Brands Add a New P to Their Marketing Mix

Washrooms are a great place to establish a brand, consumer connect RAJIV SINGH NEW DELHI Posters with truisms like Aim and shoot, size doesnt matter, and do not give in to pressure may appear to be the handiwork of a lazy copy hack. But place them in strategic locations and these slogans spring to life and make for high-impact advertising. The strategic location in this case is multiplex washrooms. Moviegoers who took a loo break at PVR Cinemas during the screening of Ek Tha Tiger found themselves staring into ads for Dixcy Scott, an innerwear brand the films hero endorses. Welcome to the bold new world of washroom advertising where a slew of brands has invaded the last bastion of human privacy to grab eyeballs with gender-specific strategies. Along with Dixcy Scott, mainstream brands from Whisper, Stayfree, Dettol, Lakme, and LOreal to Lux, Axe, Diesel, Sony Pix and Zee TV are advertising in the restrooms of Indian multiplexes. In India, brands are willing to move into loos as they are no longer viewed as filthy not at least in multiplexes. International surveys have shown that women spend an average of 105 seconds and men 55 seconds in the washroom. That's enough time to take the information in, says Noreen V Holstein, director of Gotcha! Impact Media, an agency that executes loo advertising in high-end bars and cafes. Why would brands want to miss out on this chance of spending exclusive time with their target audience, says Holstein, who has worked with brands such as Fox History and Entertainment, Kotex and Viacom 18 Movies in India. Dixcy Scott has found a prime spot for itself -- just above the wall-mounted mens urinal at all multiplexes of PVR Cinemas. And LOreals makeup and cosmetics brand Maybelline is adorning the mirrors of the womens washrooms at PVR with advertising for its brand Colossal Kajal. Loos are a point of consumption where brands can directly connect with users in a clutterfree manner, says Leena Shoor, marketing manager for Maybelline New York in India. Some 13 million people hit PVR loos every year, says PVR COO Gautam Dutta. A message staring at you for 15 seconds from a distance of less than 10 inches can deliver unparalleled impact, he adds. Dutta lets on that an internal study suggests that brand recall inside loos is 55% higher than in the case of onscreen advertising.

Indias largest multiplex chain, Inox, too is betting big on this form of advertisement. Dove Deodorant, Whisper, UTV Action and SAB TV are some brands that have already found their way into the loos of Inox and Fame multiplexes. We have seen a marked increase in loo ads over the last couple of months, says Harshavardhan Gangurde, vice president, marketing, Inox Leisure. The multiplex operator, however, ensures that its brand image remains intact by not carrying every or any kind of advertisement. The essence is how you provide innovative options to brands rather than just giving them plain-vanilla branding, says Shirish Srivastava, head (sales & marketing) of BIG Cinemas, which has tied up with Zapak, Whisper and Piramal iSure for loo ads. For brand experts like Prathap Suthan, such advertising could be a double-edged sword. I am not sure whether this would translate into sales because the ambience adds or deletes to brand preference, says Suthan, chief creative officer of Bang in the Middle, an independent ad agency. Rahul Sikka, the 27-year-old second-generation director at the Tirupur-based Dixcy Scott, sounds a note of caution for brands rushing to the loo.Its a very tricky space. The product has to be relevant to the space.

Shop Till You Drop: Stores Open Early, Close Late

RASUL BAILAY & SAGAR MALVIYA NEW DELHI/MUMBAI

From opening stores at 7 in the morning to shutting down well after midnight, several big retailers now work overtime to increase their sales amidst weakening consumer sentiment by wooing joggers and night owls. Reliance Retail, for instance, has advanced opening timing for some of its supermarkets in Maharashtra by two hours to 8 am to attract joggers and office goers, while Future Groups KB Fair Price stores open even earlier at 7. We are already seeing good sales in the live bakery section as many consumers have started having daily breakfast at our stores after their morning walk," said a senior Reliance Retail official who did not want to be named because he is not authorised to speak to media. It's not just joggers who shop in the morning. Consumers prefer fresh stock especially for fruits and vegetables segment. Damodar Mall, director for food strategy at Future Group, says KB Fair Price sells almost 40% of fresh produce by 10 am, its earlier opening time. Many residents shop for fresh produce first thing in the morning, Mall said. Industry watchers say the change in store timings shows that retailers now recognise the heterogeneity among consumers. The idea is to understand what the 'primetime' during the day and during the week is for various segments of shoppers even as retailers synchronize themselves with their existing buying cycles for various categories, Adrian Terron, executive director, retail and shopper practice, at Nielsen India. As a strategy it helps draw new footfalls and cater to niche segments, he said. Retailers Association of India, a lobby group of branded stores, has requested several state governments to allow modern retailers to open stores 365 days without the hassle of renewing such licences on an annual basis. The group has so far petitioned 15 different states including Andhra Pradesh, Tamil Nadu, Karnataka, Gujarat and Maharashtra. Madhya Pradesh implemented it in June. Indian retailers seem to be taking a cue from global counterparts. World's largest retailer Walmart Stores Inc opens its outlets in the US as early as 6 am. In fact, several shops in the West remain open 24 hours a day. In India too, global retailers open their stores early albeit they sell their wares to resellers and not end consumers. Bharti-Walmart's Best Price Modern Wholesale stores and Frances Carrefour SA open their stores at 7.00 am while some Metro Cash

and Carry stores open at 6 in the morning. But extended shop timing means higher costssomething several retailers want to check at a time when there is slowdown in consumer demand. "If we open our stores early, there is a substantial cost involved in terms of manpower and electricity, a senior official at Aditya Birla Retail said on condition of anonymity. We feel that the profit we could earn during the extra hours will not offset our costs," the person added. Some retailers open stores for longer hours only on days when higher sales are almost guaranteed. In February, Korum Mall at Thane near Mumbai kept its mall open until mid-night for two nights in a bid to cash-in on Valentine Day celebrations. Other days, it closes at 9:30 pm. Buoyed by the response, the mall again kept it open until 12:00 am on the eve of the Independence Day as retailers chipped in with flat 50% off between 10:00 p.m. and mid-night, dubbed as happy hours. Gaurav Kumawat, retail manager at Korum Mall, said sales that night was 350% more than normal weekdays. In Delhi, Select Citywalk mall at Saket has requested cafes, restaurants and the food court operators to open at 8 am in the morning to serve breakfast for people visiting the gym in the mall and other office goers. R City Mall in Mumbai too plans to open its doors early and invite residents in the vicinity to use the mall for morning walks. Coffee shops will open early for joggers to have snacks and breakfast.

New Expense Ratio Takes Away MFs Cost Advantage

SHAILESH MENON MUMBAI

Mutual fund products have lost their cost advantage over unit-linked insurance plans after the Securities and Exchange Board of Indias move last week to allow mutual funds to charge higher fees from unit holders. The increase in expense ratio the fee charged by a fund house to manage and operate the fund by 65 basis points, or 0.65%, to about 3% has made mutual funds equity schemes a tad costlier than unitlinked insurance plans (Ulips), which have drawn flak for being an expensive investment product. As per IRDA regulations, insurance companies can charge a maximum of 3% for a 10-year Ulip and 2.5% for a 15-year Ulip in terms of overall charges. Mutual funds shed its low-cost tag last week when a series of steps by the markets regulator paved the way for mutual fund schemes with assets less than Rs 100 crore to charge close to 3.12% expense ratio annually. Long-term investors may move to Ulips once they start comparing the costs involved. From a distributors point of view, distributors will push Ulips as they get upfront commission selling insurance products, said Ramesh Bhat, president of IFA Galaxy, an association representing independent financial advisors and product distributors in south India. A Ulip is a financial product that offers investment as well as insurance (or risk) cover. The features of a Ulip are similar to those of mutual funds, except that Ulips are investment products with tax and insurance benefits. A comparison of fees of equity mutual funds and Ulips holds water only if expense ratios are compared. In normal course, Ulips also charge a hefty mortality premium, which may raise participation costs significantly. In terms of fees, Ulips are cheaper than mutual funds, said the chief executive of a mid-sized fund house. The decision of Sebi to scrap multiple retail/institutional plans and start direct plans will alienate distributors even further. They will stop selling funds of small asset managers and shift to ULIPs, the chief executive said. According to fund marketers, rich, savvy investors may also shift their investments from regular schemes to direct plans as they would incur lower expense ratio. Sebi will have to take the submission of distributors seriously... They will move to selling other products otherwise. Ulips could benefit a lot from this disenchantment of

distributors, the marketing head of a bank-promoted fund house said. But, marketing heads of insurance companies are not expecting huge investment inflows despite the increase in mutual fund expense ratios. A few distributors may try to sell more Ulips, but it will not make any huge impact to overall Ulip inflows. The decision to shift mutual fund investments to Ulips would purely be a decision taken by the investor, said the marketing head of a private life insurer. If mutual funds continue to perform badly, there may be some shift in investments to Ulips. For all practical purposes, Ulips provide an insurance cover, assures long-term investments and give tax benefits, the marketing head said. Meanwhile, Mumbai-based Foundation of Independent Financial Advisors (FIFA) has written to Sebi over the scrapping of multiple plans and rollout of new direct plans. Direct plans allow customers to invest in funds directly -- without incurring any incidental costs and at lower expense ratios. These funds may be cheaper than regular funds by 50-75 basis points and it will bear a separate NAV from regular plans. Such a step could lead to a lot of existing investors shifting to the direct class after taking advice, said Dhruv Mehta, chairman of FIFA in his letter to Sebi.

Startups Bet on Small-Town Boom

A clutch of entrepreneurs create business models targeting increasingly affluent non-metro consumers, reports Radhika P Nair

In places largely bypassed by the big-name brands, enterprising businessmen are building malls, multiplexes and retail businesses to take the latest in shopping and consumer trends to small-town India Ventures such as Promart, Stargaze Entertainment, eDabba and Miraaya are catering to an increasingly affluent set of consumers living in cities and towns like Ajmer, Kurukshetra and Tinsukia who are demanding the same products and services that metrodwellers have easy access to. And, as these entrepreneurs are finding out, smalltown consumers are also willing to spend, if not more then at least as much as metroconsumers. A Nielsen study late last year mentions that Middle India, a region made up of approximately 400 towns, each with a population of 1-10 lakh, is home to 100 million Indians and accounts for a fifth of the overall consumption of fast moving consumer goods. The Indian economy is going to be fuelled increasingly by the 400 million people who live in small towns and entrepreneurs who recognise this have an advantage. says Justin Sargent, MD-Consumer, Nielsen India. These entrepreneurs are following a smart model of meeting small town aspirations. LOW COST It is the prohibitive rental costs in metros, along with the crowded retail scene, which made Punit Agarwal, chief executive officer of discount-based brick-and-mortar fashion chain Promart Retail, target non-metro locations such as Vadodara, Rajkot, Vapi, Anand and Aurangabad. All our margins will get eaten up by just the rents in metro cities. What is the point of having a presence in metros; we need to make money as well, says Agarwal, who, along with co-founder Ashish Garg, bought out Promart from Provogue India in late-2011. The company, which also supplies uniforms to schools and corporates, is planning to launch stores in smaller towns such as Bilaspur, Silvassa and Bhilai. The company is also tying up with local franchisees in still smaller towns like Latur and Beed. Agarwal says the company, which also has retails a private label brand, has seen a

growth of 10-12% month-on-month from its store sales and is targeting revenue of 250 crore from stores. SPENDING POWER Sumant Bhargava, founder of Stargaze Entertainment, which runs multiplex chain Glitz Cinema, says consumers in these locations are willing to spend for good quality products and services. Bhargava set up Stargaze in 2008 and in fact started operations in Delhi. But he soon shifted his focus to nonmetro centres. All cinema chains focus on the top few cities, where consumers have access to many forms of entertainment, says Bhargava, who expects to double revenues from 35 crore this year to 65 crore in the next fiscal. In smaller cities and towns, movies are the only form of entertainment available and now people are willing to pay 150 for a cinema ticket if they get a multiplex experience. Stargaze operates mall-based multiscreen cinemas in Ajmer, Raipur, Ranchi, Kurukshetra, Dehradun, Bilaspur and Jodhpur. The company is now setting up multiplexes in Muzaffarnagar in Uttar Pradesh and Yamuna Nagar in Haryana. While Promart has a 100 square metre shopin-shop in Mumbai and Bhargava still operates the Delhi multiplex, the entrepreneurs say they will continue to focus only on smaller centres. Our Mumbai store is performing satisfactorily, but it is our stores in smaller towns that are giving us margins of over 10%, so our focus will be on these towns, says Promarts Agarwal. LACK OF CHOICE Rajesh Jain, co-founder of affordable fashion chain Miraaya, says small-town buyers have never had the choices that a metro-buyer has come to expect as natural. Jain, who was earlier Head - Buying & Merchandising at Lifestyles Max brand, set up Miraaya in 2010 to provide Indo-Western apparel to women in smaller towns and cities. The company has over 60 self-owned and franchisee stores, including in centres such as Guwahati, Tinsukia, Vishakapatnam and Gorakhpur. We have tailored our design for small-town sensibilities, but in the past two years we have realised that women in these towns want the same fashions as found in large cities, says Jain. The company, which plans to double its turnover to 8 crore this financial year, has an ecommerce platform as well and has also tied up with a handful on online retailers to expand their reach. NEW MODELS Ankur Bisen, Associate Vice President-Retail at Technopak, says cracking last-mile delivery will be critical for such entrepreneurs as the lack of infrastructure is a problem. It is to solve this issue that Manoj Kumar, former chief executive officer of

Future Groups electronics retailer Ezone, along with Saurabh B Chaddha, set up a hybrid retail venture, eDabba, in 2011. Apart from an ecommerce platform, the company, which is targeting 50-crore turnover this year, has tied up with small retail stores in tier-II and III cities and towns. We have set up computer kiosks where the shopkeeper can guide the consumer to buy products online. We handle the deliveries, says Kumar, who offers a selection of electronics, books and jewellery among other categories through his venture. Over 80% of all orders for the company come from these kiosks, known as Trust Points, which are present in towns such as Bhilwara, Ajmer, Chhatarpur, Zirakpur and Barnala. In many of these centres, new products reach only after many months through traditional retail models. When Galaxy S3 was launched, we were able to offer it immediately, says Kumar, who says eDabba is registering growth of 35% month-on-month. CHALLENGES While these entrepreneurs are busy chalking out their expansion plans, they admit that the lack of trained manpower, especially at the managerial level, is their biggest worry. No one wants to come from big cities to work in small centres, says Stargazes Bhargava, who is now training inexperienced employees to take on managerial roles. We show them that they can grow with us and hopefully they will stay on, adds Bhargava. Logistics and infrastructure issues also dog these entrepreneurs. Companies such as Promart and Miraaya are joining hands with franchisees who have the local knowledge to deal with structural problems in small towns. However, the hiccups of operating in small towns pale in comparison with the opportunities, say the entrepreneurs. We are aiming to become a $70-million brand by 2017 and that will be powered by smaller centres, says Miraayas Jain.