God’s rage on MNCs!
Godrej Appliances plans a huge assault!

(column by Angshuman Paul)

In Bollywood Blockbuster Chak De, coach Kabir Khan alias Shah Rukh Khan paid heed to all the facts like internal strength, team spirit and game tactics to create his dream team. Perhaps as an attempt to replicate the ‘reel’ success in mdoernday ‘real’ life, Adi Godrej is making his team strive hard to win amidst competitors – big and small!

With the Rs.14 billion unit Godrej Appliances (a unit of Godrej & Boyce fg. Co.) setting an ambitious turnover target of Rs.140 billion and a CAGR of 42% till 2008, the heat as can be felt in the appliance major is ... on! To achieve this target, the company is gung-ho to entice every segment of the market through a range of new products and through experimentation of its pricing strategies. Affirms Phiroze D. Lam, Exec. Director & President of Godrej & Boyce Mfg Co., “The market for consumer durable is growing in every corner of the country and your product portfolio should have product for every customer. We have been focusing in the lifestyle or metro segment and now we will strengthen out position in rural domain also.”

On the one hand, the company is rolling out hi-class colourful products for the metro denizens; while on the other, it is coming out with economical offerings for smaller towns. Adds Lam, “We will be coming out more with affordable products & every year, we are setting aside 5% of our total turnover to spend on R&D of such product.” Surely, with the attack of the MNCs, it’s time that Godrej realises that attack is the best mode of defence.

(End of Angshuman Paul column)

‘L’ucky ‘G’SM for LG?
LG has decided to change tracks...

(column by Surbhi Chawla)

After proving its mettle in the consumer durable segment in India, LG is now all set to dazzle and ‘shine’ in the mobile handset space as wellwith its latest announcement to get ‘serious’ with its GSM business. The latest proof of the same being the launch of its latest GSM handset ‘Shine’ metal phone, which also happens to be its only premium handset. So the question basically is – is LG’s move into the GSM business (and eventual shedding-off of its CDMA business) logical? Well, our answer is – a thumping ‘Yes’!

Considerng that over 2006-07, 74.7% of the new additions in mobile subscriber base happenned in the GSM segment, it takes no rocket science to conclude which amongst the two is a better business model when you are in the handset manufacturing business. It is keeping this fact in mind that Anil Arora, Business Group Head for GSM and Kitchen appliances, confidently predicted to 4Ps B&M that, “LG would become the third-largest handset maker in the country by the first quarter of 2008”. However, with stiff competition from many GSM A DIVISION OF PLANMAN CONSULTING This section presented by: handset-making players, most of whom are well-placed and equally aggressive, LG surely has set a big task for itself.

Other noteworthy happenings in favour of LG are TRAI’s latest recommendation of extending the number of licences in any circle and the huge investments that GSM operators like BSNL and the Ruias (through BPL) have announced. Also, in the CDMA space, Reliance Communications’ collaboration with ZTE to produce cheap phones (remember the Rs. 777,Rs. 1234 handsets), will only kill LG’s CDMA business. With LG’s turnover for CDMA phones in the Indian market for FY2006 falling by an alarming 16.67% to just $250 million as copared to a year back, with a further annual fall of 40% predicted for FY2007 (to touch just $150 million) the move seems to be more than just a saving grace for LG! 4Ps

(End of Surbhi Chawla column)

Little drops of joy...
...or will it be a thanda affair for Coca Cola

(column by Angshuman Paul)

This summer, sales of all major cola drinks nose-dived by 15- 17% (April-May) as against the same period last year (that too at a time when cola majors were reeling under the pesticide allegations). But for Coca Cola India, the year 2007 is definitely a watershed year as they are well on their way to break even this year. However, all’s not hunky-dory for the cola major as it faces stiff competition from its arch rival Pepsi. With a diversified portfolio (foods) as well as Pepsi’s over-emphasis on health drinks in recent times is surely a reason for concern for the cola giant. But Coca Cola is not cooling its heels either. It’s back to the drawing board for Coca Cola, as the cola major is busy charting new plans, new launches and ramping up its image in the desi soil. A move in the right direction is the unveiling of Coca Cola’s new corporate campaign – ‘Little Drops of Joy,’ which projects the company as a responsible corporate citizen. In an exclusive interview with 4Ps B&M, Venkatesh Kini, VP Marketing, Coca Cola India, reveals the company’s future growth strategy and plans for the Indian subcontinent. Excerpts from the interview:

How will the new corporate campaign ‘Little Drops of Joy’ help Coca-Cola to strengthen its brand positioning?
This campaign outlines the 5 pillars of our strategy – people, portfolio, planet, partners & performance. The campaign essentially is an umbrella campaign that should tie all these five Ps together in one communication. We expect to communicate this to all our consumers and stakeholdersin one integrated way.

Why have you chosen this particular time to come out with this new corporate brand campaign?
We wanted to be absolutely sure about what we are doing before we talk about it. So everything that you see in the campaign is something we have already done. For instance, we are expanding our portfolio and its there in the campaign. We have been undertaking CSR exercises and we have won government awards on that front. So it’s the best time to announce the new campaign.

Compared to other players in the market, how do you think Coca Cola is placed?
The beauty of our product is that you get all the functional benefits of energy, refreshment with all the emotional benefits for just Rs.8 a bottle. No products can claim to offer such benefits at such a price.

And what about allegations related to ground-water depletion, pesticides, et al?
We are opening our doors to the public to see the facts for themselves. We are inviting media to come visit our plants and see for themselves, talk to the local neighbouring communities to see how we are doing because it is easy to make allegations as anyone making allegations gets media coverage. And when you make allegations against an iconic company and a brand like Coca Cola you get much more media coverage.

What are your company’s future promotion plans? Our brand ambassadors like Aamir Khan for Coke and Akshay Kumar for Thums Up will remain the same. We plan to come out with new ad campaigns. And it will be a 360 degree promotional exercise including print, TV, and a new look website. We will also have a plant visit programme wherein we will invite media which will be a ‘little trip of joy’.

(End of Angshuman Paul column)

A mind Game…
…or are collaborative deals among Big Pharma a compulsion?

(column by Manish K Pandey)

Two egalitarian armies inherently destroy each other, there is nothing really new about it. But, consider a situation where both start sharing each-other’s secrets, Calamitous! Err… Big Pharma listening? We think, they aren’t, or else they wouldn’t have been sharing the much safeguarded coins of their realm. Not at least with their sizeable adversaries. After all, nowhere is this tradition of confidentiality more palpable than the present day pharmaceutical industry. Well, not to forget the money, honey, that starts pouring in with each success! So, how come these big pharma players are displaying a new found mutual affinity?

This year alone, at least six of the 13 companies that comprise the Big Pharma universe tied knots with each other. While Abbott and AstraZeneca were the latest to take on the $21.6 billion cholesterol market with a combination drug, Bristol- Myers & Pfizer, Schering-Plough & Merck et al were some of the other unions celebrated by the pharma industry. The wedding vows not only included the sharing of intellectual property but also scientists, and, of course, most importantly a promise to share the sale proceeds (not to result in a prospective agenda for a divorce, we hope!).

So, what’s unusual in that? The question pours in. No doubt, these big pharma companies have been shelling out billions in the past to acquire companies to channel new ideas. But as a unitary force, allthese companies have found themselves wanting in more ways than one, as their blockbuster patents are on the brink of extinction. And it seems better to combine forces rather than becoming dinosaurs themselves. “Well thought of”, answers Sujay Shetty, Associate Director, Pharmaceutical and Life Sciences practice, Pricewaterhouse- Coopers. “With the dearth of new compounds in the pipeline and patents expiring on various blockbusters, collaborative deals with their peers seems to be a smart strategy from Big Pharma,” says he. Undoubtedly a good rationale in support of these blissful marriages, but then one cannot deny the need for vigour either. Raison d’être, poor financial performance, rising sales & marketing expenditures, increased legal & regulatory constraints & challenges and tarnished reputations at times because of drug failures. No doubt, R&D spend has soared, but the number of new molecular entities (NMEs) and biologics approved by the FDA is definitely down. “In 2006 the US FDA approved only 22 NMEs and biologics, as comapred to 53 it approved in 1996 when R&D expenditure was less than half as of today” affirms a latest report by PwC. Moreover, “the competition from generic drug-makers has stiffened too... Collaborative deals with sizable peers happens to be a tried and tested ground as they have been doing it for long in biotech space,” analysts from global consulting firm, Frost & Sullivan shared with 4Ps, B&M.

So, whether it’s Big Pharma foresightedness or a forced outcome, one thing is for sure. Companies now seem to have recognised that even their present R&D expenditure levels are unsustainable, unless and until they deliver more proven results and cost benefits over the long term. Even if that means ‘Sleeping with the Enemy’, so be it! 4Ps

(End of Manish K Pandey column)