IPL: Who are the Gainers?

Is IPL a successful business plan made by Modi, the Chairman& Commissioner of IPL? Who are the gainers? Is it that BCCI alone? For this answer I have to say “yes”.
The World Sports Group (WSG) bought the IPL rights for 10 years for a sum of $1 billion and in turn gave to Sony for a three year period. Sony now owes IPL $30mn and looking for an exit route from the contract. Sony is unable to make its money through the advertisement sponsors. In the first season of IPL, Sony has 2000 seconds of TV ad time priced at 2lakhs per 10second ad slot, A sharp 75k increase from 20-20 world cup rate of 1.25lakh per 10second ad slot. Now it has to increase its prices to pay to IPL. But with the economic situation, will the companies are ready to pay huge amounts for advertisements.
The sponsorships for the franchises are still to be finalized. Few days back, Coco-Cola has taken the sponsorship of Kolkata Knight Raiders, after as Pepsi dropped Sharukh khan as their Brand Ambassador. The franchises are fighting hard to get sponsorships’. With this, can the franchises make profits in the second season, with only Kolkata Knight Raiders and Rajasthan Royals making profits in the first season? Who are profited, isn’t it only the players & IPL alone.

RECESSION: IT’S STEP INTO PRINT MEDIA

India’s print media industry has joined the growing list of businesses seeking a bailout from the government to combat a sudden downturn in the economy after three years of rapid growth. Government has called up on to guide Print Media in recession period. Government has a direct impact on the Industry.
DAVP refers to the Directorate of Advertising and Visual Publicity, a unit of the I&B ministry that manages the government’s advertising and buys media space or air-time on its behalf, and commercial rates are the rates at which regular private advertisers buy space in newspapers and magazines.
DAVP is the largest advertiser in terms of volumes, or the advertising space bought, for most national publishers. The fee paid by the agency for the space bought, however, is only 8-10% of the rates paid by commercial advertisers. Commercial advertising rates for the Delhi edition of top-selling English dailies, for instance, range from Rs2, 500 per sq. cm to Rs3, 500 per sq. cm, while the corresponding DAVP rates are Rs250-283 per sq. cm.
Real estate, automobiles, financial services and all other such large print advertisers have cut their ad spends massively in the past few months. With all these effects, publishers have asked the government, the single largest advertiser in newspapers, to revise its advertising rates, abolish custom duty on newsprint and withdraw fringe benefit tax levied on the non-core salary components of their employees.
Print Media apart from asking government to increase the advertising rates, it can decrease the costs per sq. cm. for other costumers to increase their spending. With lower offerings it can attract the market from TV ads, which are a high spending for companies.

CADBURY-MARKETING RESEARCH BENEFITS:

We (not to forget I am a student from Alliance, Bangalore) had a class on marketing research taken by Mr. Narasimha, former GM of Cadbury marketing team. He spoke about the various facets of Marketing research and its implications on companies.
He said Market research is the gathering, recording and analyzing of information about markets and their probable reaction to product, price, distribution and promotion decisions. He gave us a plethora of examples from his professional life in the field of marketing.
Cadbury had exceeded its target expectations in 1997 (target-380cr, achieved-427cr with marketing expense of 62cr). With these positive results, management increased its target to achieve 540cr in 1998 by increasing its marketing expenses. The brand manager was provided 90cr as the marketing budget to achieve the target. But the Brand manager asked for a month's time to make a decision regarding the budget plan. He approached a Marketing research team to find how much budget he needs to spend to achieve the target.
The Marketing research team had come up with some interesting points. The correlation between the Advertisement and brand recognition was 0.9, between Advertisement and visibility was 0.95 but between Advertisement and purchase intention it was 0.3. From this data, it was clear that advertisements do not have a major influence on purchase. Again he asked the research team to find out what influenced people in buying the product. From the research they found out that the visibility of product has a positive effect on purchasing decision. In India most of the shopping is done by Women and interestingly the most exciting moments of their life do involve shopping for something. When they are accompanied by their children for shopping, there is always pressure to purchase chocolates. In order to avoid getting disturbed in their shopping experience, first thing they do is buy chocolates that are visible to them. So the visibility has an effect on the sale of the product.
Considering the data, Cadbury's brand manager had spent less on the advertisements and spent nearly 12cr on increasing the visibility of the product in retail shops. By following this Cadbury had made Rs.700cr in sales, which had surpassed their target sales of 540cr. The marketing expenditure spend was 50cr compared to 62cr compared to last year’s expenditure. From this any management student can learn that the decision we take as managers should have data to support.

Amid Recession-Coco-Cola & Pepsi plans to Increase Prices:

Coca-Cola has emerged as the Market Leader in India with its Thumps Up brand and Sprite has surpassed Pepsi to take over 2nd place with 16.16% market share, with PepsiCo lagging behind with market share at 13%. Coco-Cola plans to increase its 600ml variant price from rs.20 to rs.22 and 2lt bottle by rs.5, to rs.55. Isn’t this a brave step taken by Coco-Cola? The reasons could be, increase in Demand for its products now that the festive season is approaching, or to increase the margin due to an increase in the Input costs. PepsiCo is following in the footsteps of Coco-Cola to increase its price by 10%.
Coco-Cola, with an increase in its sales by upto 18% in India is looking good and has a positive chance of sustaining its position in the market even with the inrease in prices. With the decrease in its sales as well as the market share, PepsiCo’s needs to take a strategic decision whether to follow Coco-Cola by increasing its prices or to remain with the existing pricing policy so as to provide an opportunity for growth. Well if PepsiCo has decided to increase its prices, it would expect to remain with same market share along with increase in margin. If PepsiCo doesn’t change any prices, it can capture the market with its low comparative price.
Well in America, pepsi's profits reduced by 43% where as coke's profits reduced by 7%, because of strong dollar.

BLACK & LOVELY:

Fair & lovely is a well recognised product from HUL,India. But have you ever heard of product Black & Lovely? Yes, such a product exists in the USA. It’s a hair product in the American product. The product line includes Hair Straightener, Dark & Lovely Kids (children’s hair products) and Dark and Lovely Naturally. The products are directly sold to the agents. The marketing strategies they follow are:
I. Create Awareness of the various products by sponsoring events like the Miss Indianz Contest.
II. Increasing the visibility in retail stores.
III.Increased reach ability by selling the products through pharmacy stores.

Fiat – Linea: "Old is Gold" Marketing Strategy

Doesn’t this advertisement share resemblence with that of Lux, featuring Priyanka Chopra, where all those who pass by pause to admire her? The same sort of idea has been adopted by Fiat Linea, where we see a kid stopping at everything he looks at, his dad having to pull him away on each occasion. But then we see that his dad stops at the display of Fiat Linea and this time its the kid who drags his dad away. In the ad, the person is attracted to the looks of the linea but what factors have influenced this attraction has not been implied. The world’s most overused and unimaginative idea—“good-looking”. People don’t just prefer looks, and its definitely not the reason for a purchase decision. The features and the points of difference are important.

In Lux advertisement, the admiration is related with beauty. But the advertisement depicts the same old “Good-looking” theme. Old is Gold is an old saying and marketers are still following this. Marketers have to think in a different manner to attract the costumers.

IPL-CAN IT BE A RECESSION WINNER :

INDIAN PREMIER LEAGUE (IPL), is a Twenty20 cricket competition created by the Board of Control for Cricket in India (BCCI) and chaired by the Chairman & Commissioner IPL, BCCI Vice President Lalit Modi. The new attraction to the IPL is Shilpa Shetty who along with her boy friend Raj Kundra, picked up about 12% stake in the Rajasthan Royals for the upcoming IPL season and then there’s Juhi Chawla who will be taking charge of the game plan for Kolkata Knight Raiders, in khan’s absence.
The second season of IPL is about to start from the 10th of April up to the 29th of May. The auction for the players that happened a few days back had obvious winners in the form of Pieterson and Flintoff. England’s Kevin Pietersen and Andrew Flintoff were signed for $1.55 million (Rs7.55 crore) a year each, topping the $1.5 million the India Cements Ltd-promoted Chennai Super Kings bid for India cricket captain Mahendra Singh Dhoni last year. Flintoff will play for the Chennai franchise and Pietersen for the United Breweries Ltd-owned Bangalore Royal Challengers.
The prices paid for cricketers who will join the Indian Premier League (IPL) in its second season clearly show no signs of the recession blues tormenting the rest of the economy. Will the franchise make money in the second season?
In the first season Mumbai Indians experienced a loss of 16cr, Royal Challengers, Bangalore with a loss of 43cr, Hyderabad Deccan Chargers with a loss of 18cr, Chennai Super Kings with a loss of 0.2cr, Delhi Dare Devils with a loss of 6.6cr, Kings XI Punjab with a loss of 2.4, Rajasthan Royals with a profit of 6cr and Kolkata knight Raiders with a profit of 13cr. Will these figures get worse this year with the recession in economy?
With minimum of 33% revenues coming from Team Sponsors, apart from Broad casting rights and Gate Receipts, the recession will have an impact on the Net Profit/Loss of the Franchises. With the recession in economy will the team sponsors spend so much on franchises? Will the DLF continue as the major sponsor for the IPL? Have to wait and watch what the IPL has to offer this time.

SLUMDOG MILLIONAIRE,INDIAS HOPE AT THE OSCARS:

After its win in golden globe awards, its the turn of BAFTA. BAFTA is The British Academy of Film and Television Arts, equivalent to Americas Oscar awards. It bagged 7awards from its 11 nominations, with best Director, best film and best music director being the highlight. Its total international awards tally got closer to 50. Will it cross the 50 mark with an Oscar? Will A.R.Rahman be the first Indain Music Director to win oscar? we have to wait till oscars on feb 22.

STARBUCKS in Japan

Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington, USA. Starbucks opened its first store in Japan in Ginza, Tokyo, on Aug. 2, 1996. Starbucks Coffee International signed an agreement with Sazaby Inc., a Japanese retailer and restaurateur, to form a joint-venture partnership on Oct. 26, 1995.
There is a belief that STARBUCKS cannot make it into the Japanese market because of their predominantly tea drinking habit and that they never buy coffee in paper cups, but Starbucks proved them wrong.
Before the arrival of Starbucks, Competition is roasting in the tea room and coffeehouse market, estimated at nearly ¥1 trillion ($8.12 billion) a year, an industry led by Doutor Coffee Co., the giant franchise that has been deploying around the country since 1980. Doutor provides cozy space for smokers, sells cheap hotdogs and sandwiches to the takeout crowd apart from the coffee. Starbucks had to adapt to the local climate to be successful in the market, but Starbucks entered as a Non-smoking coffee house. Starbucks maintains a fresh aroma in the store and the beans in good condition; they also offer plenty of food items, including sandwiches and salads. Starbucks has been releasing original CDs featuring seasonal jazz that are played in the coffee shops as background music. With their evident popularity among young Japanese women, Starbucks would now pose a killer threat to the cramped, smoky havens of Doutor.

Doutor sells a regular-size Blend Coffee for 180 yen per cup and uses china cups for in-store customers. Starbucks offers a short “Coffee of the Day” for 250 yen, and mostly uses paper or plastic cups whether customers imbibe in or outside the shop. They differ in style and also Starbucks concentrated on a niche market, coffee drinkers who are willing to spend just a little more to enjoy excellent coffee in a first-class setting climate, so they are carefully avoiding head-to-head competition. Starbucks income was $20.3 million for fiscal 2000, compared to $3.2 million for fiscal 1999.
American market has been saturated, and this has been reflected in the stock price, which is down almost 50% versus last year. The situation is somewhat different here in Japan. The market is not quite saturated and the brand continues to grow. Starbucks has now more than 500 locations in Japan.