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May 30, 2014

The Original Poster boy of Price cutting – A Marketing Maverick par excellence - Kabir Mirchandani

Kabir Mirchandani was the original prince of price cutting. One who redefined prices and margins in entertainment electronics especially Televisions . Kabir Mulchandani, now 41, had captured popular imagination as a "gotcha-have-it" guy in the mid 90s. Someone who wrote his own rules and got others to play by them.
Kabir’s company Baron entered the Indian CTV market on December 23, 1994, reviving the Akai brand and crashed the prices. At that time each Inch of television would cost a thousand that is a 21 inch TV was costing 21,000/- and 29 inch TV was 29,000/-. The existing TV makers were well entrenched and were happy with respective market shares. 

When Kabir entered the business, black and white TV sets were outselling colour sets three to one. At the heart of this imbalance was the price. An average 21 inch colour set in 1993 cost nearly Rs.21,000, roughly four times the national per capita consumption expenditure.

So, Kabir "incentivised" the shift to colour. Through gifts, financing schemes and exchange offers. He broke down the price barrier and brought colour television into lower middle class homes. In this he was helped by the cable revolution which bloomed in 1992-93. Kabir realized the potential of luring consumers if he could make it affordable. And he did just that.

Armed with a sizeable advertising budget - it crossed Rs.120 crore in 1997 - Kabir used the media cost effectively to spread this message of affordability His choice of the medium, mainly newspapers and large hoardings, was in itself unconventional.

When Mumbai's hoardings went empty, Kabir offered to take them at less than 25 per cent of the rentals, gaining exposure at a fourth of the price. Similarly, his advertising in papers are normally on week-ends. Rationale: big-tag shopping takes place with family in attendance on holidays. "I sell around 2,500 sets on Saturdays and Sundays as compared to 1,200 on weekdays," Kabir explained.

In four years, Baron International  had launched 13 different schemes to potential Akai TV buyers; the offers included free two-in-ones, gold coins, pagers, 14-inch sets, washing machines, mobile phones, refrigerators, even club memberships. 

The most effective was the exchange scheme that Kabir pioneered. Well aware of the national tradition of not discarding anything, Kabir decided to play on it. For as little as Rs.9,999, he goaded owners of old TV sets to trade them for brand new ones. Other manufacturers soon followed suit.

Even the competition acknowledged that Kabir had made a difference. "The consumer electronics market has periodically seen new marketing innovations," said BPL's then Director Rajeev Chandrashekar. "Kabir's exchange offers have certainly brought a new element into consumer durables marketing." Indeed, the exchange fever has gripped virtually every segment of the consumer market, even cars.

In the process, Baron International's CTV sales grew from 2,500 in 1993-94 to 4.29 lakh in 1997-98, with every other TV company being forced to match the gifts and emulate the exchange offers.

Mulchandani launched  focused buy, buy, buy campaigns with his full-page advertisements. He didn't allow the consumer time to lie back and think. Most purchases were instinctive, which is what the campaigns achieved.
In the process, he changed the rules of the game in entertainment electronics. His strategy was to make people buy rather than sell his product. The strategy was built keeping in mind the price-sensitive and value-conscious Indian consumers. It paid rich dividends.

Kabir Mulchandani sold at wafer-thin margins of 2 per cent, good enough for him to make money through high volumes. In 1998, ties with Akai soured, and Kabir tied up with Aiwa, citing Aiwa's "superior product range".

Akai was the first split-up. But soon, it became a pattern. Baron seemed to have hit it off with Aiwa, but they soon fell out. In the meantime, Baron had declined to renew its contract with Hitachi and soon it snapped ties with TCL. And with each of them, Kabir followed the same marketing strategy to bump up sales. Aiwa's gleaming music systems, for instance, came with offers like 'Rs 7,000 off on your old system and 50 CDs free!'
And with a trade-in, he sold 29-inch TCL televisions for Rs 12,900! But again, these tie-ups soured and Kabir was left looking for yet another partner. Analysts say Kabir Mulchandani's business model didn't have long-term sustainability. For one, it meant frequent switching of collaborators and the race once run couldn't be re-run.

Baron didn't build any back-up strength in terms of after sales service or any credible infrastructure to maintain consumer confidence. That finally meant the doom for the prince but he taught us all a lesson. Be aggressive in the market pace, challenge the holy cows and believe in yourself and offer value to the customers. The things that he missed out - not minding the basics,  not building long term relationships based on trust and not focusing on less glamorous but important issues like customer service, quality and gaining customer confidence. 

We are what we believe - Snakes and snake charmers

 India has only 4 poisonous species of snakes. But many people die of snake bites In India than the number who should. 9 out of 10 people die as they believe that they are bitten by poisonous snakes? In other words IT IS ALL IN THE MIND - WE ARE WHAT WE BELIEVE. 

This is what happens.  A man is bitten by a snake. He believes that he is bitten by a poisonous snake. As he believes that it is a poisonous snake, the mind tells the body that it is a poisonous bite and the body accepts it. The shock kills the man. 

The rustic snake charmer has a role in this process. The man bitten by the snake is rushed to the snake charmer. Remember in 9 out of 10 cases the man is bitten by a  non-poisonous snake. The snake charmer does his job. Chants some mantras, throws in some holy water, rubs some MAGIC ointment and the patient is free to go. 

The confidence that is given by the snake charmer is enough. The patient believes that he is cured. Remember WE ARE WHAT WE BELIEVE. The man is cured. If it is a poisonous snake the patient will die. But that the chances are dying are only 1 in 10. The snake charmer can still claim that the patient did not follow his instructions and that he died as a result of his carelessness. 


May 29, 2014

World's best (worst) goof Ups - Part - V

 15. NEW DELHI: The Delhi's state government's advertising campaign on the occasion of World Sparrow Day on Wednesday carried a picture of the Eurasian tree sparrow, which is neither found in Delhi nor in most parts of India, mistaking it for the house sparrow.

It was an ironic reflection of the plight of the sparrow, declared Delhi's state bird last year when it had all but disappeared from the city. The matter would have escaped attention but for the massive number of bird lovers in Delhi.

Some furious bird lovers called the environment department while a discussion was launched on social networking sites.

The picture had been downloaded from the internet and while the environment department officials accepted the error, they said the idea was to depict a sparrow which is what the advertisement did.

"For a large part of the public, the bird in the ad is a sparrow and it becomes immaterial that it is the wrong species. We managed to get the message across. The difference would have been evident to only a trained eye. However, such an error should not happened and will recur in future," said an government official.


16. NASA uses the metric system while Lockheed Martin uses the English system when building a satellite: A team of Lockheed Martin engineers used the English system of measurement, while the rest of the team used the metric system for a Mars orbiter. The use of two different measurement systems prevented the spacecraft's navigation coordinates from being transferred from a spacecraft team in Denver to a lab in California. The orbiter was then lost in space, and NASA was out $125 million. (1999)

17.   Safety inspectors forget to replace a valve at the Piper Bravo Oil Rig: This led to a massive explosion. Oil workers had to be evacuated from the Piper Bravo Oil Rig after an explosion. The explosion killed 167 of the 226 men working.

During a routine check, inspectors removed and replaced all safety valves, except for one, which was never put back. Unaware that the safety valve was missing, a worker pushed the start button, and gas began to leak out leading to a loss of 3.4 billion US dollars in repairs (1994)