MURDER ON ELM STREET

IIPM : EXECUTIVE EDUCATION

Recalls hit customers badly, and may also destroy brand value, but if they are not done in a timely way, the repercussions could be even more deadly

“A bullet once fired out of the barrel cannot be recalled.” Nor can the target save himself normally, unless, of course, the target is Neo and we are talking about the scintillating Matrix trilogy; where Keanu Reeves enthralls us with his bullet dodging skills.

Ahem... well, coming back to reality, companies that face the flak for ‘unproductive’ products, find themselves in a similar situation. They can recall products, but by then, it’s normally too late; the damage is done; the target has been shot; and the company’s image gets a bigger blow in turn. And the latest victim is Cadbury. The horrendous milk scandal in China has forced the British chocolate giant – Cadbury Plc to direct Cadbury Asia Pacific (its Asian arm) to recall 11 types of its Chinese-made chocolates (manufactured in Beijing & distributed in Taiwan, Hong Kong & Australia) as tests revealed presence of melamine-laced dairy content in the sweets. Kraft Foods Inc. (Oreos) and Mars Inc. (M&Ms and Snickers) are also investigating claims by Indonesian authorities that high traces of the chemical have been found in their products.

The road to corporate glory is replete with failures; and recalls too, which plague some of the best names. Take Sony, which recalled four lakh units of Sony Vaio laptops due to potential burn hazards from overheating and short circuits. Hondo Motors recalled 5,81,353 mini vehicles in Japan to fix a faulty fuel pump that could cause the engine to stop. Nokia issued a product advisory to recall close to 46 million Nokia-branded BL-5C batteries between December 2005 and November 2006, when it received complaints that in rare cases, the batteries could potentially overheat while charging, causing the battery to dislodge.

So what can such ‘late in the day amends’ achieve? Graham Hales, Group Chief Communications Officer, Interbrand opines, “A product recall may cause uncertainty in a brand and may therefore place the brand under greater scrutiny of choice amongst its competitors.” But David Haigh, CEO, Brand Finance counters, “If handled professionally product recalls can strengthen brand equity.” The company must ensure that trust is not broken and recall is swift and efficient. Hales points out that “the risk of allowing inferior or under-performing products to represent the brand will cause greater loss in the long term.”

Another mistake that most companies do, which ostensibly leads to customer losing their faith in the brand is blaming their out-sourced manufacturing units for the entire problem. Cadbury chocolates were manufactured in Hong Kong, Nokia had outsourced the manufacturing of batteries to Japan-based Matsushita Battery Industrial. But putting the blame on an outside party will only dilute the brand equity. “Customers can’t be won with excuses and buck passing,” avers Haigh.

Difficult as it may sound, the company has to admit, apologise, and make amends swiftly. To err is human; to persist in error is develish; and in this case, suicidal as well.

Savreen Gadhoke

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we are not rattling off names of some quixotic food ingredients

IIPM’s 36th Glorious Year of Academic Excellence

Chalet, Cabana, Mews, Ginger, Lemon Tree, Peppermint, Berggruen… hey wait, we are not rattling off names of some quixotic food ingredients; instead these are innovative brand names for some equally innovative hospitality ideas at work. By Neha Sariya

When Roots Corporation – a subsidiary of Indian Hotels Limited (which also runs the Taj Group of hotels) ventured into a new concept of self-help hotels called Ginger in 2004, trade pundits were skeptical about its success. After all, whoever heard of a hotel, where you’d have to do everything yourself: from checking in to ironing your clothes. Ginger had no liveried bellhops asking for tips, instead guests were met by baggage carts with help-yourself signs; ATM style self check-in counters replaced the traditional receptionist; even the mustachioed gatekeeper was missing in action! However, the strategy was perfectly timed. Ginger’s low cost and Rs.999 tariff plans created a rage among budget travellers, who were in any case reeling under the demand-supply gap in the budget hotels segment. Today, with 14 properties across India, this one’s all gingered up for the future riding on its early mover’s advantage. Predictably, Ginger’s success prompted a host of me-too’s in the segment and a slew of budget hotels started popping out of the woodwork, including Lemon Tree, Peppermint and global players like Berggruen and Best Western.

But hey, they missed the bus! Analysts claim that as opposed to 5-Star hotels, which witnessed 100% occupancy in 2007, budget hotels did not share similar occupancy rates, largely because a large chunk of travellers to India were either business travellers or international tourists. Little surprise that now, everyone – from local tycoons like Anand Mahindra and K.P. Singh to global biggies like Hilton and Mariott, everyone is focused on pioneering alternative luxury hospitality concepts to set cash registers ringing.

The race is to dominate new luxury hospitality segments, ranging from residential hotels or service apartments, destination resorts, condo hotels, vacation ownership and private resident’s clubs. For instance, Taj Wellington Mews and Lakeside Chalet Marriott Executive Apartments are already luring a spate of global professionals to their swank service apartments in the financial capital’s suburbs. Companies like RCI (Resort Condominiums International) are thinking differently, and filling in the gap for vacation ownership and time sharing concepts in India, where a group of vacationers pay in a lump sum for spending a specific time period in any resort. The vacation ownership industry is growing at a CAGR of 20% today.

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

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Don’t Supply; Just Partner...

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...Says Jon Wilkins, Founder Partner, Naked Communications

Jon Wilkins
Founding Partner,Naked Communications

“Creative provision is more volatile as ideas are ephemeral and creative agencies have never been able to genuinely prove the pay back to their clients,” believes Wilkins, even as he outlines the shape of things to come in the global and Indian advertising industry

Naked refuses to be called either an advertising firm or a media planning agency. Started in 1999, the founders like to call themselves something between an ad-shop and a communication consultancy. Already delivering ground breaking strategies for some of the world’s biggest brands (Coca-Cola, Nestle & Nokia), Naked is now interested in the Indian market and is currently talking to clients here, as also scouting for partners and potential acquisitions. Founding partner, Jon Wilkins makes a case for the future of advertising...

4Ps B&M: According to AdWeek, $27.5b of advertising business went into review in 2007. How do you explain the bitterness in client-agency relationships?
JW: There is no right answer to this but clients have to find partners who can help them build value through communications, and as the landscape changes in India, more clients will need more partners or new partners to help them navigate this opportunity or threat. Clients should always strive to get the best services from their agency partners, so it’s not a surprise that business moves around. In the west this is more marked than in the east, where long term relationships are valued higher.

4Ps B&M: Which sectors are most volatile i.e. seeing maximum account movement and why?
JW: Service oriented businesses are perhaps the most obvious volatile category, in that they are highly competitive, highly. Segmented and under pressure to build maintain and grow long term customer relationships. They require the broadest communications expertise, and face the biggest challenges with digital disintermediation.

4Ps B&M: How does Naked’s model fit into the evolving scheme of things?
JW: We rarely pitch and are more often invited in by clients to help them realise value, unblock problems or create opportunities through our communications approach. We get business when clients want to accelerate growth beyond the norm, or have a problem that conventional TV led advertising can’t fix, or when to be honest they value the idea of experimenting with new channels and new opportunities and struggle to find strategic partners that are engaged enough with this new digitally framed fragmented communication landscape.

4Ps B&M: How do you see client-agency relationship evolving in the changing market dynamics?
JW: A true agency partner must help the client achieve his business and marketing goals. As such they must be entirely objective and align their goals with that of the client. This isn’t about ‘owning’ every conceivable executional delivery capability. It’s about being able to come up with big ideas not campaigns, understanding how to integrate an idea, a customer journey and multiple channels seamlessly to deliver against objectives set, and an ability to be able to genuinely measure your contribution to your clients success.

Many agencies and holding companies think the future is about owning more means of production, we believe in ‘open source’ collaboration and an ability to work with best of breed partners in every discipline. It’s an impossible and thankless task to try and own everything and everyone in a rapidly changing communications environment. You need to offer a one stop shop but it’s not what you own, it’s who you know!

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 - Admission Procedure
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...