Inaugural Session: “The Consumer Retention Route to Enhanced ROMI”

Keynote Speaker - Mr. Santosh Desai, MD & CEO of Future Brands


Session I: “Spoil for Choice – The Retention of Indian Youth”

Speakers:

1. Mr. Ashok Bajpai, General Manager - Taco Bell at Yum Restaurants International
2. Ms. Simeran Bhasin, Marketing Head - Fastrack & New Brands at Titan Industries
3. Mr. S Srinivas, GM Marketing - TVS Motor Company
4. Mr. Rahul Shanker, Senior Marketing Manager - Wrigley India


Session II: “Retaining the Exclusive Tag: The World of Luxury Brands”

Moderator for the Panel Discussion:

Ivan Coste-Maniere
Director - Marketing Department, Skema Business School, France
Director - MSc Luxury & Fashion Management, Skema Business School, France

Panellists:

1. Mr. Devasish Dutta, CEO - Gitanjali Lifestyle Limited & MD at MGPL Private Ltd.
2. Mr. Amit Dutta, CEO - Luxury Marketing Council India and MD & Founder at Luxury
Hues Consultancy Limited & Quintessentially Concierge India
3. Mr. Sandeep Vij, CEO - DDB Mudra Group at Mudra Communicatio
4. Ms. Ruchita Sharma, Head of Luxury Retail at the Bird Group & Head of Strategic
Planning at Globaluxia
5. Mr. Sudeep Chhabra, Head of Marketing at DLF Emporio
6. Ms. Roasie Ahluwalia, GM - Marketing Communications at Genesis Luxury Fashion
Pvt. Ltd.


Session III: “Charming their way to Consumer Loyalty – Th e Services Industry”

Speakers:

1. Abhinav Rahul, VP Corporate Communication at Max New York Life Insurance
2. Mr. Mouli Venkataraman, Head - Portfolio Planning and Insights at Nokia*
3. Mr. B Hariharan, VP Sales & Marketing at ITC Hotels*


* Confirmation Awaited

NATIONAL MARKETING SYMPOSIUM 2010

“THE CONSUMER RETENTION ROUTE TO ENHANCING ROMI”

“Loyalty cannot be blueprinted. It cannot be produced on an assembly line. In fact, it cannot be manufactured at all, for its origin is the human heart – the centre of self respect and human dignity. It is a force that will leap into being only when conditions are exactly right for it – and it is a force very sensitive to betrayal.” ~ Maurice Franks

Let us begin with a simple question: Who gives a bigger return on marketing investment – an existing consumer of your brand who must be retained for the possibility of a future repurchase; or an uninitiated user who expands your consumer base and gives you volumes?



THE THEME – NATIONAL MARKETING SYMPOSIUM 2010


“T he c onsumer ret ent ion rout e t o enhanc in g RO M I” – Understanding Brand Loyalty, Efficient Measurement of Return on Marketing Investment (ROMI) and Strategies for Consumer Retention; including low cost IMC techniques aimed at consumer retention to facilitate a greater ROMI. A brief description of the various sub-themes mentioned above is presented in the following paragraphs.

UNDERSTANDING BRAND LOYALTY


As advertising spends break records after records, rivals are leaving no stone unturned to pull your consumer away from you. Besides this, post the deregulation of the Indian economy in the 1990s, the entry of some of the biggest international players in the market has presented Consumer India with a plethora of options to choose from. As clichéd as it may sound, an understanding of the underlying factors that drive consumer loyalty is becoming increasingly important for organizations facing a competition which is stiffer than ever before.

MEASURING ROMI

ROMI – Return on Marketing Investments; is a metric used to measure the overall effectiveness of a marketing campaign to help marketers make better decisions about allocating future investments. ROMI precisely signifies profitability generated for every rupee spent on marketing activities. Some of the parameters that it takes into account are: product positioning (market share), profitability (contribution/
EBIDTA margin) and marketing philosophy and aggression (Selling & distribution).


STRATEGIES FOR CONSUMER RETENTION


A growing top line for an organisation today is not a function of an increasing consumer base alone. Consumer involvement of existing users through engagement, feedback, variants, extensions, upgrades, value addition and a unique experience has become a critical aspect for a year on year sales growth of all successful organisations. The word of mouth publicity which results from all these activities often helps in transforming brands from the ordinary to the iconic.




On August 12, 2010 at The National Marketing Symposium at IIFT; some of the best minds from the corporate world and some of the brightest students in the country will unravel the mind of the consumer who is already connected to a brand.

We welcome you to join us in this discovery.

India:Third Largest Recipient of FDI

In recent times a lot of attention has been given to FIIs and the extent to which their inflows or outflows have impacted the stock markets. But if India has to sustain its high level of growth and see more development, what it really needs is FDI. Foreign direct investment, that is. And in this regard, there are some positive developments. The United Nations Conference on Trade and Development (UNCTAD) believes that India would emerge as the third largest recipient of FDI for the three-year period ending 2012.

Infact, the country did very well in 2009 too. The FDI that it received last year totaled to US$ 34.6 bn. This catapulted it to the list of top 10 countries to have the highest FDIs. Indeed, India has been growing at a strong pace in the last few years. But there is scope for more growth. Infrastructure has to be ramped up and developments in many areas need to take place. And so, FDIs are certainly welcome. After all it is not 'hot money' prone to the whims of market movements. But is long term in nature with the potential to do the country some good.

New Dawn: Launch of Africa Business Cell

July 21, 2010 became a historic day for IIFT as it became the first B-School in India to have an exclusive Africa Business Cell. An entirely a student initiative, it aims at promoting Africa which is beyond war, genocide and famine. It primarily aims at

• Increasing awareness about the vast business opportunities in Africa among the student community of IIFT
• Enhanced interaction among IIFT faculty & students, and leading African & Indian businesses and government officials

The inauguration ceremony was followed by a panel discussion on the theme, ‘India as partner of Africa in growth.’ The panelists included The High Commissioner Designate of Rwanda, The Charge d’affaires, The Embassy of Ethiopia, The High Commissioner of Gambia, The Ambassador of Tunisia, The High Commissioner of Eritrea and The General Manager, The Triton Group.

According World Economic Forum Report (2009), between 2001 and 2008, growth in Gross Domestic Product of the continent of Africa pegged an average of 5.9% annually. This was accompanied by substantial inflows of FDI (foreign direct investment), leading to almost doubling of FDI stock between 2003 and 2007. The McKinsey Quarterly Report 2010 also speaks of how macroeconomic reforms have reduced inflation, improved regulatory environment and opened economies to international business and trade. In this context, Africa offers immense business opportunities in agricultural commodities sourcing and trading, consumer goods, oil & natural gas, automobiles, education, health care, etc.


No wonder such an initiative focusing on Africa is going to bring immense learning and growth opportunities.Kudos to the Africa Business Cell Team and IIFT.

India's Opportunity in Africa

Hello

I found this useul article in Economic Times regarding India's Opportunity in Africa.

Here is the link:

http://lite.epaper.timesofindia.com/getpage.aspx?pageid=14&pagesize=&edid=&edlabel=ETM&mydateHid=25-05-2010&pubname=&edname=&publabel=ET

Happy Reading!!

Regards,

Saurav Tibrewal

Is ICICI Bank committing a mistake in acquiring BoR?

There is a saying in the modern corporate world, “Lunch or be lunch”. The quotation is apt with the recent trend of mergers and acquisitions. ICICI Bank, India’s biggest private sector bank is all set to make its third acquisition this year. After taking over Sangli Bank and Bank of Madura, it has offered to acquire Bank of Rajasthan. After HDFC Bank acquired Centurion Bank of Punjab in 2007, it is the biggest M & A in Banking Industry.

ICICI Bank has offered a swap deal of 25:118. This means that Bank of Rajasthan shareholders will get 25 shares of ICICI Bank for every 118 shares of Bank of Rajasthan. The swap ratio will value BOR at about 3000 crores which is nearly 1.5 times its current market capitalization. I would have mentioned almost double, had this post been written two days back.

Now, let us do an analysis of the merger with the little information we have. Has ICICI Bank taken the right decision to acquire BOR?

For the merger

1. Increased number of branches and presence in Rajasthan

BOR has currently 463 branches, which will take the tally of ICICI Bank’s branches to nearly 2470 after merger. More than that, it will give the acquirer much needed sizeable presence in northwestern desert state of Rajasthan.

2. Encountering competition

ICICI Bank is facing stiff competition from HDFC Bank and also the resurging Axis Bank. To remain as the top private player, it needs to grow bigger and what better way to grow than the path of acquisition.


Against the merger

1. Expensive Deal

ICICI Bank has valued BOR at a whopping 3000 crores which is much more than its market capitalization. It values the acquired bank at 2.9 times the book value in comparison to 1.89 times, which is the Indian Banking average. At a time, where the picture of global financial world again seems to be shallow with Greece crisis, this expensive deal may decrease EPS of ICICI Bank.

The market gave its judgment on the day of announcement when the shares of ICICI bank were down by over 7% and BoR’s shares hit an upper circuit of 20%. The shareholders of BOR are to reap benefits as their per share value has been valued at Rs. 188.42 as compared to Rs. 80 on the end of17th May, the day previous to the day of announcement.

2. Cultural Differences

BOR, though being a private bank, has been managed like a public sector bank, where the jobs were safe and the productivity per employee was low.

ICICI Bank may probably pay them higher but again the expectations to perform will go up. Even, the average age of employees in BOR is around 40 as compared to young age group of ICICI Bank. BoR had a profit per employee of Rs Rs 2.89 lakh for the financial year up to March 31, 2009, compared to Rs 11 lakh for ICICI Bank.

The staff union at BOR is opposing the merger and has even threatened to take legal action against the promoters, if the merger goes ahead.

3. Ownership not transparent

Tayal Family had been the promoters of Bank of Rajasthan holding 28.6 percent stake in the bank. But according to a SEBI order, they, in coalition with related parties, set to hold 55% shares in the company. Tayal family has been barred by SEBI ti access capital markets and deal in securities.

The SEBI investigation is in progress and thus the possibility of a scam in the said bank cannot be ignored.

4. RBI guidelines violation

A penalty of Rs. 25 lakhs was imposed on them for violating RBI norms of illegal acquisition of immovable property, non compliance with Know Your Customer guidelines, deletion of certain records and data in Bank’s IT system.

Thus, in a nut shell, it can be said that all is not well with the bank and it was highly mismanaged. After the merger, ICICI Bank may have to bear the brunt of many such things.

5. Low operating income

Bank of Rajasthan’s profit has increased over the years. But still, it has a low EPS and net profit margin. The profit till nine months ended in a negative of Rs. 44 crores for nine months ended December 2009 against a profit of Rs. 117 crores in the year ended March 2009.


Thus, the above indicates the pros and cons of this merger but apparently it seems that the arguments against the merger are higher. We have seen certain expensive deals in the recent past which has affected the acquirer in a pretty big way. Will this merger also go down as one of the worst deals or will ICICI bank prove analysts and critiques wrong needs to be seen?

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Know the risks before taking the equity call

Equity investment is associated with various kinds of risks.To be successful,an investor must identify these risks and understand their implications,says Nikhil Walavalkar

TWO planes colliding into two towers half-way across the world brought down financial markets all across the world.A fortnight-long dry spell is enough for share prices of some companies to tank.Markets are meant to react to external events.Some traders make a killing by betting on such events,but a majority of retail investors emerge losers.

Equities,by their very nature,are susceptible to all kinds of risks.The reaction of the domestic market to the financial crisis in Greece is the most recent instance of how globalisation has increased linkages between Indian and overseas markets even if there is no direct connection between the economies.

Broadly,investors have to contend with two sets of risks one pertaining to the markets or systemic risk,and the other specific to the company.Here is a look at how the risks impact returns and how to handle them.

MARKET RISKS

You cannot ignore market risks while building a portfolio.There are instances,where all the company specific factors are in place but the price is not right,making it a risky bet, says Chetan Parikh,director of Jeetay Investments.During a market rally,a boom phase creates a situation where an investor buys shares at a price far higher than what the company is worth.In a downturn it is the other way round where irrespective of a companys performance the price declines.Price volatility arising out of broad market movements is attributable to systematic risk.There is no one solution to this risk and diversification does not help.If you can keep your calm and pick stocks at lower levels then you are likely to face limited loss when the markets fall,as there is enough margin of safety.Some investors prefer to buy put options if they are worried about market health and have a huge portfolio.

MANAGEMENT RISK

Lending money to a dishonest person brings with it the risk that he may default.The same holds true for dishonest managements.There are instances where companies keep coming out with announcements of new projects followed by pump and dump operations.Despite the regulatory crackdown,investors lose their money as they are forced to exit at near-zero value.It makes sense to ask about those you are getting into business with.Track record of the management is a must check point.It makes sense to let go an opportunity from an unknown entity and instead invest in well-managed company with a good investor-friendly track record.

BUSINESS ENVIRONMENT

This comprises economic environment and regulatory framework.Corporate earnings grow along with the growth in the real economy.It makes sense to keep a track of the growth in real economy.But if the regulators decide to change the rules of the game,such changes could impact the fortunes of companies.Especially in highly-regulated businesses it is imperative that you keep a track of regulatory changes,as it may have its repercussions on margins and volumes.

RISKS RELATED TO BUSINESS MODELS

Not all companies in a sector work in the same manner.They may have focus on certain markets,certain geographies and certain customers.A pharmaceutical company engaged in contract manufacturing will have different risk-reward than that of a researchdriven company.

To gauge the possible impact of any variable on a companys earnings,investors must have a good understanding of the business model of a company.This can be acquired by visiting company website and reading annual report of the company.If you are bullish about a sector,it makes sense to diversify your holding across business models within that sector to ensure that there is less risk involved in a concentrated portfolio.

GEARING RISKS

In a rising interest scenario,a company with high level of debt faces increased risks.As the interest rates rise,the interest burden also increases,taking its toll on the bottomline and adversely impacts shareholder returns.The worst scenario happens if the existing debt of the company matures in times of credit crunch,leading to terrible situation for the company.

It makes sense to go for companies with net positive cashflows.One can also look at zero debt or nominal debt companies, says Kunj Bansal,CIO,Sanlam SMC Investment Management India.If you are keen to go for a debt ridden company,ensure that the valuations are really low to ensure that you have some margin to fall back.

GEO-POLITICAL RISKS

Though the companies you invest are listed on Indian stock exchanges,they need not earn all their revenue in India.There are many companies that earn their revenue overseas.It is better to understand the geo-political framework of the countries.Especially in countries where democratic governments do not exist the risk is high.Recent issue of volcanic ash in European skies grounded airline shares.This underlined the risk associated with such low probabilityhigh impact black swan events.Diversification is the only way out here.It makes sense to have some meaning full diversification by investing in markets sharing low correlation with each other.

FOREIGN EXCHANGE RISKS

Companies earning their revenue or paying for their raw materials in foreign currency run the risk of fluctuations in foreign exchange.At a time when the global markets are turning more integrated,it is imperative to have a close look at the foreign exchange movements.A weak local currency is helpful for an exporting company,but makes the life miserable for a company that imports its raw material but cannot Risks associated with equity markets.The only solution to this problem is to identify earnings sensitivity at various level of cross currency rates and accordingly take positions,other things remaining the same.

The reward of investing in stocks depends on how well you steer clear of risks or manage the risks that you really cannot avoid.If you find it difficult,you will be better off allowing entities such as mutual funds to manage your money.

Source: Economic Times, New Delhi, 13th May 2010

Europe in a mess

ET in the classroom