Thursday, February 26, 2009

Marketing Research

Marketing research is all about forecasts. Professionals will say that crystal gazing is unscientific. Unfortunately human brain has so far not been able to find a foolproof method of guessing the future. Statistical methods or whatever never yield 100% correctness and the worst is that the degree of incorrectness is understood only after the occurrence of the event or the passage of the time.

Some people have tremendous faith in professionals who have excelled in their own fields. Like you can ask Sachin Tendulkar about the future of cricket in the sub-continent and then decide upon how many cricket bats you should manufacture in a year. Sounds reasonable.

Given below is a list of famous predictions made by people or corporations or publications of world repute.
  • “I think there is a world market for maybe five computers.” [Thomas Watson, Chairman of IBM in 1943].
  • “We don’t like their sound, and guitar music is on the way out.” [Decca Recording Co. rejecting the Beatles in 1962].
  • “There is no need for any individual to have a computer in their home.” [Ken Olson, President of Digital Equipment Corp, in 1977].
  • “No one will need more than 637 kb of memory for a personal computer. 640K ought to be enough for anybody.” [Bill Gates, founder of Microsoft, in 1981].
  • “Computers in the future may weigh no more than 1.5 tons.” [Popular Mechanics, forecasting the relentless march of science, 1949].
  • “Heavier-than-air flying machines are impossible.” [Lord Kelvin, ca. 1895, British mathematician and physicist].
  • “Radio has no future.” [Lord Kelvin, ca. 1897].
  • “Well informed people know it is impossible to transmit the voice over wires and that were it possible to do so, the thing would be of no practical value.” [The Boston Post in 1865].

Contributed By:
Prof. P. Guha
(Globsyn Business School)

Tuesday, February 24, 2009

Pontiac Shrivels Up

Products like people, no matter how great, do not last for ever. General Motors that had positioned itself consistently in the top five for ages is now craving for a bailout. One of its prominent models the Pontiac has contributed well towards the downfall of the company. The extract from the New York Times of February 20 2009 gives a painful account of the roller-coaster ride that the car is having on the P-L-C graph.

DETROIT — With its history of building muscle cars like the GTO and the low-slung Firebird, Pontiac had good reason to take pride in its best-known marketing slogan from the 1980s, “We Build Excitement.”

Lately it has been using “Pontiac is CAR,” a phrase more likely to catch the attention of grammarians than car buffs.

And on Tuesday, when General Motors asked the federal government for more bailout money, it also announced a reorganization plan that included demoting Pontiac to a “focused niche brand,” signaling that its lineup of vehicles would shrink and that it would no longer be a separate division.

To industry analysts and Pontiac’s longtime fans, the downgrade provides a case study of the product missteps that helped put G.M. in its precarious state, and a reminder of the dangers in straying from a successful formula.

“When you deviate too far from it, that’s when you run into trouble as a brand and a company,” said Jack R. Nerad, executive editorial director at Kelley Blue Book, whose 1968 Firebird made him feel “as cool as I could be.”

More than any other G.M. brand, Pontiac stood for performance, speed and sex appeal. Its crosstown rivals followed with similar muscle cars, giving Detroit bragging rights over the cars that Japanese automakers were selling based on quality and reliability.

Though still G.M.’s third-best-selling division, behind Chevrolet and GMC, Pontiac’s sales peaked in 1984, when it sold almost 850,000 vehicles, roughly four times as many as it sold last year.

G.M.’s chief executive, Rick Wagoner, said the company’s decision to concentrate primarily on Cadillac, Chevrolet, Buick and GMC left the company with a “comprehensive portfolio.”

By many accounts, Pontiac started to falter when G.M. pursued a cost-saving strategy of providing the same cars to different divisions.

It gave Pontiac vehicles like the TransSport minivan, and the Sunbird, Sunfire and Phoenix cars that were barely distinguishable from models sold by Chevrolet and Oldsmobile.

Pontiac also garnered unwanted publicity in 2001 with the Aztek, whose tag line declared, “Quite possibly the most versatile vehicle on the planet.” Its bulky looks landed it on lists of the world’s ugliest cars. Indeed, Aztek won top honors in that category from The Daily Telegraph of London last year.

Pontiac’s current plight is reflected in its Vibe, a well-regarded crossover vehicle that shares underpinnings with the Toyota Matrix, as part of a joint venture between Toyota and G.M.

While the Matrix holds 67 percent of its resale value after three years, according to Kelley Blue Book, the Vibe retains just 54 percent.

The Vibe, whose future is not clear but which was redesigned for 2009, is meant to appeal to the same age group that Pontiac’s muscle cars once did.

But many younger Americans, who were not around for Pontiac’s prime period, will not miss the brand as it shrinks, said Ron Pinelli, who is president of, a company that tracks industry statistics.

To them, he said, “it doesn’t have any cachet unless they’re watching a late-night movie with Burt Reynolds,” whose film “Smokey and the Bandit” featured the Pontiac Trans Am.

But in its best years, Pontiacs were “highly styled and valued and really something,” Mr. Pinelli said.

Known before World War II primarily for its sedate sedans, Pontiac got a lift in the 1950s when G.M. used its cars on the racing circuit. Because of its “wide track” stance, Pontiacs quickly caught on with street racers, as well.

Tim Sampson, whose family owned a yellow Pontiac Grand Prix in the 1960s, remembered the Pontiacs that were used for drag races on President’s Island, in an industrial part of Memphis. “People used to get arrested,” said Mr. Sampson, a founder of the Stax Museum of American Soul.

Italian sports cars inspired another classic Pontiac in the 1960s, when the division’s new general manager, John Z. DeLorean, decided it needed a small, fast car modeled after a Ferrari. He hit on the name GTO — after a Ferrari coupe called the Gran Turismo Omologato.

The GTO returned this decade, as part of an effort to revive Pontiac. But G.M.’s Holden division in Australia built that car.

Its appearance barely echoed the original GTO, disappointing its core audience. It lasted only from 2004 to 2006, before G.M. stopped selling them.

The most recent efforts to breathe new life into Pontiac were put into motion by G.M.’s vice chairman, Robert A. Lutz, who will retire at the end of 2009. Known in the industry for his love of high-performance vehicles, Mr. Lutz had pushed the division to return to its car heritage.
On its Web site, Pontiac explains its new slogan more fully: “Pontiac is style. Pontiac is performance. Pontiac is culture. Pontiac is music. Pontiac is CAR.”

Now, G.M. will have to determine which Pontiacs will remain Pontiacs. So far, Mr. Wagoner and other executives have not given any indication of the company’s specific plans for Pontiac.

But unlike Saturn, which will be discontinued by 2012, G.M. does not have to dismantle a dealership lineup for Pontiac. Its franchises, for the most part, already have been grouped with Buick and GMC. Any future models, G.M. said this week, will be sold through this Buick-Pontiac-GMC organization.

“We’re the third generation, and we’re the last,” said Rick Zimmerman, whose family has sold Pontiacs in Pittsfield, Ill., since the brand came to life as part of its Oakland division in the 1920s. (Pontiac became a stand-alone division in 1932.)

Mr. Zimmerman, whose first car was a GTO, said hundreds of customers used to flood his showroom each fall when new Pontiacs — like the popular Bonneville, now a retired nameplate — were unveiled.

Now, despite positive reviews about the performance of some new models like the G8, he has trouble getting his customers interested in them.

“It’s been a good name, and had a lot of good cars,” Mr. Zimmerman said. “It’s tough to see it go.”

Contributed By:
Prof. P. Guha
(Globsyn Business School)


Wednesday, February 18, 2009

Valentine’s Day

Marketing professionals do not debate, they accept realities. They do not debate whether professing love openly on Valentine’s Day conforms to Indian culture or whether it is necessary at all. They accept the fact that celebrations on Valentine’s Day are a reality.

Marketing professionals also do not blame people or companies or countries for anything. They do not waste time in finding out which economic policy of which King, President or Prime Minister brought about this global economic crisis.

Successful marketers today know that the recession is a reality and also know that the human race cannot be kept away from love or kept away from expressions of love. They put the two together and come up with brilliant marketing ideas appropriate for the times.

A few examples are here.

Mumbai: This Valentine’s Day advertisers are betting on more than just love and fresh air. As consumers experience the pressures of a slowing economy, advertisers are putting out messages that are pragmatic, utilitarian, value-added or investment-based and appeal to a broad swathe of consumers beyond lovelorn couples.

“Recession romance” is playing out across markets this February, as advertisers across industries, including real estate, auto and media infuse their products with romance. Cleverly tuning in to the zeitgeist, youth entertainment channel UTV Bindass recently took off on the famous MasterCard ads: “Preparing for Valentine’s day? Flowers & gift: Rs1,000; hiring a limousine: Rs10,000; dinner at 5 star: Rs15,000; diamond ring: Rs80,000. Total cost: very expensive. Staying at home and watching TV instead: Free. Recession Romance”.

“We thought, for once let’s enjoy this recession and remind young people there’s a smarter way of doing this without blowing up money,” says Ashok Abraham Cherian, business head at UTV Bindass, the channel under the UTV Group, adding that the promotion was also a tongue-in-cheek way of telling them that home was the safest, non-intrusive environment they could be in today. “You’re not going to have some moral police guy come in and burst that heart-shaped balloon,” he adds.

Out Of Home Media (India) Pvt. Ltd, commonly know as OOH Media, which is India’s largest out-of-home television company, has similarly launched “LOohve Spots” on their in-store network, which listed the top five Valentine hangouts in each city. Needless to say, all were free public spaces.

Some products are being smartly positioned as good value/investments and hence V-Day gifts, in an endeavour to connect with money-conscious consumers. A 2008 World Gold Council (WGC) study claims that women consider gold a superior gift due to its implicit value. “The higher gold price has added to gold jewellery’s desirability despite these challenging economic times,” says Philip Olden, managing director of WGC.

Meanwhile, real estate company DishaDirect urges consumers to invest in a “Heartland” home for their Valentine. And touting long-term protection for one’s loved ones, Max New York Life Insurance Co. Ltd offers “Karo Zyaada Pyaar Ka Vada”.

There’s nothing like a good bargain to impress your loved one or save some chips. Witness a flurry of heartfelt sales, discounts and brand promotions.

Ads for online portal Indiatimes Shopping announced “50% Back. 100% Love”, while those for eBay India read: “Valentine’s on a budget”.

Contributed By:
Prof. P. Guha
(Globsyn Business School)


Tuesday, February 3, 2009

Lighter Side of Marketing?

“Everybody’s granny cooks the best”. And when one buys butter, cheese, sauce, pickles cakes and cookies, one is invariably reminded of the ones made at home by the senior ladies of the household like mothers and grandmothers. But mothers and grandmothers working in their domestic kitchens cannot take care of the entire markets for these products. Corporate entities like Amul, Britannia and Lijjat therefore have to step in. And the marketing gurus of these companies know very well that their products will strike a nostalgic chord somewhere in the hearts of the customers if they can make some reference to the mothers and the grandmothers.

But the question is of ethics. Should such messages be put up in advertisements?

Contributed By:
Prof. P. Guha
(Globsyn Business School)