expands its geographical coverage, more and more people will be able to charge and run imaging and computing devices across the country. As the unique identity programme and, based on it, electronic transfer of subsidy

and welfare payments gain momentum, the use of online services and access to devices that connect to the internet will spread. Tablets and phones will morph and merge to spawn myriad devices that are cheap, run video, play music and allow people to see, hear and read news and novels and everything in-between. The arrival of the ultra-cheap tablet is an indication that the process is already underway.

How the revenues from digital music overtook physical sales

Story Comments

Read more on VAS|Sony India|net|Neeraj Roy|Music Bharti|Max Music|Lijin Thomas|KPMG India| Jehil Thakkar

The question is not tough. Yet, Lijin Thomas, marketing head of Landmark, pauses to think. It takes a while before he can recollect the latest Hindi movie album that flew off the shelves. "Dabangg," he says, finally. How many days was it in high demand? Three to four weeks. How many CDs have been sold till date? Around 3,800. Five to seven years ago, average albums clocked these figures in his bookstore chain. Today, it takes the biggest grosser of modern Indian cinema, 3 Idiots, to sell its music CDs for more than a couple of months. Between 2006 and 2010, physical sales, including latest movie albums, dropped by about 50%. Most music buffs get their favourite songs free - on the Net or on their mobile phones. So how do the music companies make money?

Through ringtones, hello tunes, downloads on the Net/mobile phones and online streaming of videos. Yes, digital music has come of its own. And last year its revenues surpassed the collections from sales of CDs and cassettes. According to a FICCI-KPMG Indian Media and Entertainment Industry report 2011, digital music earned Rs 420 crore last year, 24% more than the sales of physical products, which grossed Rs 320 crore. "Music labels and stores like ours were prepared. So much is happening in the digital space. Tracks are available for free or the price is so low that CDs can't compete with them. To stay in the game, we will start online downloads from October-November. The business model will be innovative and interactive to stand out in the crowd," says Thomas. The crowd has formidable new faces - handset makers like Nokia (Ovi store), telecom service providers like Airtel (music-related value-added-services), FM channels like Radio Mirchi and online content aggregators and distributors like Hungama Digital Media Entertainment. Equipped with deep pockets and strong infrastructural support, these companies have changed the music business. So much so, that the biggest music company by revenues is now Music Bharti. To compete with the challenge, companies that know Indian music best, record labels like T-series, Sony Music and Saregama India, are bringing in an array of new products and services. "Music companies will build a customised portfolio of revenue streams, from content creation, licensing to TV, film, mobile and commercials to managing artists including live performances. Some will specialise in one over the other but creativity in content and business models will be the key to survival and prosperity," says Jehil Thakkar, partner, media and entertainment, KPMG India. What are these innovative revenue trends that have breathed life into the music industry? Are they quick-fixes or will they consolidate over the years? To find out, ET on Sunday spoke to multiple stakeholders who shared their business strategy and outlook with us. Based on their expectations, here are the four key ways music companies plan to keep the party on.

Mobile

Phones: Max

Music,

Max

Money

In 2010, Indians bought about 150 million portable music players - mobile phones.

True, only medium to high-end ones have access to music stores. But the cheapest handsets now boast polyphonic tones with popular music content. This is the size of the mobile music business. But not everyone who uses a phone listens to music on it, you can counter. For instance, your aunt who can barely send an SMS. Here comes the second fascinating aspect of mobile music: one song can be converted into at least four products: a ring tone, hello tune, downloadable MP3 track and a video clip. For every aunt who uses a phone only to call, there are many who consume all four products. According to the FICCI-KPMG report, in 2010, 56% revenue of value-addedservices(VAS) came from music. With the roll out of 3G, the quality of these services is set to go up. The challenge lies in identifying the price customers will cough up for the music without a blink. Like all things in telecom, pricing of VAS is a war zone. Song downloads on Airtel are as low as a rupee a song (for subscribers of five songs for Rs 5 a day), while Vodafone offers full albums for Rs 50-99. Threatening the pay-for-downloads strategy is the Nokia Ovi store. Consumers pay nothing for unlimited downloads from the Ovi's collection of 6 million tracks.

Network roll-out makes sense only if ubiquitous imaging devices guarantee use of the networks and the services that ride on them. Just as Reliancesubsidised handsets at the time of launching its mobile services in 2003, bringing the cost of owning and operating a mobile phone to 500, and kicked off India's mass adoption of mobile telephony, it is more than conceivable that a smart operator of fourth generationwireless broadband services would make available reasonable quality imaging devices at mass market prices. That would change the game for the traditional media of content distribution and alter content generation as well. Media companies would do well to pay heed and prepare for a proximate digital future. The government as well needs to modulate its policy to incorporate expanded online distribution of news, music and video. Steep bids for broadcast spectrum for radio stations, for example, would make as little sense as high net worth conditions for audio-visual news channels.