Domino effect...

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But isn’t Big Mac (McDonald’s) considered the most economical product in the QSR category? And if Domino’s is intending to compete with dosa and chole batore, then what about Mac Aloo Tikki Burger? Well, the competing products do remain, and some other competitor will surely launch a similar low-priced product soon, but Domino’s wants to do more... It plans to lure consumers with new launches through 360 degree ad-campaigns coupled with a new tagline ‘kushion ki delivery.’ Dev Amritesh, CMO, Domino’s Pizza India Ltd., while explaining the concepts behind the new TVC, points out that, “The new tagline & promotional acts would address the emotional proposition more, and that’s the reason we say kushio ki delivery...”

The strategy is clearly to cajole the consumers emotionally, but at the same time the company is not planning to do away with its on-time delivery anytime soon. After a clear dominance in the home-delivery segment, the real question that comes in mind is its future plans to improve its situation in the ‘sit & dine’ segment. “We are doing phenomenally well, in the sit & dine segment too, in which we grew by 55% over last year. Specially in tier-II cities like Nasik, Panipath et al, our restaurant segment is really doing well,” claims Ajay. Not a hollow boast, as Domino’s is aggressively mushrooming even in those places where others haven’t forayed-in yet. For numbers, Domino’s has rolled out as many as 210 stores across the country (Pizza Hut has 100 stores, McDonald’s 130) and in most of these towns & cities, where Domino’s is having a roll, Pizza Hut isn’t present yet!

Financially, launching a typical Domino’s outlet (being smaller than a Pizza Hut outlet), requires lesser capital. But that really doesn’t tantamount to an advantage as my Sunday dinner proved... Therefore, besides multi-locational expansions, Domino’s should immediately upgrade all its stores, as an industry analyst warns, “In the hospitality segment, a slight difference in service from a well-known brand can prove a disaster...” But then, it’s also true that in places like tier-I and tier-II, where Pizza Hut is absent, Domino’s is having a gala time. With the sit & dine segment contributing to 35% of its total turnover, Domino’s can’t let the ‘golden pizza-laying hen’ advantage fade away.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Watch out for plunging skylines!

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“The price correction expected in the sector is what is driving us to play safe and therefore you will see most of the investments by us in the commercial space,” said Dr. Anil Jindal, Chairman, SRS Group explaining the strategy of the group to bank on commercial land in order to stay away from the major correction seen in the sector. Tinku Sigh, Group President, SRS Group added further, “We will be focusing on Tier-II and Tier- III cities only as the prices of properties in metros are almost attaining saturation level.”

There are certain developers in the country that have raised debt at a very high rate of interest as there was a enormous scarcity of supply as compared to the demand in the sector (remember the boom in the sector), which made them believe on the formula of ‘Higher risk, higher return’ blindly. According to Unmesh Sharma, real estate analyst, Macquarie Research, the problems of the real estate players don’t seem to be ending with the festive season around the corner as he states, “Given the current interest rate scenario, I see a higher than 50% probability that recovery in sales volume will be weaker than expected.” This, if true, can surely raise some problems for the famed players in the industry.

Already, there seems to be a shift in strategy by mid and small players, signalling some consolidation. They are already facing a liquidity crunch and have seem to be sending an SOS message to big developers. Small and mid-sized players are more than willing to sell their land to biggies in order to arrange funds for the ongoing projects. “The real estate sector is facing a slowdown altogether and the players are facing a major liquidity crunch at this point of time” avers Susil Dungarwal, an independent realty & retail analyst.

Even Parsvnath Developers saw blood on its balance sheet as they announced a 17.8% dip in net profits for the quarter ending March 2008 standing at Rs.108.88 crores as compared to Rs.132.44 crores in the corresponding quarter last year. And their problems seem to be getting compounded with the rise in input prices; which could make it difficult for the company to script a comeback this year.

For DLF, the brand value continues to shield the group quite well from the sectoral upheaval. Recently, Symphony (a UK based PE fund) invested a hefty amount of $450 million in DAL (DLF Assets owned by the promoter of DLF, DE Shaw, Lehmann Brothers and Symphony Capital – with no cross holdings between DLF Ltd and DAL), which eased the risk of off-take for the commercial properties of the realty major. The problem of liquidity crunch is bothering Unitech the least as it is capable enough of raising the fresh venture capital and attracting new PE funds even after the debt the company has on the balance sheet.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
Now IIPM's World-Class Education... for everybody!!
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
IIPM Ranked No. 1 B-School In Global Exposre - Zee...
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When IIPM comes to education, never compromise
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Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...