Recently the pioneer of the Coffee Concepts in India, The Café Coffee Day chain of stores is receiving a lot of fire on social media on one of their policy on what music should be played in the café. People of a linguistic segment are roping that the café should play the music in their languages in the café operating in their linguistic areas. This issue being particularly sensitive one given the kind of politicizing happens within the country over the language. Before I share my views upon the issue, I would like to mention some of my close encounters regarding this issue from the other side.

I am a regular customer at the café I frequent, and am a steady source of the revenue for the folks there. My bonds with my café have always been strong, right from the store manager & the stewards love me for I understand the business and the ordeal they have to go during a day at work.

There are two instances, during 2006-07 Barista had a tie up with the World Space radio and had mandated that only the songs from a particular station in World Space can be played in their stores. In reality the station was really bad and since it was a corporate mandate they had to play the songs, so we had to ask them to reduce the volume to as low as possible.

Another instance, A premium coffee chain (would not like to name it, as I don’t want the staff to get into the trouble) outlet in Pune, used to oblige the regular customers by playing their songs towards the end of the day based on whatever music we had. I actually used to carry my CDs and Ipod to connect to the café music while I had coffee. One day similarly another customer came in and he was not happy about the music being played in the café and wanted a change. The café guys immediately changed the music.

So coming back to the problem being faced by the CCD folks, we need to get back to why there is music in the café stores and the kind of music should be played is actually a marketing decision on demographics & target audience.



Image Source: Google Images

Dealing into the question what purposes does the music serves in a café, I would list the following-

1- Creating a lively & positive ambience in the store
2- Creating ample amount of noise so that the conversations remain private
3- When the footfalls are low the café should not appear dead and eerie

Now coming to the second part of the question, what kind of demographics & target audience these café cater to-

1- Majority of Café business comes from the Young Urban Professionals group. Who often use
2- Another hot segment adding footfalls is the Student groups who need a place to hang-out
3- The third segment being the regional demographic in and around the store area.

Now if we look the above first 2 categories are migratory in nature, change cities, jobs and often constitute of a crowd that in common language is often addressed as the Cosmo crowd. Profiling of these audiences on a regional & linguistic basis would be a bad strategy because they are always in flux and the structure and constituents continuously keep on changing.

So what a coffee store can aim at is creating a standard profiling based on what might be the most common and inclusive tastes of the audience from food to the music and try and create a uniform ambience across the stores. Once a customer gets habitual with the store and the brand, the best strategy for a chain like CCD would be to leverage the customer base & loyalty by providing a uniform experience to the customer across stores. Which is why what CCD is doing right now is correct.

Now to look at the effects of the region based profiling; which is being demanded of the CCD folks by their very own customer. Assume a scenario, similar to my second example above, two customers in the store insisting the music to be of their type. Now the ground level operational staff would be in a soup, even if the sharpest of guys are operating on the ground level, they just might end up offending one of the customers and might lose them. It is a strategic decision not to entertain or cater to a particular customer set but then the operational staff cannot be trusted to make those choices.

Also looking at an additional aspect of the problem this might also be something similar to the example which I mentioned above. The issue might be of a dislike of the music of a particular kind and for some reasons is appearing as a political and a linguistic side of it. This can be a great opportunity for the CCD folks to look back at their market research and open up a survey amongst their target audience visiting their café and the others to identify if there is a serious gap in the kind of music they are playing and the kind of music is being expected by the customers. And then enforce the standardized music all across the stores. In case the issue turns more political, then a valid option for them might be to ditch all the languages and go for universal constants like Music or English to maintain and address their needs.

Currently Price of Crude Oil is – USD 73 / Barrel

1 Oil Barrel = 158.9873L

Assuming the Going rate of USD – 46.79

1L of Oil when converted to Indian Price should be – INR 21.48392 /L

Now even If I assume a 100% of markup for transport, refining and distribution the oil should not be more than INR 43/L

Unfortunately I pay around INR 58.09/L so approximately 270% of the cost of the oil.

That too when the Oil marketing companies and refineries for the most part have been PSUs and been operating out of the tax payers aid. I would seriously like to know why as a consumer I should be taxed so high for the petrol which is a primary commodity for my commute?

No wonder I support the Bandh

However, the focus of the coffee chains has been to extend reach and presence by opening the new stores at very fast pace, especially by Café Coffee Day & Barista primarily grew in this fashion. This has been a replica of what exactly was the growth mode by Starbucks in North America, with more than 30,000 stores opened in the growth frenzy the market didn’t seem to flourish as much as per expectations. We all the know the woes of Starbucks from then and it’s decision to close the non profitable stores.

I don’t deny that Indian markets appetite for the coffee stores, is huge and the market still has a lot of untapped potential in the tier 2 cities and also the metros. However, there is one aspect of the business that has been neglected by almost all the coffee chains, that is customer retention, brand loyalty and customer association.

Almost none of the coffee chains have a proper India website (except for Café Coffee Day and Barista (which recently created the site)) and loyalty programs in place. I remember the old tagline which was used to marked on the interiors of the Barista I used to frequent “It’s easier to change one’s religion than changing one’s café.” And I quite agree to this part that changing your coffee and acquiring the taste for a new coffee is not very easy. But in the end coffee is a commodity item and most of the café customers are not brew sensitive in India might make it redundant in the loyalty context.

The fact that the café chains acting in middle income group segments and above and it also entertains a huge amount of customers which are mobile, travelers and the so called young urban professionals. It produces all the more case for them to strengthen your ties with a customer, go a step and reward him for his loyalty with your brand. With technology moving towards mobile applications and GPS based applications it’s a strong case for them to put use to it and develop sites and application which would ensure the customers would know where is their nearest favorite café where they can spend some time and have coffee.

With the pace the new entrants are coming into this market and increasing competition, that one cup of coffee that your loyal customer had at your competitors’ might cost you the customer in longer term. All this just because he didn’t knew that you had a store operating right there in the next lane.

My views about this particular idea can be addressed as bullet points.

• The placement of the banner is brilliant. The office is at the main road while going to the major IT Park in Bangalore, and there is always a slow traffic around the office gate hence it directly positioned for eye-catching of the target audience. I mean you can’t get better in addressing a specific audience through a mass media like it.
• It communicates two things, One the age of recession is over, the outlook of the company towards new deals is positive as it is looking for growth. Secondly that the hiring in this particular company has started.
• The idea is innovative and cost effective, I mean the only cost incurred would be in creating the banner which should not be more than USD 20. Far more cheaper than any newspaper advertisement, hiring agency or staffic organization.
• The only drawback regarding the idea is the contact point. The contact point is going inside the company and meeting the HR, which by all means would not work until the person in unemployed. Specially when the job description, level, and skill of hiring are not defined. It would have been a better of strategy to punch in an email id to send in a resume. I believe that relatively far more number of people will find e-mailing more comfortable and the HR department also gets to consider the kind and level of people it wants to engage with for further discussions.

Everything said and done I still love the simple yet effective way of reaching out to potential employees. And also the idea that the dark days of recession are fading away. So what do you think about this new age hiring announcements, would you walk-in?

Briefly summarizing the happenings, Tiger Woods is the most successful golfer in the history and one is the highest paid professional athlete through winnings and endorsements.

Highlights of his professional golfing career are something that would make anybody proud, when they were all blemished by the reports of his numerous (last count I read somewhere was 11) extra-marital affairs. And now Tiger Woods is on a break from his professional Golfing career to salvage his strained marriage.

Coming back to the business side of it, Tiger Woods was endorsing premium brands like Gillette, Accenture, and Nike. After the infidelity fiasco broke loose, Gillette and Accenture have cut off Tiger Woods from their sponsorships and advertising. However, Nike has gone the other way, deciding to support Tiger Woods.

The reason to fire Tiger was very obvious and the unethical side of Tiger actually doesn’t put up a good show for any brand he endorses, but then why is it that Nike chose to stand differently from the rest. What I see through is a deeply thought out strategy and a long term vision and understanding of the business.

To share my understanding of the situation, I would say the Accenture has actually gone and disowned the once loved Brand Ambassador which makes a lot of sense for them.

One because they have enough ghosts from the times of Arthur Andresen to haunt their branding strategy and add to it the woes of the one-time parent organization getting involved with Enron saga.

Secondly, in their line of business ethics and values are of critical importance and can be deal breaking if they have chance of being compromised. So when the kind of breach occurs at any level it was the smartest thing to be done by the Accenture people to get the tiger out as quickly they got in.

Though asking all their employees not wear the Tiger branded merchandise was a step to ridiculous or too far but for them it’s a time to retrospect and judge was it a good strategy to be so hand in glove with the brand ambassador that his actions might put the brand at risk?

However, Nike is a different ball game all together. The bread and butter of Nike is and has been sports, one thing that Nike can’t live without but an Accenture can is endorsements by the sportsman.

Given the fact that an average endorsements career for a sportsman has a limited time at its peak, and generally the trend is companies like Nike thrive on identifying great sporting talent earlier in their career offering them a long term contract with a high value in present.

This is based on hedging on the fact that they would have got an economical deal when the player makes it big with a fan following. In cases like this a sportsman starting to taste success prefer the companies who would have an emotional side and would see you through thick and thin, who would stay with you on the lean side of career, troubles, and injuries.

With Tiger, Nike has projected the image that it does stands by, when the player is alienated by his own fans, brands he endorsed, even his family it was Nike which stood by him. I am sure this is a positive thing done by Nike appealing and targeting the emotional intelligence of the sportsmen.

Secondly the product line of Nike, is a lot more independent of the moral side of the endorser. I mean as a customer mindset, I don’t attribute Tiger’s infidelity and flings to Nike Shoes or Golf Clubs. I am not sure I would not be attributed as a womanizer because I use a Nike product. A reason for this is because of the strong synergies and overlap with the Nike products and Tiger Woods, the golfer is very high. However, contrary to that Accenture was focusing more on the Tiger as a person when it was using the branding as a strategy.

Also a point which would have been considered by Nike would be the offline branding which would remain existent, and would be difficult to dissociate from.

For example, almost all the advertisements of Accenture Tiger have been displaying the Nike Logo with apparels and Nike cannot stop him from wearing them and appearing in Public. So for Nike it is impossible to dissociate themselves from Tiger. Also, with so much outrage and media attention around Tiger going off the professional golf, it is expected media would lap up with similar attention and outrage when he comes back and given the situations currently at that point Nike would be the only hotshot brand he would be endorsing. So Nike might hold all campaigns around tiger and cash it out at the opportune moment.

So, actually I would say this has been a judicious and a calculated risk taken by Nike to keep Tiger on Board, play their branding cautiously amidst sportsmen and if possible cash-out with the return of tigers in a futures brand value.  On a very lighter note, as people shared on twitter, Tiger perfectly lives up to “Just Do It” branding for Nike.

This post was featured in the Trak.in the India Business Blog here

However, with the latest news coming in with Wipro and TCS talking of revamping recruitment structure over JIT model (Just in Time Model) once again brings out the point forward, that the companies are still running with practices borrowed from the manufacturing world.

This is an interesting trend displayed by the entire industry – this approach to governance has some very distinct advantages and some clear roadblocks. Clearly speaking the manufacturing Industry would be classified as the most mature industry with fairly evolved and benchmarked practices. Any industry / organization drawing its organizational structure would start with an advantage on the playing field.  With the perfectly tried and tested processes initiatives like Six Sigma, Lean and JIT have over the years been refined and perfected to produce unparalleled efficiencies in a manufacturing setup.

So when I read that IT companies are indulging themselves further in the management practices of the manufacturing I was left wondering. To get the basics right first we need to understand the basic practice model of both the business areas, and then identify the relevance of such a step on the productivity.

Manufacturing specially the line manufacturing the productivity is a factor of Lowest Common Denominator, as in the productivity of the entire line setup would match up to the productivity of the lowest productive operation on the line. All the line manufacturing practices including the renounced TOC by Goldratt or JIT by Toyota proceed with this assumption.

However, in the case of IT when we model the people as resources and the deliverables output but still the productivity is never the function of the Lowest Common Denominator i.e. the slowest or the most inefficient resource. The productivity is essentially the function of the process itself with lesser dependence on individual resources. However the resources itself are skill based and very specific.

So with the basic premise in mind this JIT model for recruitment is something I would say the following drawbacks would actually be encountered this model, creating substantial road blocks for the IT companies:

Availability

The availability of the resources (read fresh engineers) in the market is only once in a year and since this is a selective process and most of the colleges controlling offers for enabling placement for all. The early bird would get a better quality of the talent, as already obvious IT industry being a talent sensitive industry and thrives on the capability of fresh graduates to learn and ramp up to be skill specific resources, they would be left with a lower quality of talent.
Obviously the talent identification by IT companies assumed to be sacrosanct here. Ideally the primary road block would be Early Bird Getting the Worm Syndrome, would be applicable in this case leading to early recruiter getting the talent.

Reputation

Even currently with their current format the IT firms, even the premium ones have lost flavor among the colleges of great repute, since this kind of move removes the stability the IT job provided to the students, would seriously impact their preference for the companies. Anyways, attrition has always been a great problem in the sector since late 90’s, this would still further dissociate the fresh employees with the company leading to lower level of engagement and association

Scalability

Generally almost all the IT companies have a lead time greater than 3 months from the fresh graduate resource being procured and finally tailored with multiple trainings and courses to be deemed fit for the quality of production of deliverables. Also given the way IT sales cycle is structured, the fresh engineers for directly being inducted into the project might not be an as smooth a process as it used to be.
The quality and scalability risk can be impending on the deliverables because of the reduction in the lead time; given the fact the quality of engineering education is not going to improve drastically to compensate for the lost time by the IT companies in JIT recruitment, it would eventually have substantial impact on the quality.

Vision and Future

Given the fact that almost all Indian IT companies are trying hard to break into the upper echelons of the IT and consulting world. It’s high time for them to concentrate on increasing the ARPR (Average Revenue per Resource) by specialized skill sets and quality than the way ahead not be concentrate and minimize the ACO (Average Cost of Operation) which is also important but certainly not the next wave of growth for them.
The zealous high end consulting out-shoots of these companies have not seen much light till now; and given the fact of rising costs on business in India and availability of other cheaper alternatives it’s high time for them to upgrade the playing field to a different level. This certainly is not going to happen by Just in Time recruiting.

While this Just in Time recruiting might provide them a short term breather from increasing costs and recession hit tighter US markets and would have some advantage as a short term tactics but using this as a long term strategy would not relate to the overall positioning of any of the larger IT majors.

It’s high time these bellwethers need to come out of the labor arbitrage shadow and look for a more independent and robust set of competencies in their recruitment models to ride the next wave of growth.

This post was featured in the Trak.in the India Business Blog here

There have been multiple instances where corporations have engaged in a legal battle for the rightful use of the trade names and brands. Some instances have been justified, where the brand infringement actually harms the brand owning organization.

For example a case where the brand name was thoroughly being misused is when -

Wipro Safelite brand for CFL was being used by a Delhi based manufacturer of Bulbs. The company went to the court for the appropriate action. The action of Wipro was suitably justified because the Brand infringement was happening in a related product area and could have actually misled the consumers or affected their perception of the brand.

However, the concern about the Brand infringement has grown multi-folds over last few years. Corporations are actually acting paranoid and going out of the way into legal battles for brand infringement. I speak of the the two recent cases which I feel are more of a case of paranoia amidst the corporations for their brands than anything else.

Porsche Vs Crocs
Recently Porsche has filed charges of Brand Infringement against the Croc. The charges are on the basis that Croc has introduced a new series of shoes called Cayman which are primarily rubber shoes priced at $30. The Porsche’s claim in the suit is that this infringes the brand of twin seat sports car priced above $50,000.

Porsche Cayman

Croc Cayman

Makemytrip.com Vs Tata

Tata filed a case against makemytrip.com for using the name “OkTataByebye.com” as a name for the new line of services.

OkTataByeBye

The Tata’s have already won the case against MakemyTrip.com as their plea that Tata in OkTataByeBye.com infringes their trade name Tata and is confusing and misleading to the consumers.

Now I have serious doubt about both of these claims – as why they needed to be made?

Does Porsche really believe that the rubber shoe from Crocs and its sports car is misuse of trademark infringement?

I don’t think the modern consumer is dumb not to identify the difference or disconnect between these two lines of product, does the company really think that the consumer perception might be aligned that since the Croc Cayman shoes were not so comfortable, the Porsche Cayman would not be a good product or a consumer driving his super fast sports car Porsche Cayman would let him believe, since the car is so fast so he would be able to run like Usain Bolt.

Similarly, for the Tata’s the phrase “Ok Tata Bye Bye” is such a common place in India, you could find something on the same lines written on every second truck, rickshaw, tempo, tractor which are far more related to the Tata’s line of Business than the travel related site Makemytrip.com.

But somehow this was a paranoia that their brand might be exploited that made the turn of events becoming ugly and heading towards the legal route. I feel both the brands are as distinct as Tata Indica car with the CavinKare’s Indica Hair Oil.

As a matter of fact “OkTataByeBye” was an innovative name and a catchy one for a website and had nothing to do with Tata Sons. No matter how much Tata’s would like to fancy themselves, in Hindi speaking India Tata still stands for Goodbyes instead of the surname of the corporate czars of the country.

I agree that the Brands are one of the greatest assets of any corporations but the way the paranoia is hitting the companies and industries, this seems to be a tough road ahead for the entire corporate world and the poor consumer would be assumed to foolish, dumb and incapable of making distinction between the entirely different line of products.

I am so grateful of companies like Amul who believe in their product, brands and consumers that they are not worried about that the customer might go out and buy an Amul Underwear when actually he wanted to buy Amul Butter.

This post was featured in the Trak.in the India Business Blog here