Abstract: · Web viewMaruti 800, Suzuki Swift, Hyundai Santro, Daewoo Matiz, Suzuki Motor Corporation (SMC), Tata Motors, Market leadership, Market expansion, Marketing communications,
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Abstract
The case Market expansion strategies of Maruti Udyog examines the market expansion strategies adopted by Maruti Udyog Limited (MUL) Indias biggest carmaker in response to intense competition and a decline in sales of its bread-and-butter model - the Maruti 800 MUL enjoyed a near-monopoly status until the Government of India liberalized the economy in 1991
This led to the entry of foreign players like Hyundai Fiat Mitsubishi and Toyota Even Indian auto players like Tata Motors and Mahindra and Mahindra entered the fray to give MUL tough challenges MUL began to introduce new models and upgrade its existing models in response to market demand
For instance the company introduced the hatchback Swift to shed its image of being a manufacturer of low-cost staid cars The case study looks into how MUL came back from the crunch to retain its place as the top carmaker in India It also deals with the tussle between Suzuki Motor Corporation and the Government of India over ownership issues
The case highlights the promotional offers undertaken by MUL in its quest for market dominance and examines how the company was able to mould itself according to the market requirements by entering new domains and reaching out to potential customers through its True Value and other promotional offers
Issues
The case is designed to help students
bull Gain an overview of the Indian automobile Industry especially the passenger car market
bull Study the rise of MUL and its measures to tackle competition successfully
bull Analyze the impact of macroeconomic variables like government regulations and environmental guidelines (Euro norms) on the functioning of an automobile manufacturer in India
bull Show how promotional offers can work wonders for a company in expanding the market and overcoming competition
bull Provide an overview of the pre-ownedused car market in India
Contents
Page NoIntroduction 1Indian Automobile Industry 2Maruti Udyog Limited 4Maruti Strikes Back 6Conclusion 10Exhibits 12
Keywords
Maruti 800 Suzuki Swift Hyundai Santro Daewoo Matiz Suzuki Motor Corporation (SMC) Tata Motors Market leadership Market expansion Marketing communications Sales promotion In-program placements Customer satisfaction Car finance Society of Indian Automobile Manufacturers (SIAM) and Maruti True Value pre-owned cars
Lets take on the world and show them what we are all about
- Rohtas Mal Chief General Manager Marketing amp Sales MUL in 19991
I believe in Dr C K Prahlads concept of finding value at the bottom of the pyramid We are trying to increase market penetration through several innovative schemes There is still a very large segment of our population which cannot afford a car
- Jagdish Khattar Managing Director MUL in 20042
Introduction
Maruti Udyog Limiteds (MUL) share of the Indian passenger vehicle market dropped to below 50 in 2004-05 (Refer to Exhibit I for the
performance of the Indian passenger vehicle industry and MUL between April 2003 and March 2005) The future of MULs low-cost model - the Maruti 800 (M-800) - was at stake due to the entry of global automakers into India
M-800 had dominated the Indian car market since it was launched in 1984 The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over two decades Apart from the increased competition MUL also had a few other problems on its plate
There was a delay in setting up of a plant in India for manufacturing diesel engines and transmission systems for cars The engines for its diesel variants were imported from other countries and there were limits on the quantities it could import In the market MULs models like the Zen Alto WagonR and Baleno were showing mixed results
Introduction Contd
MUL hoped this model would help the company shed its low-cost and simple look The move expressed the companys intent to move up the value pyramid (by upgrading Alto-WagonR-Santro customers to the new model) while simultaneously increasing market penetration at the bottom of the value pyramid by making the M-800 more affordable
Indian Automobile Industry
The Indian automobile industry has four major segments -- commercial vehicles (CVs) passenger vehicles three
While Zen Alto and WagonR were successful Baleno failed to live up to MULs expectations Its utility vehicle Versa met with a disastrous response from the Indian consumer In addition rising incomes the growth in the used-car market and availability of easier finance options led customers to shift their allegiance to other models from competitors To reduce its excessive dependence on a single model (M-800) the company had restructured the strategy for the M-800 and planned for product upgrades and new product development In tune with changing customer preferences the company launched its hatch-back model Swift in May 2005 to compete with Hyundai3 Getz and Fiat4 Palio
wheelers and two wheelers The market share for each of these segments of the Indian automobile industry for the year 2003-04 is shown in Figure I
According to the Society of Indian Automobile Manufacturers (SIAM) the Indian passenger vehicle market has three categories -- passenger cars multi-purpose vehicles (MPVs) and utility vehicles (UVs)
The passenger car market is further divided into various segments based on the length of the car (Refer to Exhibit II for a detailed description of the lengthwise classification of passenger cars
The Indian automobile industry was a highly protected slow-growth industry with very few players till the opening up of the Indian economy in 1991 Low manufacturing costs
availability of skilled labor an organized component industry and the capability to supply in large volumes attracted global auto majors to set up their operations in India after the opening up of the sector
For example Fiat and DaimlerChrysler started outsourcing their component requirements to India 100 percent Indian subsidiaries of global players like Delphi Automotive Systems and Visteon exported components to other parts of the world
Macroeconomic factors like government regulations low interest rates and availability of retail finance played an important role in the rapid development of the automobile industry in India during the late nineties (Refer to Exhibit III for an understanding of the impact of the Union Budget on the Indian automobile industry over the years)
Excerpts
Maruti Udyog Limited
MULs M-800 was ideally suitable for Indian customers as it was reasonably priced fuel efficient and was sleek and easy to drive when compared to the models then available With the success of its M-800 MUL soon replaced Hindustan Motors as the leader in the passenger car market
Government of India - Suzuki tussle
In August 1997 there was a major difference of opinion between the GoI and SMC regarding the appointment of the Managing Director (MD) for MUL SMC did not support the appointment of R S S L N Bhaskarudu (Bhaskarudu) holding that he was incompetent to hold the post
Decline in market share
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Maruti Strikes Back
Launch of new variants and models
Despite analysts predicting that the M-800 the bread and butter model of MUL would be phased out the company asserted that it would take necessary steps to maintain its leadership position MUL had three compact car models -- Alto WagonR and Zen -- competing with Hyundai Santro Tata Indica and Fiat Palio
Increasing dealer profitability
During 2003 and 2004 MUL visualized and implemented a strategy for its dealers to increase
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
bull Analyze the impact of macroeconomic variables like government regulations and environmental guidelines (Euro norms) on the functioning of an automobile manufacturer in India
bull Show how promotional offers can work wonders for a company in expanding the market and overcoming competition
bull Provide an overview of the pre-ownedused car market in India
Contents
Page NoIntroduction 1Indian Automobile Industry 2Maruti Udyog Limited 4Maruti Strikes Back 6Conclusion 10Exhibits 12
Keywords
Maruti 800 Suzuki Swift Hyundai Santro Daewoo Matiz Suzuki Motor Corporation (SMC) Tata Motors Market leadership Market expansion Marketing communications Sales promotion In-program placements Customer satisfaction Car finance Society of Indian Automobile Manufacturers (SIAM) and Maruti True Value pre-owned cars
Lets take on the world and show them what we are all about
- Rohtas Mal Chief General Manager Marketing amp Sales MUL in 19991
I believe in Dr C K Prahlads concept of finding value at the bottom of the pyramid We are trying to increase market penetration through several innovative schemes There is still a very large segment of our population which cannot afford a car
- Jagdish Khattar Managing Director MUL in 20042
Introduction
Maruti Udyog Limiteds (MUL) share of the Indian passenger vehicle market dropped to below 50 in 2004-05 (Refer to Exhibit I for the
performance of the Indian passenger vehicle industry and MUL between April 2003 and March 2005) The future of MULs low-cost model - the Maruti 800 (M-800) - was at stake due to the entry of global automakers into India
M-800 had dominated the Indian car market since it was launched in 1984 The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over two decades Apart from the increased competition MUL also had a few other problems on its plate
There was a delay in setting up of a plant in India for manufacturing diesel engines and transmission systems for cars The engines for its diesel variants were imported from other countries and there were limits on the quantities it could import In the market MULs models like the Zen Alto WagonR and Baleno were showing mixed results
Introduction Contd
MUL hoped this model would help the company shed its low-cost and simple look The move expressed the companys intent to move up the value pyramid (by upgrading Alto-WagonR-Santro customers to the new model) while simultaneously increasing market penetration at the bottom of the value pyramid by making the M-800 more affordable
Indian Automobile Industry
The Indian automobile industry has four major segments -- commercial vehicles (CVs) passenger vehicles three
While Zen Alto and WagonR were successful Baleno failed to live up to MULs expectations Its utility vehicle Versa met with a disastrous response from the Indian consumer In addition rising incomes the growth in the used-car market and availability of easier finance options led customers to shift their allegiance to other models from competitors To reduce its excessive dependence on a single model (M-800) the company had restructured the strategy for the M-800 and planned for product upgrades and new product development In tune with changing customer preferences the company launched its hatch-back model Swift in May 2005 to compete with Hyundai3 Getz and Fiat4 Palio
wheelers and two wheelers The market share for each of these segments of the Indian automobile industry for the year 2003-04 is shown in Figure I
According to the Society of Indian Automobile Manufacturers (SIAM) the Indian passenger vehicle market has three categories -- passenger cars multi-purpose vehicles (MPVs) and utility vehicles (UVs)
The passenger car market is further divided into various segments based on the length of the car (Refer to Exhibit II for a detailed description of the lengthwise classification of passenger cars
The Indian automobile industry was a highly protected slow-growth industry with very few players till the opening up of the Indian economy in 1991 Low manufacturing costs
availability of skilled labor an organized component industry and the capability to supply in large volumes attracted global auto majors to set up their operations in India after the opening up of the sector
For example Fiat and DaimlerChrysler started outsourcing their component requirements to India 100 percent Indian subsidiaries of global players like Delphi Automotive Systems and Visteon exported components to other parts of the world
Macroeconomic factors like government regulations low interest rates and availability of retail finance played an important role in the rapid development of the automobile industry in India during the late nineties (Refer to Exhibit III for an understanding of the impact of the Union Budget on the Indian automobile industry over the years)
Excerpts
Maruti Udyog Limited
MULs M-800 was ideally suitable for Indian customers as it was reasonably priced fuel efficient and was sleek and easy to drive when compared to the models then available With the success of its M-800 MUL soon replaced Hindustan Motors as the leader in the passenger car market
Government of India - Suzuki tussle
In August 1997 there was a major difference of opinion between the GoI and SMC regarding the appointment of the Managing Director (MD) for MUL SMC did not support the appointment of R S S L N Bhaskarudu (Bhaskarudu) holding that he was incompetent to hold the post
Decline in market share
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Maruti Strikes Back
Launch of new variants and models
Despite analysts predicting that the M-800 the bread and butter model of MUL would be phased out the company asserted that it would take necessary steps to maintain its leadership position MUL had three compact car models -- Alto WagonR and Zen -- competing with Hyundai Santro Tata Indica and Fiat Palio
Increasing dealer profitability
During 2003 and 2004 MUL visualized and implemented a strategy for its dealers to increase
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
performance of the Indian passenger vehicle industry and MUL between April 2003 and March 2005) The future of MULs low-cost model - the Maruti 800 (M-800) - was at stake due to the entry of global automakers into India
M-800 had dominated the Indian car market since it was launched in 1984 The introduction of new cars by competitors made the M-800 look obsolete as it had not been changed in any major way for over two decades Apart from the increased competition MUL also had a few other problems on its plate
There was a delay in setting up of a plant in India for manufacturing diesel engines and transmission systems for cars The engines for its diesel variants were imported from other countries and there were limits on the quantities it could import In the market MULs models like the Zen Alto WagonR and Baleno were showing mixed results
Introduction Contd
MUL hoped this model would help the company shed its low-cost and simple look The move expressed the companys intent to move up the value pyramid (by upgrading Alto-WagonR-Santro customers to the new model) while simultaneously increasing market penetration at the bottom of the value pyramid by making the M-800 more affordable
Indian Automobile Industry
The Indian automobile industry has four major segments -- commercial vehicles (CVs) passenger vehicles three
While Zen Alto and WagonR were successful Baleno failed to live up to MULs expectations Its utility vehicle Versa met with a disastrous response from the Indian consumer In addition rising incomes the growth in the used-car market and availability of easier finance options led customers to shift their allegiance to other models from competitors To reduce its excessive dependence on a single model (M-800) the company had restructured the strategy for the M-800 and planned for product upgrades and new product development In tune with changing customer preferences the company launched its hatch-back model Swift in May 2005 to compete with Hyundai3 Getz and Fiat4 Palio
wheelers and two wheelers The market share for each of these segments of the Indian automobile industry for the year 2003-04 is shown in Figure I
According to the Society of Indian Automobile Manufacturers (SIAM) the Indian passenger vehicle market has three categories -- passenger cars multi-purpose vehicles (MPVs) and utility vehicles (UVs)
The passenger car market is further divided into various segments based on the length of the car (Refer to Exhibit II for a detailed description of the lengthwise classification of passenger cars
The Indian automobile industry was a highly protected slow-growth industry with very few players till the opening up of the Indian economy in 1991 Low manufacturing costs
availability of skilled labor an organized component industry and the capability to supply in large volumes attracted global auto majors to set up their operations in India after the opening up of the sector
For example Fiat and DaimlerChrysler started outsourcing their component requirements to India 100 percent Indian subsidiaries of global players like Delphi Automotive Systems and Visteon exported components to other parts of the world
Macroeconomic factors like government regulations low interest rates and availability of retail finance played an important role in the rapid development of the automobile industry in India during the late nineties (Refer to Exhibit III for an understanding of the impact of the Union Budget on the Indian automobile industry over the years)
Excerpts
Maruti Udyog Limited
MULs M-800 was ideally suitable for Indian customers as it was reasonably priced fuel efficient and was sleek and easy to drive when compared to the models then available With the success of its M-800 MUL soon replaced Hindustan Motors as the leader in the passenger car market
Government of India - Suzuki tussle
In August 1997 there was a major difference of opinion between the GoI and SMC regarding the appointment of the Managing Director (MD) for MUL SMC did not support the appointment of R S S L N Bhaskarudu (Bhaskarudu) holding that he was incompetent to hold the post
Decline in market share
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Maruti Strikes Back
Launch of new variants and models
Despite analysts predicting that the M-800 the bread and butter model of MUL would be phased out the company asserted that it would take necessary steps to maintain its leadership position MUL had three compact car models -- Alto WagonR and Zen -- competing with Hyundai Santro Tata Indica and Fiat Palio
Increasing dealer profitability
During 2003 and 2004 MUL visualized and implemented a strategy for its dealers to increase
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
wheelers and two wheelers The market share for each of these segments of the Indian automobile industry for the year 2003-04 is shown in Figure I
According to the Society of Indian Automobile Manufacturers (SIAM) the Indian passenger vehicle market has three categories -- passenger cars multi-purpose vehicles (MPVs) and utility vehicles (UVs)
The passenger car market is further divided into various segments based on the length of the car (Refer to Exhibit II for a detailed description of the lengthwise classification of passenger cars
The Indian automobile industry was a highly protected slow-growth industry with very few players till the opening up of the Indian economy in 1991 Low manufacturing costs
availability of skilled labor an organized component industry and the capability to supply in large volumes attracted global auto majors to set up their operations in India after the opening up of the sector
For example Fiat and DaimlerChrysler started outsourcing their component requirements to India 100 percent Indian subsidiaries of global players like Delphi Automotive Systems and Visteon exported components to other parts of the world
Macroeconomic factors like government regulations low interest rates and availability of retail finance played an important role in the rapid development of the automobile industry in India during the late nineties (Refer to Exhibit III for an understanding of the impact of the Union Budget on the Indian automobile industry over the years)
Excerpts
Maruti Udyog Limited
MULs M-800 was ideally suitable for Indian customers as it was reasonably priced fuel efficient and was sleek and easy to drive when compared to the models then available With the success of its M-800 MUL soon replaced Hindustan Motors as the leader in the passenger car market
Government of India - Suzuki tussle
In August 1997 there was a major difference of opinion between the GoI and SMC regarding the appointment of the Managing Director (MD) for MUL SMC did not support the appointment of R S S L N Bhaskarudu (Bhaskarudu) holding that he was incompetent to hold the post
Decline in market share
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Maruti Strikes Back
Launch of new variants and models
Despite analysts predicting that the M-800 the bread and butter model of MUL would be phased out the company asserted that it would take necessary steps to maintain its leadership position MUL had three compact car models -- Alto WagonR and Zen -- competing with Hyundai Santro Tata Indica and Fiat Palio
Increasing dealer profitability
During 2003 and 2004 MUL visualized and implemented a strategy for its dealers to increase
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
availability of skilled labor an organized component industry and the capability to supply in large volumes attracted global auto majors to set up their operations in India after the opening up of the sector
For example Fiat and DaimlerChrysler started outsourcing their component requirements to India 100 percent Indian subsidiaries of global players like Delphi Automotive Systems and Visteon exported components to other parts of the world
Macroeconomic factors like government regulations low interest rates and availability of retail finance played an important role in the rapid development of the automobile industry in India during the late nineties (Refer to Exhibit III for an understanding of the impact of the Union Budget on the Indian automobile industry over the years)
Excerpts
Maruti Udyog Limited
MULs M-800 was ideally suitable for Indian customers as it was reasonably priced fuel efficient and was sleek and easy to drive when compared to the models then available With the success of its M-800 MUL soon replaced Hindustan Motors as the leader in the passenger car market
Government of India - Suzuki tussle
In August 1997 there was a major difference of opinion between the GoI and SMC regarding the appointment of the Managing Director (MD) for MUL SMC did not support the appointment of R S S L N Bhaskarudu (Bhaskarudu) holding that he was incompetent to hold the post
Decline in market share
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Maruti Strikes Back
Launch of new variants and models
Despite analysts predicting that the M-800 the bread and butter model of MUL would be phased out the company asserted that it would take necessary steps to maintain its leadership position MUL had three compact car models -- Alto WagonR and Zen -- competing with Hyundai Santro Tata Indica and Fiat Palio
Increasing dealer profitability
During 2003 and 2004 MUL visualized and implemented a strategy for its dealers to increase
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Excerpts
Maruti Udyog Limited
MULs M-800 was ideally suitable for Indian customers as it was reasonably priced fuel efficient and was sleek and easy to drive when compared to the models then available With the success of its M-800 MUL soon replaced Hindustan Motors as the leader in the passenger car market
Government of India - Suzuki tussle
In August 1997 there was a major difference of opinion between the GoI and SMC regarding the appointment of the Managing Director (MD) for MUL SMC did not support the appointment of R S S L N Bhaskarudu (Bhaskarudu) holding that he was incompetent to hold the post
Decline in market share
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Maruti Strikes Back
Launch of new variants and models
Despite analysts predicting that the M-800 the bread and butter model of MUL would be phased out the company asserted that it would take necessary steps to maintain its leadership position MUL had three compact car models -- Alto WagonR and Zen -- competing with Hyundai Santro Tata Indica and Fiat Palio
Increasing dealer profitability
During 2003 and 2004 MUL visualized and implemented a strategy for its dealers to increase
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
their profitability levels in view of increased competition According to the strategy the 300-odd dealers of the company were asked to strengthen their manpower increase the salaries of their sales agents and offer them better incentives
Promotional offers
Faced with stiff competition and declining market shares MUL focused its promotions strategy on targeting two-wheeler owners
Change Your Life campaign
In 2003 MUL launched novel offers like Change Your Life campaign and also offered vehicle insurance for Rupee One only to attract customers
Television campaigns
In 2003 MUL came out with a toy car advertisement that became popular for its simplicity and straightforward message The advertisement depicted a child playing with a toy car When reprimanded by his father the child replies Kya karoon papa petrol khatam hi nahin hota (What should I do The petrol never finishes)
Excerpts Contd
2599 offer
In 2004 MUL introduced the 2599 offer under which a consumer could buy an M-800 by paying an EMI of Rs 2599 only for a period of seven years The down payment was fixed at Rs 40000 MUL entered into an agreement with the State Bank of India (SBI) the largest bank in India to promote this scheme
Teacher Plus scheme
To further penetrate into the market MUL continued to focus its efforts on the rural markets and specific target groups In 2004 it introduced the Teacher plus
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
scheme in a tie-up with SBI aimed at teachers who were interested in buying a new car
Maruti True Value
There was a gradual decline in the market share of MUL over the years from 1999 to 2004 This happened even though MUL had slashed prices of certain models on a couple of occasions
Conclusion
The companys change in strategy and emphasis on developing effective marketing communications began to yield results In the JD Power Asia Pacific 2004 India APEAL study WagonR and Zen were ranked first and third in the premium compact segment Esteem was picked as the best entry level car in the mid-size category
MUL also topped the JD Power Asia Pacific 2005 India Sales Satisfaction Index in terms of customer satisfaction with the new vehicle sales process
As per the JD Power Asia Pacific 2005 India Customer Satisfaction study MUL ranked highest in customer satisfaction with after-sales service for the sixth consecutive year
Marutis consistent performance in the study over the past several years has resulted in a steady increase in the percentage of its customers who say they intend to remain loyal to the brand said Mohit Arora India director JD Power Asia Pacific
Exhibits
Abstract
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
The case Reeboks Game Plan in India gives an overview of the entry of Reebok the international sports shoe giant into India the entry of its global competitors Nike and Adidas into India and the strategies adopted by the three players to build up their market shares
The case specifically deals with the strategies adopted by Reebok in India to deal with the competition from Nike and Adidas
The case gives insights into Reeboks venture into the kids market and its emphasis on fitness The challenges that the company could face in India have also been discussed
The case deals with the market conditions that prevailed in India during the entry of these players the competition among the domestic players and the changes that the multinational companies brought about in their strategies to increase their market shares
Issues
bull Understand the positioning of Reebok Adidas and Nike in India
Contents
Page NoIntroduction 1Background Note 2Competition 3How Fit is Reeboks Fitness Platform 4Targeting The Kids 5Adidas amp Nike Selling Lifestyle 5The Challenges Ahead for Reebok 7Exhibits 8
Keywords
Reeboks Game Plan in India Reebok international sports shoe giant India global competitors Nike Adidas India market shares
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
strategies Reebok kids market fitness market conditions multinational companies
The creation of a motivating and relevant brand position in India will widen the gap and help us gain volumes
- Siddharth Varma Managing Director Reebok India
Our main global competitor (Nike) is already behind us here The other one (Reebok) we will catch up with
- Herbert Hainer CEO amp Chairman Adidas-Salomon AG commenting on Adidas performance in India
We will maintain Nikes global reputation of being an aggressive marketer
- GKNayar CEO Sierra Industrial Enterprises Nikes licensee in India
Introduction
With 50 percent market share of the Indian sports shoe market in 2001 Reebok India (Reebok) the Rs950 million Indian arm of the Boston (USA)-based $3 billion fitness and sportswear giant Reebok International Ltd had left competitors Adidas and Nike behind Being the first of its kind to enter India Reebok had an edge over its competitors In 2001 its business had grown by 18 percent The firm was confident of a 35 percent growth by December 2002 by achieving a sales target of Rs13 billion The average growth of the industry was less than 15 percent at that time In 2001 the three global brands Reebok Adidas and Nike together sold sportswear worth less than Rs18 billion in India
According to Siddharth Varma (Varma) managing director Reebok India creating a motivating and relevant brand position in India would increase the sales volumes
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Introduction Contd
However the parent company had issued a mandate that its Indian subsidiary should stick to the companys vision of instilling fitness consciousness among people and at the same time stay focused on maintaining its leadership position in India
Reebok underwent several changes in order to increase its visibility in the Indian market It forayed into the kids footwear market where the sales volumes were higher However Reebok did not want to lose sight of what it originally was - a fitness brand
The company felt that its fitness platform would fit well in the Indian market as it was better understood than sports However analysts felt that the fitness footwear and apparel market in India were at a nascent stage and had limited scope
While Reebok made some adjustments in its marketing strategy in India Nike and Adidas were very cautious while entering the Indian market Both Nike and Adidas positioned themselves as lifestyle products
Background Note
The liberalization of the Indian economy in 1991 led to an increase in the buying capacity of the countrys middle class This created optimism among industry players regarding sales in the premium segment (Rs 700 - Rs 1200) of footwear
During the same period many Indian manufacturers also came up with a wide range of sports shoes (Phoenixs Power Range Libertys Force 10 and Geosport Action)1 They catered to the middle class sports lovers with shoes priced between Rs500 and Rs750
Excerpts gtgt
ExcerptsCompetition
Reebok India
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
The major activities of Reebok International Ltd included designing and marketing of sports and fitness products including footwear and apparel In October 1995 Reebok International Ltd entered into a 8020 joint venture with the Delhi-based Phoenix Overseas (Reebok India Co)
Initially Reebok offered 65 varieties of sports shoes and sports clothing such as T-shirts shorts and sweatshirts in 5 exclusive stores in Delhi and Mumbai
Nike India
Based in Oregon USA Nike Inc was one of the worlds leading sports footwear and apparel The company sold its products through independent distributors licensees and subsidiaries in numerous countries around the world
Adidas Salomon AG
In 1948 Adolf (Adi) Dassler founded Adidas in Schienfield Germany In 1956 Adidas started manufacturing sports apparel balls and other sports accessories
In 1997 the company acquired the French Salomon Group the global leader in the manufacture of winter sports equipment
The newly formed company was named Adidas-Salomon AG and was headquartered in Herzogenaurach Germany The company marketed its products in more than 160 countries
Excerpts Contd
How Fit is Reeboks Fitness Platform
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Globally Reebok was positioned as a complete fitness brand The Indian subsidiarys stated vision was to enhance fitness consciousness while staying ahead of its competitors Reebok believed that this vision would do well in India as this concept was more popular here than sports
Targeting The Kids
Another area where Reebok India was trying to make its presence felt was the kids line of apparel footwear and accessories The kids apparel market was estimated to be Rs 48 billion and the kids footwear market was estimated to be Rs10 billion
The company realized the need to identify a segment in the kids market where sales volumes could be high and prices would be acceptable to the parents So in 2001 Reebok launched its new footwear range called Reebok Kids targeted at schoolgoing kids
Adidas amp Nike Selling Lifestyle
In India Adidas decided to stick to its basic image as a performance brand while potentially entering into the lifestyle market To do this the company divided its products into three categories sports performance sports heritage and sports lifestyle
The Challenges Ahead for Reebok
Reebok was the first multinational footwear company to enter India after the liberalization of the countrys economy and post profits It set up Indias third largest chain of exclusive brand stores with about 100 stores across the country
Exhibits
Exhibit I Reeboks Product RangeExhibit II Nikes Product RangeExhibit III Product Range of Adidas
Abstract
The case Kelloggs Indian Experience analyzes the causes that led to the failure of the Kellogg breakfast cereal brand in
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
the Indian market The case examines the measures the company adopted on the marketing front to rectify its mistakes and at the efficacy of these measures
Issues
raquo Enable students to see how mistakes on the pricing positioning and distribution fronts led to Kelloggs poor performance in the initial stages
Contents
Page NoA Failed Launch 1The Mistakes 1Setting Things Right 3The Results 4
Keywords
Kelloggs Indian Experience Kellogg breakfast cereal brand Indian market marketing mistakes
Our only rivals are traditional Indian foods like idlis and vadas
- Denis Avronsart Managing Director Kellogg India
A Failed Launch
In April 1995 Kellogg India Ltd (Kellogg) received unsettling reports of a gradual drop in sales from its distributors in Mumbai
There was a 25 decline in countrywide sales since March1995 the month Kellogg products had been made available nationally Kellogg was the wholly-owned Indian subsidiary of the Kellogg Company based in Battle Creek Michigan
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Kellogg Company was the worlds leading producer of cereals and convenience foods including cookies crackers cereal bars frozen waffles meat alternatives piecrusts and ice cream cones
Founded in 1906 Kellogg Company had manufacturing facilities in 19 countries and marketed its products in more than 160 countries The companys turnover in 1999-00 was $ 7 billion Kellogg Company had set up its 30th manufacturing facility in India with a total investment of $ 30 million
The Indian market held great significance for the Kellogg Company because its US sales were stagnating and only regular price increases had helped boost the revenues in the 1990s
Launched in September 1994 Kelloggs initial offerings in India included cornflakes wheat flakes and Basmati rice flakes
Despite offering good quality products and being supported by the technical managerial and financial resources of its parent Kelloggs products failed in the Indian market Even a high-profile launch backed by hectic media activity failed to make an impact in the marketplace
The Mistakes
Kellogg realized that it was going to be tough to get the Indian consumers to accept its products Kellogg banked heavily on the quality of its crispy flakes But pouring hot milk on the flakes made them soggy Indians always boiled their milk unlike in the West and consumed it warm or lukewarm They also liked to add sugar to their milk or lukewarm
Setting Things Right
Disappointed with the poor performance Kellogg decided to launch two of its highly successful
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
brands - Chocos (September 1996) and Frosties (April 1997) in India The company hoped to repeat the global success of these brands in the Indian market
Chocos were wheat scoops coated with chocolate while Frosties had sugar frosting on individual flakes The success of these variants took even Kellogg by surprise and sales picked up significantly (It was even reported that Indian consumers were consuming the products as snacks)
This was followed by the launch of Chocos Breakfast Cereal Biscuits The success of Chocos and Frosties also led to Kelloggs decision to focus on totally indianising its flavors in the future This resulted in the launch of the Mazza series in August 1998 - a crunchy almond-shaped corn breakfast cereal in three local flavors -Mango ElaichiCoconut Kesarand Rose
The Results
In 1995 Kellogg had a 53 share of the Rs 150 million breakfast cereal market which had been growing at 4-5 per annum till then
By 2000 the market size was Rs 600 million and Kelloggs share had increased to 65 Analysts claimed that Kellogg entry was responsible for this growth
The companys improved prospects were clearly attributed to the shift in positioning increased consumer promotions and an enhanced media budget
Abstract
The case discusses the localization strategies adopted by the multinational fast food chains -
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
McDonalds Dominos and KFC in India Initially these fast food chains found it tough to cater to Indian tastes Soon they customized their menu positioned their products and advertised to appeal to Indian customers McDonalds and Dominos succeeded to a certain extent while KFC still had a long way to go The case is intended to enable students understand the localization strategies adopted by the multinational fast food chains They should also be able to appreciate the factors that forced the fast food chains to understand the local market and modify their strategies to suit local requirements
Issues
raquo Localization strategies adopted by fast food chains customization of menus positioning of their product
Contents
Page NoIntroduction 1Joining The Fray 1The Indian Coming 2Indianizing All The Mcdonalds Way 2How others did it 4The KFC Way 4Improving Prospects 5Mounting Losses 5
Keywords
Localization strategies multinational fast food chains McDonalds Dominos KFC India fast food chains Indian tastes customized menu positioned products advertised Indian customers McDonalds Dominos KFC multinational local requirements
Even though the Indian outfit stuck to its core taste that grew on consumers from bland to unique in three years with no change
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
factored in by the fast-food chain McDonalds menu still was about 75 different from its global menu
- Vikram Bakshi MD McDonalds Delhi
The Indian palate is very definitive -people are extremely finicky and choosy not too willing to experiment Food tastes vary from region to region To capture the market we had to localize flavors
- Gautam Advani Chief of Marketing Dominos Pizza
People didnt know about the menu and as a result KFC was regarded as a restaurant serving chicken All this was simply because of the word chicken
- Pankaj Batra Kentucky Fried Chickens Marketing Manager
Introduction
In the mid 1990s a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment But they found it difficult to establish themselves Gaining acceptance locally and blending into the Indian culture proved difficult In 1997 McDonalds was facing several problems Most Indians thought McDonalds was expensive and many didnt like the fact that it served only non-vegetarian meals The bland taste of its preparations didnt go down well with the Indian palate In 1998 the company faced intense competition from domestic food chains Globally McDonalds success had been built on its commitment to the QSCV (quality service cleanliness and value) principle
However Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting This notion of value was something that could not remain unique Other fast food chains began to adopt the same fast and clean service formula and soon it wasnt a distinguishing feature of McDonalds anymore
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Joining The Fray
While McDonalds was establishing itself Dominos faced tough competition when it entered India with homegrown players like Nirualas and Pizza Corner and MNCs like Pizza Hut and Wimpys already having established themselves in the market
The home delivery concept that the company introduced1 had not yet caught on Besides Dominos was in a dilemma about how it should position pizza -as a meal or a snack How far should they go in indianising the pizza so that it had mass appeal and yet did not lose its identity
The Indian Coming
McDonalds began to look at the Indian market sometime in 1990 when its executives started making exploratory trips By 1994 some international suppliers of McDonalds had visited India to identify local partners Meetings with agriculturists were conducted with a view to set up a supply chain
Indianizing All The Mcdonalds Way
It gain acceptance locally McDonalds had to modify its menu -substituting mutton for beef in the burgers (something it had never done in any other market) choosing names like McAloo and Maharaja Mac and introducing variations and dishes that were not available at any McDonalds outlet anywhere in the world From the meticulous sourcing of raw materials and the elimination of beef and pork from its desi menus to even segregating the vegetarian and non-vegetarian workers McDonalds seemed to be extremely orthodox in its approach
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
How others did it
To establish its presence in the Indian market Dominos too made efforts to give its products a local flavour It even offered special products in different regions In the south Indian segment the company offered Chettinad Chicken and Mutton Ghongoor while for North India it offered Butter Chicken and Paneer Makhani
The KFC Way
While Dominos did all it could to give its offerings an Indian flavour KFC initially preferred to retain its international taste But this had few takers in India Research revealed that Indian consumers did not relish chicken with skinoffered by KFC
Improving Prospects
In 2000 McDonalds announced that over the next three years it would invest Rs 35 billion to increase the number of restaurants from 25 restaurants to 80
Mounting Losses
In a bid to salvage its Indian venture KFC had indianized its menu to a great extent Despite its efforts however it soon became clear that it would be difficult for it to become a major player in the Indian fast food arena
Abstract
The case describes the customer relationship management (CRM) initiatives undertaken by Tesco the number one retailing company in the United Kingdom (UK) since the mid-1990s The companys growth and its numerous customer service efforts are discussed The case then studies the loyalty card scheme launched by the company in 1995
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
It examines how the data generated through this scheme was used to modify the companys marketing strategies and explores the role played by the scheme in making Tesco the market leader The case also takes a look at the various other ways in which Tesco tried to offer its customers the best possible service
Finally the companys future prospects are commented on in light of changing market dynamics the companys new strategic game plan and criticism of loyalty card schemes
Issues
bull Examine how the information gathered through CRM tools can be used to modify marketing strategies and the benefits that can be reaped through them
Contents
Page NoA Master at CRM 1Background Note 2CRM - The Tesco Way 4Reaping the Benefits 7From Customer Service to Customer Delight 9An Invincible Company Not Exactly 11Exhibits 13
Keywords
Customer relationship management CRM Tesco retailing company United Kingdom UK mid-1990 customer service efforts loyalty card scheme 1995 data generated scheme marketing strategies possible service changing market dynamics game plan loyalty card schemes
Our mission is to earn and grow the lifetime loyalty of our customers
- Sir Terry Leahy Chief Executive Officer (Tesco) quoted in Tescos 1998 Annual Report
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
They (Tesco) know more than any firm I have ever dealt with how their customers actually think what will impress and upset them and how they feel about grocery shopping1
- Jim Barnes Executive Vice President of Bristol Group a Canada-based Marketing Communications and Information firm and a CRM
expert
The whole philosophy is in balancing the business in favor of the customer That comes down to a mixture of company culture and customer insight2
- Crawford Davidson Director (Clubcard Loyalty Program) Tesco
A Master at CRM
Every three months millions of people in the United Kingdom (UK) receive a magazine from the countrys number one retailing company Tesco Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailersmagazines to their customers
These initiatives promote the stores products introduce promotional schemes and contain discount coupons However what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines Every magazine had a unique combination of articles advertisements related to Tescos offerings and third-party advertisements
A Master at CRM Contd
Tesco ensured that all its customers received magazines that contained material suited to their lifestyles The company had worked
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
out a mechanism for determining the advertisements and promotional coupons that would go in each of the over 150000 variants of the magazine This had been made possible by its world-renowned customer relationship management (CRM) strategy framework (Refer Exhibit I for a brief note on CRM)
The loyalty card3 scheme (launched in 1995) laid the foundations of a CRM framework that made Tesco post growth figures in an industry that had been stagnating for a long time
The data collected through these cards formed the basis for formulating strategies that offered customers personalized services in a cost-effective manner
Each and every one of the over 8 million transactions made every week at the companys stores was individually linked to customer-profile information
And each of these transactions had the potential to be used for modifying the companys strategies According to Tesco sources the companys CRM initiative was not limited to the loyalty card scheme it was more of a company wide philosophy
Industry observers felt that Tescos CRM initiatives enabled it to develop highly focused marketing strategies
ExcerptsBackground Note
The Tesco story dates back to 1919 when Jack Cohen (Cohen) an ex-
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
army man set up a grocery business in Londons East End In 1924 Cohen purchased a shipment of tea from a company named T E Stockwell
He used the first three letters of this companys name added the Co from his name and branded the tea Tesco
Reportedly he was so enamored of the name that he named his entire business sco The first store under the Tesco name was opened in 1929 in Burnt Oak Edgware
CRM - The Tesco Way
Tescos efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive prices
Reaping the Benefits
Commenting on the way the data generated was used sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach) instead of targeting them as a group (the carpet bombing approach)
Since the customers received coupons that matched their buying patterns over 20 of Tescos coupons were redeemed - as against the industry average of 05
The number of loyal customers increased manifold since the loyalty card scheme was launched (Refer Figure I)
From Customer Service to Customer
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Delight
To sustain the growth achieved through the launch of Clubcards Tesco decided to adopt a four pronged approach launch better bigger stores on a frequent basis offer competitive prices (eg offering everyday low prices in the staples business) increase the number of products offered in the Value range and focus on remote shopping services (this included the online shopping venture) To make sure that its prices were the lowest among all retailers Tesco employed a dedicated team of employees called price checkers
An Invincible Company Not Exactly
Tescos customer base and the frequency with which each customer visited its stores had increased significantly over the years However according to reports the average purchase per visit had not gone up as much as it would have liked to see
Analysts said that this was not a very positive sign They also said that while it was true that Tesco was the market leader by a wide margin it was also true that Asda and Morrison were growing rapidly (Refer Exhibit II) Given the fact that the company was moving away from its core business within UK (thrust on non-food utility services online travel services) and was globalizing rapidly (reportedly it was exploring the possibilities of entering China and Japan) industry observers were rather skeptical of its ability to maintain the growth it had been posting since the late-1900s The Economist stated that the UK retailing industry seemed to have become saturated and that Tescos growth could be sustained
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
only if it ventured overseas
Abstract
The case focuses on the rural marketing initiatives undertaken by the cola major - Coca Cola in India
The case discusses in detail the changes brought about by Coca Cola in distribution pricing and advertising to make inroads into rural India
The case also discusses the concept of rural marketing and its characteristics in a developing country like India
Further it also provides details about PepsiCos rural marketing initiatives
Issues
bull The reasons behind CCI entering the rural market
bull The strategy adopted by CCI to penetrate the rural market
bull The role of advertising in the rural market
Contents
Page NoThanda Goes Rural 1CCIs Rural Marketing Strategy 2Future Prospects 5Exhibits 6
Keywords
Rural marketing cola major Coca Cola India distribution pricing advertising rural India rural marketing characteristics developing country India PepsiCo rural marketing
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
We want to be the Hindustan Lever1 of the Indian beverage business
- Sanjeev Gupta Deputy President - Coca-Cola India in May 20022
The rural market is a significant part of our marketing strategy which enables us to help the consumer link with our product
- Sanjeev Gupta Marketing Director - Cola-Cola India in August 19953
Thanda Goes Rural
In early 2002 Coca-Cola India (CCI) (Refer Exhibit I for information about CCI) launched a new advertisement campaign featuring leading bollywood actor - Aamir Khan
The advertisement with the tag line - Thanda Matlab Coca-Cola4 was targeted at rural and semi-urban consumers According to company sources the idea was to position Coca-Cola as a generic brand for cold drinks
The campaign was launched to support CCIs rural marketing initiatives CCI began focusing on the rural market in the early 2000s in order to increase volumes
This decision was not surprising given the huge size of the untapped rural market in India (Refer Exhibit II to learn about the rural market in India) With flat sales in the urban areas it was clear that CCI would have to shift its focus to the rural market Nantoo Banerjee spokeswoman - CCI said The real market in India is in the rural areas
If you can crack it there is tremendous potential5
However the poor rural infrastructure and consumption habits that are very different from
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
those of urban people were two major obstacles to cracking the rural market for CCI
Because of the erratic power supply most grocers in rural areas did not stock cold drinks Also people in rural areas had a preference for traditional cold beverages such as lassi6 and lemon juice
Further the price of the beverage was also a major factor for the rural consumer
CCIs Rural Marketing Strategy
CCIs rural marketing strategy was based on three As - Availability Affordability and Acceptability The first A - Availability emphasized on the availability of the product to the customer the second A - Affordability focused on product pricing and the third A- Acceptability focused on convincing the customer to buy the product
Availability
Once CCI entered the rural market it focused on strengthening its distribution network there It realized that the centralized distribution system used by the company in the urban areas would not be suitable for rural areas
In the centralized distribution system the product was transported directly from the bottling plants to retailers (Refer Figure I) However CCI realized that this distribution system would not work in rural markets as taking stock directly from bottling plants to retail stores would be very costly due to the long distances to be covered
The company instead opted for a hub and spoke distribution system (Refer Figure II) Under the hub and spoke distribution system stock was transported from the bottling plants to hubs and then from
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
hubs the stock was transported to spokes which were situated in small towns These spokes fed the retailers catering to the demand in rural areas
CCI not only changed its distribution model it also changed the type of vehicles used for transportation The company used large trucks for transporting stock from bottling plants to hubs and medium commercial vehicles transported the stock from the hubs to spokes
For transporting stock from spokes to village retailers the company utilized auto rickshaws and cycles Commenting on the transportation of stock in rural markets a company spokesperson said We use all possible means of transport that range from trucks auto rickshaws cycle rickshaws and hand carts to even camel carts in Rajasthan and mules in the hilly areas to cart our products from the nearest hub7
In late 2002 CCI made an additional investment of Rs 7 million (Rs 5 million from the company and Rs 2 million from the companys bottlers) to meet rural demand By March 2003 the company had added 25 production lines and doubled its glass and PET bottle capacity8
Excerpts
Affordability
A survey conducted by CCI in 2001 revealed that 300 ml bottles were not popular with rural and semi-urban residents where two persons often shared a 300 ml bottle It was also found that the price of Rs10- per bottle was considered too high by rural consumers
Acceptability
The initiatives of CCI in distribution and pricing were supported by
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
extensive marketing in the mass media as well as through outdoor advertising
The company put up hoardings in villages and painted the name Coca Cola on the compounds of the residences in the villages
Further CCI also participated in the weekly mandies by setting up temporary retail outlets and also took part in the annual haats and fairs - major sources of business activity and entertainment in rural India
Future Prospects
CCI claimed all its marketing initiatives were very successful and as a result its rural penetration increased from 9 in 2001 to 25 in 2003 CCI also said that volumes from rural markets had increased to 35 in 2003
The company said that it would focus on adding more villages to its distribution network For the year 2003 CCI had a target of reaching 01 million more villages
Analysts pointed out that stiff competition from archrival PepsiCo would make it increasingly difficult for CCI to garner more market share
PepsiCo too had started focusing on the rural market due to the flat volumes in urban areas
Like CCI PepsiCo too launched 200 ml bottles priced at Rs 5 Going one step ahead PepsiCo slashed the price of its 300 ml bottles to Rs 6- to boost volumes in urban areas
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
When most people hear ldquoGILLETTErdquo one thing comes to mindmdashRazors Thatrsquos to be expected since safety razors were invented by King C Gillette in 1903 and the product in various forms has been the core of the companyrsquos business ever since Few firms have dominated an industry so completely and for so long Wet-razor shaving (as distinct from electric razors) is a $900 million market Gillettersquos share is 62 percent with the remainder divided among SCHICKmdash15 per cent BICmdash11 percent WILKINSON swordmdash2 percent and a number of private brandsGillette would like to achieve a similar position in the menrsquos toiletries with a new line of products called the GILLETTE Series However its record that market is spotty at best
One Gillette success Right Guard Deodorant was market leader in the 1960rsquos Right Guard was one of the first Aerosols and it became a family product which was used both by men and women However the product has not changed although the deodorant market has become fragmented with the introduction of antiperspirants various product forms and applicators and many different scents As a result Gillette slipped to third position in deodorant sales behind P amp G and ColgatemdashPalmoliveAn even more embarrassing situation is Gillettersquos foamy shaving cream a natural fit with the razor business S C Johnson and Sons Edge Gel have supplanted that brand as the leading seller These experiences created frustration at Gillette Despite its preeminence in razors and blades the company has been unable to sustain a leading position across the full range of toiletriesGillette is using its most recent success the sensor razor as a springboard for its new toiletries The Sensor story provides the background necessary to understand the marketing of the Gillette Series and also offers some insight into Gillettersquos marketing prowessSensor- a high technology cartridge razor- was a gamble for Gillette because it ran counter to consumersrsquo buying preferences Disposable razors which were produced by the French firm BIC in 1974 had gained control in nearly 80 of the razor market by 1990 Gillettersquos analysis showed that disposables provide a worse shave than a cartridge blade cost more to make than a blade and are sold at a lower profit margin Despite its disdain for the product competitive pressure forced Gillette to introduce its own disposable Good News
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
As concern about the squeeze that disposables were putting on profit margins grew Gillette began looking for a way to displace them The company spent $ 300 million to develop a technology to significantly improve on the three attributes desired in shaving- closeness comfort and safety They came up with the Sensor a razor with independently moving twin blades The Sensor produces a superior shave but it is also more expensive to produce than a disposable So Gillettersquos gamble was that a better shave would be enough to justify a premium price and in the process displace the successful but not a very comfortable disposable razor In addition to the R amp D investment Gillette spent $ 110 in the first year to advertise Sensor The strategy paid off Estimated 1992 sales for the brand was $ 390 million and equally important the share of the market held by the disposables has gone down to 42Gillette then moved to capitalize on the success of Sensor The company had a line of toiletries in development and the decision was made to tie them closely to sensor The line consists of 14 items
1 two shaving gels for sensitive and regular skin2 two shaving creams3 two concentrated shaving gels4 a clear gel anti- perspirant5 a clear gel deodorant6 an anti- perspirant stick7 a deodorant stick8 An after- shave gel9 An after-shave lotion10 An anti- perspirant aerosol and a deodorant body spray available only in
EuropeThe products in the Gillette series were developed over a three year period at a cost of $ 75 million They were tested on 70000 consumers An indication of their newness is the fact that Gillette has 20 patents pending with them Consideration had been given to introducing the line in 1992 but the introduction was cancelled by Gillettersquos CEO Alfred Zeien He insisted that the line not be launched until consumer tests showed that each of the 14 products was preferred to the best- performing brand in its categoryAll the products have a common fragrance that Gillette calls Cool Wave They come in silver and blue packages like the Sensor and the black lines on the packages match the grooved sides of the Sensor Razor handleThe items retail at $ 269 each 10- 20 higher than the prices of major competing items As was the case with Sensor Gillette hopes that the productsrsquo innovation will convince men to switch brands and pay the higher prices
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
During the Gillette Series first year the company spent $ 60 million on a joint advertising campaign with Sensor Just like Sensor the line was to introduce in January with ads on the Super Bowl The campaign uses the same theme as Sensor ldquo The Best a man can getrdquo Initial TV commercials were one minute in length They started with 15 seconds on shaving gels and cream followed by 30 seconds on Sensor and 15 seconds on aftershaves The deodorants are advertised separatelyThe Gillette series faces two major problems
Convincing consumers that the line is actually better and the higher price justified will be more difficult than with SENSOR With the razor Gillette had name recognition as the dominant firm in the industry In addition the design differences the sensor were visible and a consumer can directly enjoy a closer shave With the toiletries Gillette does not have a strong position in the consumersrsquo minds nor are the benefits provided by the products obvious Furthermore the menrsquos toiletries market is extremely competitive Powerful firms with proven marketing skills have taken a greater interest un this category P amp G has acquired Old Spice and Noxzema Colgate owns Mennen and Unilever purchased Brut Itrsquos unlikely the rest of the firms in the market will sit back and ignore Gillettersquos activity
Gillette is tying the new product line to the Sensor but using a different brand name If consumers do not associate the Gillette Series with the innovativeness and success of Sensor the new line may just be another brand in an already cluttered market
According to a Gillette Vice President one of the most compelling aspects of the Gillette series is its synergy with the companyrsquos core businessmdashrazors If the new line is successful Gillette anticipates adding other menrsquos grooming products such as hair sprays and shampoos The firmrsquos CEO Zeien says ldquo wersquore already the worldwide leader in blades Will we be the world leader in other (toiletries) or not Thatrsquos our goalrdquoQUESTIONS
1 How is the Gillette Series being positioned with respect to (a) competitors (b) the target market (c) the product class (d) price and quality What other positioning possibilities are there
2 Is Gillette making the best use of the brand equity that has been created with Sensor
3 What strategies do you propose to Gillette Address the entire marketing mix
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Role of Reserve Bank of India (RBI) in Indian EconomyYou are HereHome gt Financial management gt Role of Reserve Bank of India (RBI) in Indian EconomyRecommended reading Indiarsquos apex bank The Reserve Bank of India(RBI) itrsquos objectives and functionsBank IssueUnder Section 22 of the Reserve Bank of India Act the bank has the sole sight to issue bank notes of all denominations The notice issued by the Reserve bank has the following advantages
It brings uniformity to note issue It is easier to control credit when there is a single agency of note issue It keeps the public faith in the paper currency alive It helps in the stabilization of the internal and external value of the currency
and Credit can be regulated according to the needs of the business
The system of note issue as it exists today is known as the minimum reserve system The currency notes issued by the Bank arid legal tender everywhere in India without any limit At present the Bank issues notes in the following denominations Rs 2 5 10 20 50 100 and 500 The responsibility of the Bank is not only to put currency into or withdraw it from the circulation but also to exchange notes and coins of one denomination into those of other denominations as demanded by the public All affairs of the Bank relating to note issue are conducted through its Issue DepartmentBanker Agent and Financial Advisor to the StateAs a banker agent and financial advisor to the State the Reserve Bank performs the following functions
It keeps the banking accounts of the government It advances short-term loans to the government and raises loans from the
public It purchases and sells through bills and currencies on behalf to the
government It receives and makes payment on behalf of the government It manages public debt and It advises the government on economic matters like deficit financing price
stability management of public debts etcBanker to the Banks
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
It acts as a guardian for the commercial banks Commercial banks are required to keep a certain proportion of cash reserves with the Reserve bank In lieu of this the Reserve bank provide them various facilities like advancing loans underwriting securities etc The RBI controls the volume of reserves of commercial banks and thereby determines the depositscredit creating ability of the banks The banks hold a part or all of their reserves with the RBI Similarly in times of their needs the banks borrow funds from the RBI It is therefore called the bank of last resort or the lender of last resortCustodian of Foreign Exchange ReservesIt is the responsibility of the Reserve bank to stabilize the external value of the national currency The Reserve Bank keeps golds and foreign currencies as reserves against note issue and also meets adverse balance of payments with other counties It also manages foreign currency in accordance with the controls imposed by the governmentAs far as the external sector is concerned the task of the RBI has the following dimensions
To administer the foreign Exchange Control To choose the exchange rate system and fix or manages the exchange rate
between the rupee and other currencies To manage exchange reserves To interact or negotiate with the monetary authorities of the Sterling Area
Asian Clearing Union and other countries and with International financial institutions such as the IMF World Bank and Asian Development Bank
The RBI is the custodian of the countryrsquos foreign exchange reserves id it is vested with the responsibility of managing the investment and utilization of the reserves in the most advantageous manner The RBI achieves this through buying and selling of foreign exchange market from and to schedule banks which are the authorized dealers in the Indian foreign exchange market The Bank manages the investment of reserves in gold counts abroadrsquo and the shares and securities issued by foreign governments and international banks or financial institutionsLender of the Last ResortAt one time it was supposed to be the most important function of the Reserve Bank When Commercial banks fail to meet obligations of their depositors the Reserve Bank comes to their rescue as the lender of the last resort the Reserve Bank assumes the responsibility of meeting directly or indirectly all legitimate demands for accommodation by the Commercial Banks under emergency conditionsBanks of Central Clearance Settlement and TransferThe commercial banks are not required to settle the payments of their mutual transactions in cash It is easier to effect clearance and settlement of claims among them by making entries in their accounts maintained with the Reserve
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Bank The Reserve Bank also provides the facility for transfer to money free of charge to member banksController of CreditIn modern times credit control is considered as the most crucial and important functional of a Reserve Bank The Reserve Bank regulates and controls the volume and direction of credit by using quantitative and qualitative controls Quantitative controls include the bank rate policy the open market operations and the variable reserve ratio Qualitative or selective credit control on the other hand includes rationing of credit margin requirements direct action moral suasion publicity etc Besides the above mentioned traditional functions the Reserve Bank also performs some promotional and supervisory functions The Reserve Bank promotes the development of agriculture and industry promotes rural credit etc The Reserve Bank also acts as an agent for the international institutions as IMF IBRD etcSupervisory FunctionsIn addition to its traditional central banking functions the Reserve Bank has certain non- monetary functions of the nature of supervision of banks and promotion of sound banking in India The supervisory functions of the RBI have helped a great deal in improving the methods of their operation The Reserve Bank Act 1934 and Banking Regulation Act 1949 have given the RBI wide powers of
Supervision and control over commercial and cooperative banks relating to licensing and establishments
Branch expansion Liquidity of their assets Management and methods of working amalgamation reconstruction and
liquidationsThe RBI is authorized to carry out periodical inspections off the banks and to call for returns and necessary information from themPromotional RoleA striking feature of the Reserve Bank of India Act was that it made agricultural credit the Bankrsquos special responsibility This reflected the realisation that the countryrsquos central bank should make special efforts to develop under its direction and guidance a system of institutional credit for a major sector of the economy namely agriculture which then accounted for more than 50 per cent of the national income However major advances in agricultural finance materialised only after Indiarsquos independence Over the years the Reserve Bank has helped to evolve a suitable institutional infrastructure for providing credit in rural areasAnother important function of the Bank is the regulation of banking All the scheduled banks are required to keep with the Reserve Bank a consolidated 3 per cent of their total deposits and the Reserve Bank has power to increase this
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
percentage up to 15 These banks must have capital and reserves of not less than Rs5 lakhs The accumulation of these balances with the Reserve Bank places it in a position to use them freely in emergencies to support the scheduled banks themselves in times of need as the lender of last resort To a certain extent it is also possible for the Reserve Bank to influence the credit policy of scheduled banks by means of an open market operations policy that is by the purchase and sale of securities or bills in the market The Reserve bank has another instrument of control in the form of the bank rate which it publishes from time to timeFurther the Bank has been given the following special powers to control banking companies under the Banking Companies Act 1949
The power to issue licenses to banks operating in India The power to have supervision and inspection of banks The power to control the opening of new branches The power to examine and sanction schemes of arrangement and
amalgamation The power to recommend the liquidation of weak banking companies The power to receive and scrutinize prescribed returns and to call for any
other information relating to the banking business The power to caution or prohibit banking companies generally or any
banking company in particular from entering into any particular transaction or transactions
The power to control the lending policy of and advances by banking companies or any particular bank in the public interest and to give directions as to the purpose for which advances mayor may not be made the margins to be maintained in respect of secured advances and the interest to be charged on advances
Case Study Project management improves Lenovorsquos strategy execution and core competitivenessYou are HereHome gt Management Case Studies gt Case Study Project management improves Lenovorsquos strategy execution and core competitivenessI BackgroundIn recent years the personal computer (PC) industry has been developing by leaps and bounds Global sales of PCs totaled 230 million units in 2006 representing a 9 percent increase over the previous year Lenovo has a product line that includes everything from servers and storage devices to printers printer supplies projectors digital products computing accessories computing services
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
and mobile handsets all in addition to its primary PC business which made up 96 percent of the companyrsquos turnover as of the second quarter of 2007
Since its acquisition of IBMrsquos Personal Computing Division in May 2005 Lenovo has been accelerating its business expansion into overseas markets The company transferred its corporate headquarters from Beijing China to Raleigh North Carolina USA Today the group has branch offices in 66 countries around the globe It conducts business in 166 countries and employs over 25000 people worldwide Lenovo is organized into four geographical units Greater China America Asia-Pacific Europe and the Middle East and Africa (EMEA) Within each unit there are functional departments that include production transportation supply chain management marketing and sales Sales outside of Greater China compromised 59 percent of the companyrsquos total turnover in the second quarter of 2007II ChallengesBefore 2004 multinational PC makers like Dell and HP were experiencing difficulties localizing their business in the Chinese market and thus did not pose a serious competitive threat to Lenovo However their operations began to have a major impact on Lenovo market share in 2004 particularly among key accountsmdashmandating better execution and core competitiveness in order to increase market share and improve business performanceIII SolutionsIn order to address these challenges Lenovo proposed substantial changes to its business model and strategy in 2004 employing a project-focused approach to develop its corporate strategy Specific steps taken wereImplementing project management as the tool for executing corporate strategy
1 After confirming the companyrsquos overall corporate strategy Lenovo set about organizing priority tasks that required multi-department cooperation into projects referred to as strategic projects Strategic projects differ from RampD projects in that time and cost cannot be used as yardsticks for success Such projects may be about expanding into new markets solving underlying problems enhancing organizational efficiency integrating strategic resources or improving employee satisfaction or capabilities In the past some strategic planning had not been followed up on sufficiently but the application of strategic project
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
management solved this problem strategic projects began to actually be executed and generated results
2 Lenovo also established a Project Management Office (PMO) to coordinate strategic projects Beginning in 2004 and early 2005 Lenovo put in place the processes and the organizational structure for its PMO It also formalized the relationships between strategic leaders and the PMO and budgeted resources for the office Subsequently all of Lenovorsquos other departmental regulations needed to conform to PMO regulations with detailed regulations being outlined by specific business departments However Lenovorsquos PMO did not interfere with projects administratively rather it offered training and established standardized procedures Lenovo employees see the PMO as a kind of resource rather than an administrative facility Designating a PMO as an administrative facility is one of several things that have doomed such offices in the past but Lenovorsquos office has thrived winning the companyrsquos excellent team award The company believes that certain conditions must exist in order to successfully utilize project management First a company must face a challenge (ie an external factor that demands it to do so) second the office must be prioritized by the company leadership third the office must be led by a professional team in order to guarantee that company-specific systems are developed and finally it must conform with the companyrsquos organizational culture and be appreciated Otherwise itrsquos hard to execute
3 Lenovo also earmarked money for strategic implementation Previously completed strategic plans were not financially supported But with the strategic shift the leadership set aside additional money to execute projects outside of the original budget and to provide bonuses for those involvedmdashpaving the way for the successful execution of strategic plans
Valuing project management professionals1 Lenovo sent its top talent in project management to take the
PMPreg certification exam and apply project management standards PMPreg certification is developed and managed by Project Management Institute (PMI) which is the largest professional project management institute in the world The PMP certification is the most authoritative and influential of its kind and is the only certification genuinely recognized and accepted globally within the project management discipline PMPreg certification conforms to A Guide to the Project Management Body of Knowledge (PMBOKreg Guide) the standards issued
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
by PMI The PMBOKreg Guide is also recognized and accepted internationally by premier authorities in standards After Lenovorsquos acquisition deal with IBMrsquos PC business Lenovo project managers needed a shared platform to communicate with and manage teams in different countries As the de- facto global standard for project management the project management standards of PMI helped Lenovo standardize its processes Starting from its functional departments (eg RampD supply chain management etc) Lenovo selected a group of key professionals to receive training in project management and sit for the PMPreg certification The returning professionals catalyzed project management in their respective functional departments and trained other team members
2 A hierarchy of project management positions was introduced within the company in line with the position structure set up by the companyrsquos human resources department Lenovo Corporate Research amp Development introduced this position structure between 2000 and 2001 Different levels for engineers included assistant engineer deputy engineer in charge engineer in charge managing engineer etc Professionals were appraised by experts annually on two fronts First based on their knowledge base namely their background and relevant understanding second based on their performance for example their ingenuity in RampD In 2006 Lenovo kicked-off a global reshuffling of its positions As an example the companyrsquos sales division is broken up into sequential levels such as assistant salesperson sales manager and consultant Positions are associated with salaries but company regulations limit the percentage of employees at each level For example top-level positions can only occupy five percent of a given team Full-time project managers can advance within the companyrsquos project management hierarchy There are over 100 full-time project managers in Lenovo but nearly all staff of lenovo have participated in some projects The hierarchy builds a professional ladder for project managers serving as a channel for project management career development
IV Major AchievementsLenovorsquos experimentation in project management significantly advanced the transformation in its corporate strategy and improved its business model The companyrsquos project-oriented approach improved teamwork and leveled the playing field team culture and corporate culture have been promoted an innovative spirit has been instilled and international integration has been improved In terms of the market results Lenovorsquos adaptation of project management has improved the companyrsquos core competitiveness with improved delivery and customer
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
satisfaction In turn distinctive performance was delivered In 2006 the company had a market share of seven percent in the global PC market led only by Dell and HP Its total turnover was USD 146 billion a rise of 10 percent over the previous yearCase Study of Walmart Inventory ManagementYou are HereHome gt Management Case Studies gt Case Study of Walmart Inventory ManagementWal-Mart had developed an ability to cater to the individual needs of its stores Stores could choose from a number of delivery plans For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center could receive replenishment within a day Wal-Mart invested heavily in IT and communications systems to effectively track sales and merchandise inventories in stores across the country With the rapid expansion of Wal-Mart stores in the US it was essential to have a good communication system Hence Wal-Mart set up its own satellite communication system in 1983 Explaining the benefits of the system Walton said ldquoI can walk in the satellite room where our technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system and just looking over their shoulders for a minute or two will tell me a lot about how a particular day is going On the screen I can see the total of the dayrsquos bank credit sales adding up as they occur If we have something really important or urgent to communicate to the stores and distribution centers I or any other Wal-Mart executive can walk back to our TV studio and get on that satellite transmission and get it right out there I can also go every Saturday morning around three look over these printouts and know precisely what kind of work we have hadrdquoWal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks reducing pack sizes across many product categories and timely price markdowns Instead of cutting inventory across the board Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most while reducing the overall inventory levels Wal-Mart also networked its suppliers through computers The company entered into collaboration with PampG for maintaining the inventory in its stores and built an automated reordering system which linked all computers between PampG and its stores and other distribution centers The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to PampG The system then sent a re-supply order to the nearest PampG factory through a satellite communication system PampG then delivered the item either to the Wal-Mart distribution center or directly to the concerned stores This collaboration between Wal-Mart and PampG was a win-win proposition for both because Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
were moving fast PampG could also lower its costs and pass on some of the savings to Wal-Mart due to better coordinationEmployees at the stores had the lsquoMagic Wandrsquo a hand-held computer which was linked to in-store terminals through a radio frequency network These helped them to keep track of the inventory in stores deliveries and backup merchandise in stock at the distribution centers The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system Through this system it was possible to monitor and track the sales and merchandise stock levels on the store shelves Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered based on the inventories in each store Since the data was accurate even bulk items could be broken and supplied to the stores Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time It also showed whether a product was being loaded in the distribution center or was in transit on a truck Once the goods were unloaded at the store the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updatedWal-Mart also made use of bar coding and radio frequency technology to manage its inventories Using bar codes and fixed optical readers the goods could be directed to the appropriate dock from where they were loaded on to the trucks for shipment Bar coding devices enabled efficient picking receiving and proper inventory control of the appropriate goods It also enabled easy order packing and physical counting of the inventories In 1991 Wal-Mart had invested approximately $4 billion to build a retail link system More than 10000 Wal-Mart retail suppliers used the retail link system to monitor the sales of their goods at stores and replenish inventories The details of daily transactions which approximately amounted to more than 10 million per day were processed through this integrated system and were furnished to every Wal-Mart store by 4 am the next day In October 2001 Wal-Mart tied-up with Atlas Commerce for upgrading the system through the Internet enabled technologies Wal-Mart owned the largest and most sophisticated computer system in the private sector The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels All information related to sales and inventories was passed on through an advanced satellite communication system To provide back-up in case of a major breakdown or service interruption the company had an extensive contingency plan By making effective use of computers in all its companyrsquos operations Wal-Mart was successful in providing uninterrupted service to its customers suppliers stockholders and trading partners About WalmartWal-Mart Stores Inc is the largest retailer in the world the worldrsquos second-largest company and the nationrsquos largest nongovernmental employer Wal-Mart Stores
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
Inc operates retail stores in various retailing formats in all 50 states in the United States The Companyrsquos mass merchandising operations serve its customers primarily through the operation of three segments The Wal-Mart Stores segment includes its discount stores Supercenters and Neighborhood Markets in the United States The Samrsquos club segment includes the warehouse membership clubs in the United States The Companyrsquos subsidiary McLane Company Inc provides products and distribution services to retail industry and institutional foodservice customers Wal-Mart serves customers and members more than 200 million times per week at more than 8416 retail units under 53 different banners in 15 countries With fiscal year 2010 sales of $405 billion Wal-Mart employs more than 21 million associates worldwide Nearly 75 of its stores are in the United States (ldquoWal-Mart International Operationsrdquo 2004) but Wal-Mart is expanding internationally The Group is engaged in the operations of retail stores located in all 50 states of the United States Argentina Brazil Canada Japan Puerto Rico and the United Kingdom Central America Chile MexicoIndia and ChinaSource Docstoccom
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Indian Automobile Industry
- Excerpts
- Maruti Udyog Limited
- Maruti Strikes Back
- Excerpts Contd
- Conclusion
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Introduction Contd
- Background Note
- Excerpts
- Competition
- Excerpts Contd
- How Fit is Reeboks Fitness Platform
- Targeting The Kids
- Adidas amp Nike Selling Lifestyle
- The Challenges Ahead for Reebok
- Exhibits
- Abstract
- Issues
- Contents
- Keywords
- A Failed Launch
- The Mistakes
- Setting Things Right
- The Results
- Abstract
- Issues
- Contents
- Keywords
- Introduction
- Joining The Fray
- The Indian Coming
- Indianizing All The Mcdonalds Way
- How others did it
- The KFC Way
- Improving Prospects
- Mounting Losses
- Abstract
- Issues
- Contents
- Keywords
- A Master at CRM
- A Master at CRM Contd
- Excerpts
- Background Note
- CRM - The Tesco Way
- Reaping the Benefits
- From Customer Service to Customer Delight
- An Invincible Company Not Exactly
- Abstract
- Issues
- Contents
- Keywords
- Thanda Goes Rural
- CCIs Rural Marketing Strategy
- Excerpts
- Future Prospects
- Role of Reserve Bank of India (RBI) in Indian Economy
- Case Study Project management improves Lenovorsquos strategy execution and core competitiveness
- Case Study of Walmart Inventory Management
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