Philip Kotler's 5 marketing & B-school mantras for India

What Indian marketers can teach the world

> Offer good products to core consumers.

> The number of innovations one has seen in this country is great. One of these is sachet packaging. At one time, they (Indian marketers) were also selling one cigarette at a time.

> India has great ideas on how to make products affordable. If they (companies here) can figure out how to bring costs down, they can sell a lot more TVs and phones.

Mistakes by Indian marketers

> The basic mistake some make is not knowing how to engage with customers' beliefs, values, needs and aspirations. 

> Sometimes marketers fail to segment effectively. They've got to decide what type of consumers they are looking for. 

> If marketers are in a service industry, they need to stay focused on employees, sales force - these people are the ones who deliver to consumers. 

> They need to be aware of new channels of communication - there's always this danger of complacency. They are not asking enough - can our product message be disrupted by changing technology?

What marketers can do to make a global impact

> Right now there aren't Indian brands that are truly global. You can say Tata, but the average American doesn't know a Tata Nano (but again, Americans are insular). I believe Asia will spawn a lot of brands that will become global. 

> Isn't it interesting that some of the smallest countries in the world have the most brands, like Switzerland. Yet they are able to create the brands differently. 

> Many people say marketers are just promoters. But they are the ones who can segment, target, position brands. 

> I want marketers to be proactive, not just reactive. An interesting example is that of the old GM - they made a car but didn't know who it was for. That's not good. Every good brand should start with a concept. Once that happens, the advertiser already knows what to say... he has to only figure out how to say it. Globally, Unilever and Nestle really know what to do or what to say.

How Domino's CEO Ajay Kaul makes sure the 30 minute promise is kept every time

As Steel Authority of IndiaBSE -0.78 % Limited's Rourkela steel plant started cranking up its best ever production numbers in the summer of 2012, a bespectacled Kashmiri executive revisited his hometown and amid memories and memos, inaugurated the firstever Domino's pizza store in the steel city. Eight years in the top job as CEO of Jubilant FoodWorks, Ajay Kaul is anything but a corner office stereotype. Before opening the store last April, decked up in the trademark blue-andblack Domino's tee-cap-cargo combo, he essayed the role of an SDP to perfection. The acronym is a homegrown term for Safe Delivery Persons, or the delivery boys, who zip from door to door with boxes they call 'warm bags'. And the prefix 'Safe' conforms to the speed governor attached to every bike that maintains a maximum speed limit of 40 kilometres/hour.

But Kaul had a different calling. Along with the local team, he rode a D o m i n o ' s -branded Hero bike into every possible direction with the store as the locus. They rode for 8-9 minutes in each direction and returned to the store. He defines that time-bound journey the "lakshman rekha" for any SDP. That is, the Domino's delivery boys will strictly toe the line and not serve houses that take more than 8-9 minutes to reach from the store.

Here's why. Domino's pizza comes with a 30-minute guarantee from the time an order is placed. If the time taken to deliver the pizza is more than 30 minutes, the pie comes free if it costs under Rs 300. And in case it costs more than that amount, the company subtracts Rs 300 from the bill. In case it is more than 4 pizzas, it is regarded as a bulk order and the guarantee does not apply. So by and large, all processes at Domino's are geared to meet the 30-minute deadline.

Frontend Frisbee

When a customer calls, the order is flashed on the kitchen screen. The pizza maker looks at it and gets down to the job at hand. There is the obvious dough stretching, saucing and cheesing, and depending on the nature of the order, 'itemizing' or topping, before it goes into the oven. Baking takes 6 minutes from where it goes to the cut table. Finally, it lands up on the routing table where it is packed as per order in pizza delivery boxes (read: warm bags) that SDPs carry to the last mile. "On average, we deploy 6-7 people on the process depending on the store size," says Harneet Singh Rajpal, VP-Marketing, Domino's Pizza India.

So this is how the 30 minutes divvy up. From order to oven, it should not take more than 4 minutes. Since the oven takes six minutes to bake; cutting, packing and pick-up make up for, say, another five minutes. And delivery time should never exceed eight minutes. Add all that-it's a neat 23 minutes. "We're designed to deliver in 23 minutes and give a seven minute buffer to our employees for unforeseen traffic, rains etc.," says Rajpal. The 50-year-old Kaul's calling is thus justified.

With 20,000 employees across 552 stores spanning 118 cities, the process is performed de rigueur day in and out. But the story doesn't end there. In the backend, materials need to move from the 180-odd business partners or vendors to the four factories or 'commissaries' as they are called inhouse, before landing up at the stores. This is where each ingredient in the supply chain comes under sharp scrutiny.

Backend Bulwark

Kaul signed up with Domino's Pizza some eight years ago but even then, pizzas as a category hadn't quite caught the fancy of the average diner. "The ecosystem did not exist and there was no mozzarella or sauce supplier and we had to import everything initially," he points out, adding that today 100% of the procurement is localised.

Elaborating on the chain, Harsharan Marwah, Sr.VP-Supply Chain, Jubilant FoodWorks Limited, claims that all goods in the system need to necessarily move between 1 and 4 degree Celsius. "There are 80-90 frozen trucks dedicated to us countrywide," he says. The first step is aligning vendors to the Domino's way. Company executives visit each vendor regularly and Kaul emphasizes that they have to be in sync with the vision of the company for the next five years. In the process, some of the vendors are literally hand-held by Domino's in their growth curve.

Take the case of the Chandigarh-based Chattha Foods. They broke into the scene 3-4 years ago supplying chicken to Domino's. Prior to them, Venky's was the sole supplier of chicken toppings to the pizza giant until constraints on supplies prompted Domino's to add Chattha Foods to their list of suppliers. Today, about 60-70% of their produce is picked up by Domino's. Again, the Manesar-based Ample Food is the sole supplier of pepperoni to Domino's. From Rs 5 crore in revenues in 2008-09, it has clocked Rs 20 crore in 2012-13.

The Last Mile Dash

Kaul insists that 80% of his vendors are HACCP-certified and that in the next 6 months, all 180 vendors would receive the certification. Again, once a quarter, there are random unannounced audits and vendors must keep complying to be on the supply map. So cheese, poultry, lamb, pepperoni, sauces, canned veggies and condiments, dips and a bevy of choices move from vendor factories to the four Domino'sfactories or commissaries in Noida, Mumbai, Kolkata and Bangalore.

Typically, each commissary covers 30,000-40,000 sq.ft. of area with 45-50 people. This is also where Domino's makes its proprietary dough from the flour that comes in. It's like the Coke formula-they'll die but never divulge! Essentially, there are two divisions in a commissary-dry and cold warehouse. Dry ingredients land up on the dry side but most action is now centered in the cold warehouse, which further has twin buckets-a -18 degree Celsius store for the dough and a 1-4 degree Celsius store for most other ingredients.

From here, the ingredients are loaded on to frozen trucks, which maintain the 1-4 degree Celsius temperature band, and taken to the stores. "Each truck is enabled with GPS trackers, which enables our area logistics managers to access the temperature status in any of these vehicles," says Marwah.

Tracking is essential since offloading ingredients from the frozen trucks needs to be done in 30 minutes flat as after that, the temperature rises to 5 degree Celsius. This is how the backend complements the frontend that practically gets the dough rolling.

Tantalizing Topping

Today, all that activity translates into 70-80 lakh pizzas a month for Domino's. The master franchise for Domino's Pizzas in the Indian subcontinent rests with Jubilant FoodWorks Limited and its network of 552 stores does twice the orders booked across the US. In fact, the top 10 stores in the world by the number of pizzas sold in a year are from India-and they're all from Domino's.

As many as five of them are from Delhi NCR and sitting at the third store by way of ranking at Noida's bustling Sector 18 market, at least for as while, the footfalls seem to fly. "We churn out 3.74 lakh pizzas a year and in December, we did ` 70 lakh worth of sales," says the very peppy store manager of the Sector 18 store, K Kashi. Roughly, the 2,200 sq.ft. store logs in 12,000 footfalls a month!

Bottomline, the system is designed to deliver in 30 minutes with a 99.6% success rate that Kaul tracks religiously every day. With revenues at Rs 1,017 crore (FY 2011-12) and EBITDA margins at 18.7%, the dough for sure is rising. About 50% of the revenues come from casual dining and takeaway and delivery makes up the remaining half. Though online ordering was launched just two years ago, it accounts for 15% of the delivery revenue pie. And despite launching mobile applications about four months back, they contribute to 2% of the delivery revenues and about 10% of the online sales. "We have more than 5 lakh apps downloaded and are among the top players in m-commerce countrywide," says Rajpal.

Sunil Jasuja, CEO of Levitate Mobile Technologies, got into a business partnership with Domino's a year back and developed their mobile ordering platform which is fully integrated to their backend. "The accuracy of ordering has increased with m-commerce because you are seeing what you are ordering instead of talking to someone over the phone who just may make a mistake," says Jasuja.

Novelty Nirvana

Sure, the supply chain complements delivery in every aspect of technology and so do the range of annual offerings in Domino's stores. Twice a year, about 10-12 people huddle in a room for a day-long exercise they call 'customer to customer'. Basically, the exercise is an internal brainstorming to gauge what products will work for customers. And typically, the group comprises people from marketing, the operations team and the NPD (New Product Development) team.

Rajpal attended such a meeting 6 months back where the group thrashed out some 50 ideas. "We have to launch pizzas and sides and need such blue sky sessions where we don't have any blocks," says Rajpal. So the ' C h e e s y Boloroni Pizza' launched in November last was a result of that blue sky session. Rajpal explains that since Domino's launched pastas three years ago and already has a 'Cheese Burst Pizza', wherein liquid cheese is filled into the pizza, they decided to combine the two. The result: Macaroni and Bolognese sauce stuffed inside the crust with bar-be-cue flavoured liquid cheese and mozzarella as toppings.

Clearly, on product strategy, the key driver is the novelty factor of the product. So products not doing too well are taken off the menu since there is limited space on shelves. For instance, Domino's launched calzone in 2007 which was discarded in 2009; it got in a pizza with Chinese ingredients as topping only last year and decided to pull it off the shelves as it did with one '3 Cheese Pizza'.

With 3-4 new offerings being launched every year, it becomes even more critical for the 4-member NPD team to work closely with the vendors detailing size, storage and smooth passage. Overall, in linking up the chain, CEO Kaul has been on the ball as Domino's notched up a 62% share in the organized pizza market and 70% share in the pizza delivery segment countrywide. Besides, over the last 5 years, the pizzamaker has registered a 48% CAGR that makes it the largest quick service restaurant network in the country, clearly drawing the 'lakshman rekha' for the competition.


For Whom The Pie Rolls

About 3-4 years ago, Sandeep Mittal, Managing Director of Cartesian Consulting, met up with the then Marketing head of Domino's India Dev Amritesh, who's now looking after the Marketing activities of licensee Jubilant FoodWorksBSE -3.80 % Limited's other brand Dunkin' Donuts. Amritesh was particularly drawn in by the Cartesian Consulting tagline—Precision Marketing. That's because there exists an in-house designation at Domino's India which goes by the name 'Precision Marketing Manager'. Ever since, Cartesian has stuck around as the pizza-maker's data custodian. "In India, it is difficult to pinpoint customer profiles and so we relied heavily on billing data and campaign response to segment customer types," says Mittal. For tyros, billing data would reflect things like what the customer orders, the type of orders, the time of ordering etc. And campaign response takes care of how consumers use coupons, whether they actually go through emails and how they respond to them, so on and so forth. Based on such "exhaustive" information, Cartesian helped Domino's identify 12 customer types: Couponos (Order with coupon only)

Grandos (Large size pizzas)

Loyalos (Order same pizza type every time)

Partios (Sometimes party size orders)

Nostalgios (Haven't come for a while)

Nightos (Order at night)

Revisitos (Come back after a break)

Relaxios (Weekends)

Randomos (Unpredictable)

Varitios (Try a wide range of things)

Starios (Best customers) Pamparios (Needs indulgence, responds to offers)

Source: Economic Times

CEO coach Ram Charan on how to win in a changing world

Last few years have seen multiple forces change the global business landscape. Through the noughties and thereafter, the common refrain has revolved around the shifting economic locus from the developed world towards the emerging pack. And because change confuses, constricts and cripples, it is important to understand the nature and extent of its impact. So when one of the world's best-known business advisors, Ram Charan, decided to study the flow of jobs, wealth and power to the newer worlds, it was bound to be a path-breaking deep dive into the once-in-centuries phenomenon. In his latest book, Global Tilt, Ram Charan studies the North to South (countries below 31st parallel) power shift, what it means for countries and companies, and how to deal successfully with the great power shift. In an interview with CD, Ram Charan discusses the Global Tilt, the forces shaping it and how to win in a tilted world. Edited excerpts:

What is 'Global Tilt' all about?

The world has changed dramatically since the Chinese began to create economic growth in China. There has been a permanent shift in terms of jobs, economic growth and political power. All companies in the world must come to terms with these shifts - which I call as 'the tilt'. They must understand what does this tilt mean, how to thrive in it and how to deal with it. It is more demanding on companies in developed countries like America, Japan, Europe, who need to learn to deliver their shareholder value in times of permanent economic power shift.

So what are the drivers for 'the tilt' phenomenon?

I see five drivers. The first one is the rise of China, which has largely been built by western countries. Western companies went to China for labour arbitrage and used the low-cost labour force to export out of China to more developed nations. The second major shift is the composition of the GDP, which is changing because of multiple factors, which include digitization, mobility, sensors, cloud, mathematics and software. That is a different kind of a tilt. Third is that the Chinese, in particular, have amassed a large amount of foreign reserves, close to 3 trillion dollars, that gives them substantial economic power. However, the opportunity for growth is in the south, which is seeing a population growth and rapid emergence of the middle-class. It is interesting to see that China has now managed all the resources they need; they do not have to beg from the western world anymore and are not dependent on Japan any longer. Today, the Chinese can get the best consultants and the best talent. They still need a few things from America, particularly the market, technology and some managerial know-how.

Another important development has been the financial crisis that accelerated the tilt because it undermined Northern economies by vastly increasing government debt, raising unemployment, stifling consumption and shrinking investment.

Enter The Draqgon

Going forward, innovations will come from all around the world. We will witness the invention of a type and scale never before seen. Major innovation in the latter part of the 20th century was for most part, institutionalized: highly concentrated in companies such as Intel, Motorola, Bell Labs etc. But then, American tech entrepreneurs, like Steve Jobs, Marc Andreesen, Jeff Bezos, Mark Zuckerberg, have been changing the world. The new innovations will come due to real-time openness and democratization of knowledge and availability of startup funds in a digitized world.

What does this tilt mean for India and what do Indian CEOs have to watch out for?

First, in India, entrepreneurship is alive. Second, we have state governments, like Gujarat, that are changing the game. I saw big ads from the Uttar Pradesh government too. States can do a lot. If they begin to look at the globe as a whole and then say how they can get a fair share in the global GDP, India will have a very good future. Many things do not require a parliamentary pulling as we have seen in the case of Gujarat and Tamil Nadu. The states can achieve a lot without having to worry about anything. At the same time, we need to get more FDI; FDI brings talent, technology and management expertise, but we need to think with a global mindset.

Just like Godrej has 3X3 strategy (expanding into 3 continents in 3 categories)-looking at it, going at it, managing it. But there is no hurry, whatever Indian business people do, you would find that there is expertise and reputation for three things: execution, developing employable talent and continued innovation and productivity. We do not need Government of India at the Center to do those things. Therefore, when you look at the situation from this lens, we are better than China in many areas-like software and mathematics. We can do better manufacturing in a new way because it is expertiseoriented. Nonetheless, we need to go and knock at the doors of the companies outside India who want to come here and assure a stable policy environment.

How ready are leaders of companies for this new reality?

The reason this book was written is that I began to see a very high proportion of companies in the US and Europe not attuned with this tilt yet. The reason? They have inertia; they are hung up on the core competence concept. They are going inside-out and are unable to see that the core competence has a life. It is never for eternity. Further, the executives of these companies do not travel. They are unaware of what is really happening. They use West-based consultants and do not keep a tab on what is happening outside their own turf/country. Another reason is that it is a low-margin business in this part of the world. But that is the reality. It is in their interest to enter the market and convince the shareholders that by not making inroads, the shareholders will lose in the long run. On the other hand, you would see that there are many western companies that make good money here. So the blind side is there, ignorance is there, but the larger problem is the inflexibility to make shifts. For example, let us say there is a company that has 20% of their sales outside America and 80% in America. They know the future is to go 50:50, yet they are hesitant to cut the number of officers in that country and double the number of officers in emerging countries. That is the reality!

What is the whole outside-in strategy that you talked about?

Most strategies have been inside-out so far. People look at it from 'what's my core competence' perspective and where can it be applied. They do a SWOT analysis, in which threats are looked at from the inside lens. Outside-in means that you look at the external landscape first. It does not matter who you are and you look at the external landscape from different multiple lenses and different industry lenses. If you are a global company, you look at the lens through China, through India, through Brazil, not just the headquarters in New York. By outside-in approach, you are looking at the landscape as a picture; asking that if I had no core competence and I was entrepreneurial, where I would position myself and how I would position myself. That would require a very different mindset... It's a 180-degree change in the mindset from the leader and his team. So I have this 98:2 rule. Two per cent of the critical leaders in the company have 98% of impact of the company's survival and thriving. If they do not change their mindset, the rest will not.

What is the new leader like? How will he have to think differently in this scenario?

The new leader and his team have to spend a significant portion of his/her time in the external social networks. He has to try and create a picture of the external landscape before he thinks about his company. If people say what is your vision for the company, then I am saying before you do that, you got to have a vision of the external landscape, how dynamic is it, how it is changing, what are the catalysts to change.

You have to answer these and that is an outside-in approach and leaders got to invest in it. In other words, I am also saying that perceptual skills of the leader and of the team have to be honed over time and perceptual skills are worth 1,000 IQ points! No schools train it. It is critical to build the mechanism to do that.

In this new world how important is digitization?

I just think every single industry is going to be totally transformed by the combination of six factors and they are all here, you do not have to forecast. These are digitization, mathematics, known algorithms, software, cloud and mobility.

They all converge. They are changing the location of profit pools. They are changing the value chain by eliminating intermediaries. If you get it right, you would have built a flexible organization; with standardization, you build speed, lower cost and lower intensity. The best examples are Amazon and Best Buy.

I am sure CEOs must be asking you some questions about the tilt. What is the most pertinent question that comes to you regarding the tilt?

I think if I look at the companies in the West, their most pertinent question is how do they make money here (in emerging markets).

Source: Economic Times

N Sathyanarayanan's startup Central Parking Services making millions through car parking solutions

At social gatherings when people ask N Sathyanarayanan, an engineer from Bharathiar University in Coimbatore, what he does for a living, he tells them he is a "parking guy".

"Most people in India associate the parking business with ruffians," says the 42-year-old, whose company, N Sathyanarayanan's startup Central Parking Services making millions through car parking solutions, provides parking facilities for cars and two wheelers in India's malls, airports and large scale weddings.

Braving preconcieved perceptions is paying off for the Bangalore-based entrepreneur, whose company aims at clocking revenues of about Rs 140 crore next fiscal. More so, as the business is one that he discovered quite by chance.

In 2005 he was running a technology services venture, Building Control Solutions that provided system integration facilities for large buildings. When Bangalore's first shopping mall, The Forum, was setup, the developers approached Sathyanarayanan to take over the parking systems.

"In building management we would install systems and then earn an annual maintenance but in parking management there is daily cash generation," says the intrepid entrepreneur who had to learn the ropes from scratch. On an average one parking bay generates around Rs 2,500 per month with a few busy lots like those within airports generating up to Rs 2 lakh of cash every month.

His initial stint at the Forum mall proved to be a success and brought in newer projects from new clients such as the Select City Walk in New Delhi and Amanora Town Centre in Pune where over a lakh people visit malls every month. "We don't have the bandwidth to manage such traffic and it best outsourced to outside parties like CPS," says Tushar Mehta, Centre Director at Pune's largest Mall Amanora Town Centre.

Buoyed by this growth in the consumer retail sector, CPS soon emerged as the flagship division for the company. "It is a capital intensive business.

We have to invest Rs 6-7 lakh per parking bay in any retail mall to make it functional," says Sathyanarayanan. The leap into the big league however came with the contracts to manage parking for Terminal 1 and Terminal 2 at Delhi Airport. In the same year, the young company also bagged the contract to manage 3,000 car slots at the Bangalore Airport. CPS now manages about 65,000 bays across 32 cities now.

Strong growth has helped the company attract the attention of risk capital managers. In 2010, early stage investor, Venture East put in $5.5 million (aboutRs30 crore now) in the company. CPS is also trying to change people's perception towards the business. Last summer, a customer's shirt was torn during a brawl in a parking lot managed by CPS in Greater Noida.

The customer asked CPS staff to sew the buttons. "Unlike the unorganised parking guys, our staff sewed the shirt just to demonstrate customer service," says Sathyanarayanan.


Another big challenge is retaining trained staff as semi skilled youth trained by CPS often switch jobs to food courts or air conditioned shops inside the same malls where they are employed."Its a dangerous job for staff in some of our installations in towns of Uttar Pradesh where goons take out country pistols when asked for parking fee," adds Sathyanarayanan. The company monitors parking bay occupancy at each of its installations through a command and control centre in Bangalore.

With about 26 lakh new cars on Indian roads every year, demand for parking spaces is at a peak in India's metros. Growth of about 25% in organised retail sector has led to similar companies like Secure Parking, Wohr, FAAC, Tenaga emerging in the parking solutions business.

Besides malls, CPS also earns from large day-long events such as political rallies, religious congregations or marriage functions of high profile industrialists which require management of over 4000 cars with valet service.

Next on the agenda for CPS India is toll and traffic management. CPS is aiming at earn revenues of Rs 250 crore in FY 15. "We aim to grab the majority market share of this business and becomes a billion dollar parking business in India," says Sathyanarayanan

Source: Economic Times

Management Mythos: The role of a leader is about outgrowing fear, not amplifying it

My company has a policy of weeding out the bottom 10% performers. I don't agree with the policy because the appraisal process of the company is not robust enough to capture a true and fair picture of the contribution of employees. In order to have a solid employee base, is it necessary to fire people every year?

There is no right way to do business and there is no wrong. There are only actions and consequences. This is the very Indian approach to do business. A Western approach seeks to do the right thing, and in doing so they rationalize cruel practices, such weeding out of the bottom 10% of performers. Appraisal processes notwithstanding, let us appreciate what is actually happening over here. The organization imagines itself as a pack of predators out to hunt. To ensure you are 'lean and mean', you need to rid yourself of laggards who hold you back. You need the strongest in your team. By that logic, this approach makes sense.

This action also instills fear in the pack, fear that you could be next to be fired. Fear is a powerful motivator. We work harder in fear. We are always on our toes. The pack of predators exists to capture Lakshmi, goddess of wealth, from the marketplace. Those who are unable to capture Lakshmi or contribute to the capture of Lakshmi are seen as losers or not fit for the pack. They have to be discarded.

Fundamentally, why does the organization exist? Is it a pride of lionesses that exists to hunt prey, so that the lion (shareholders) feast on it? If yes, then the weak will be kicked out. This approach visualizes the market as a jungle full of rival competitors and prey who can outrun the predator. This is rana-bhoomi, the battleground where there is no room for weakness. Here, the organization has to survive and be willing to get rid of weak links.

But we can see the organization as an ecosystem that helps people grow and thrive, a place where the strong help the weak rather than rejecting them. Where appraisals are a way to figure out what more needs to be done to enable even the weakest member of the pack to hunt. Here the organization turns into rangabhoomi, a nurturing playground, an ecosystem that you enter in order to grow. But the risk is that people can turn complacent here, take advantage of the kindness of the leader and not be paranoid about succeeding. Some may even dismiss this idea as utopian. For the cynic, battlegrounds are truth; playgrounds are fantasy.

When the battle is announced, Ravan kicks out those who do not fall in line with his appraisal ( Vibhishan) and wakes up those who sleep (Kumbhakarna). Ravan is a great king who grabs and captures Lakshmi. But in the Indian way, he is unworthy of worship, for the purpose of an organization and the role of a leader is about outgrowing fear, not amplifying it.

Devdutt's new book 'Business Sutra — a very Indian approach to management' is due out in March 2013.

Source : economic times