Demonetization – Fifty days and still counting

Fifty days after the demonetization announcement the queues at ATMs are still long and many of the machines are still not functional. I am yet to draw any money from a Citibank ATM. I think Citibank did not even try to reach out and help its customers during this cash crunch but that’s a story for another day. A few times I did manage to withdraw money from the State Bank ATMs, I always ended up with a 2000 Rs note which was a bit difficult to put to use for small transactions. Looking at the bigger picture however, my cash travails are at best minor inconveniences.

On the penultimate day of the self-imposed deadline for return to normalcy, Finance Minister Arun Jaitley stopped just short of declaring the demonetization move a grand success. He has quoted some stats to prove that the move did not have any adverse impact-

• Net increase in the income tax of 13.6% till 19th of December
• Central indirect taxes increase of 26.2%
• Higher collection of indirect taxes in November compared YtY
• Rabi sowing is 6.3% higher compared YtY
• Other positive outcomes related to Life insurance businesses, international tourism, air passenger traffic investments in mutual funds

These no.s are impressive but whether or not these can be attributed to demonetization is still not clear to me. And, so is the efficacy of demonetization on black money. Without a sustained campaign, it is unlikely to make any dent to black money hoarders in the long run. Another complication is the surge in deposits to Jan Dhan accounts. Many of these accounts have been misused but will the govt. take any action? I don’t think so. There are bigger fish to catch, they say!

I don’t know if the push to digital transactions and a less-cash economy was an afterthought, but things seem to be moving in the right direction. Increase in tax base and tax collection will go a long way in revitalizing the economy. For now, all eyes on Mr. Modi as he addresses the nation in a couple of hours. I am guessing he will put a major emphasis on digital and maybe also talk about legislation related to benami properties. Any other populist measure might be announced closer to UP election. What do you think?

India: Right to Food Bill

Right to Food Bill will most probably be passed in the parliament in the near future. With some give and take, most political parties will fall in line. The bill has merits as far as fighting undernourishment is concerned, but there is no doubt that this is a populist measure.  What surprises me most is that all this is happening under the stewardship of our economist PM Dr.Manmohan Singh. While I agree that some welfare measures are needed to fight poverty, hunger, illiteracy, in the absence of any other achievement (on any front including economy), this is at best a desperate measure to save his government’s sagging fortunes.

There has been an attempt to link all the banes of our country such as income disparity, deteriorating farm and rural economies and  poverty, to economic liberalization. If such disparities exist today, it is because the government did not create a conducive atmosphere where economic benefits could reach all. For example, rural connectivity, education quality, health facilities are still in a mess. Liberalized economy might have increased the income gaps but thanks to it we’ve pulled out so many people out of poverty. I would blame poor governance and nothing else.

Quote from Wikipedia:

India currently adds 40 million people to its middle class every year. Analysts such as the founder of “Forecasting International”, Marvin J. Cetron writes that an estimated 300 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. At the current rate of growth, a majority of Indians will be middle-class by 2025.

A growing economy is a must to create jobs and long term prosperity. NREGA, Right to Food, loan waivers every now and then, are at best short term measures. This is where we need to tread cautiously. Once such populist measures are put in place, no government or politician will dare to review them again. For example:

• Everybody agrees that subsidies are bad for the economy, but no government will review/reform the system
• Reservations when introduced, was a time bound program for affirmative action. Has anybody dared to review the quota system?

Incidentally, many of these welfare programs are pushed by NAC, which is just an advisory body without any accountability. If things go wrong, who will own up?

Piggybacking

Piggybacking - Sights in India

Friendly neighborhood pan shop

The neighbourhood is teeming with pan shops. I guess there are more 30 pan shops within 50 meters from my place. Many of these pan shops are make shift arrangements, and occupy just around 4 sq ft area. While talking to one of the shop owners, I realized that the shop had more than 150 items (SKUs). Amazing! With the focus on BoP market and micro-selling (in smaller portions, sizes as in sachets), they are now an indispensible channel to marketers. No wonder why there are so many of them.

From cigarette sticks to condoms to soft drinks, they sell about everything, not to forget the custom made pans keeping in mind the tastes of every customer. But, a pan shop is more than just a place to buy something. It’s a meeting place for the neighborhood – a perfect social barometer for everything in my locality, be it politics, real estate prices or movies. This ‘social’ aspect of pan shops is simply irreplaceable and I expect this aspect to spawn many innovations in the coming days.

Friendly Neighborhood Pan Shop

For the last couple of weeks, there is an incessant debate on FDI in organized retail. If you look at these pan shops and see how the business is organized, you will realize that India is a unique place – incomparable to any other country. The sheer diversity will pose a big challenge to retailers who basically thrive by standardizing. There is no guarantee that the big organized retailing will succeed – especially in rural and semi-urban areas.

At the moment the government seems to be on the backfoot and there is uncertainty over the policy. Amidst all this confusion, one thing is for certain. Walmarts or no Walmarts, pan shops are here to stay. They simply rock!

FDI in multi-brand retail

As expected, Twitter is abuzz with the FDI topic. If one goes by the popular sentiment on twitter, then FDI in retail should be allowed. By and large, tweeple seem to be excited about shopping in Walmarts and Carrefours.

This presentation on the cabinet decision on FDI in retail, throws some light on the impact of the policy. Some highlights from the preso are:

• The FDI in Multi-brand Retail is being opened in 53 Cities only with population of 1 Million
• The opening up of Multi Brand Retail will also have a salutary impact on food inflation
• The direct employment generated by the organized retail sector in India over the coming 5 years will be close to 1.7 million jobs
• At least 50% Of total FDI brought in shall be invested in backend infrastructure
• At least 30% of the procurement of manufactured/processed products shall be sourced from small industries

Organized retailing is not new to India. One cannot oppose FDI on this premise alone. I agree that the backend infrastructure will grow substantially; farmers can expect better prices for their produce and city based consumers can expect cheaper prices. There are a few unanswered questions though:

• What will the net job addition in the next five years? (assuming some jobs will be lost from  unorganized retailing)
• Should the government not worry about the small traders and neighborhood grocery shop owners? Why are they being projected as villains?
• Trade balance with China is already lopsided. Considering the fact that China is still a favorite sourcing destination for most big international retailers, what will the impact of FDI be on the trade balance, ?

In a country where frugal living is a norm, there is bound to be some impact on our ‘way of life’. I wish this does not give rise to blatant consumerism. Doe this matter at all?

Overall, it is a difficult position to take. At this stage one can only wish that there is a healthy debate on the policy before next steps are taken.

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Tweeple Speak:

Foreign retailers should sell 25 % of their goods at a special discount rates to Dalits to appease Mayawati for allowing #FDI in UP (@RationalDesi)

Debate shud be if we want organized retail of not.V hv already accepted tht in form of Reliance, Future etc. In tht case why object to #FDI? (@jagdish_khattar)

iTHINK:#FDI:This is good news for the farmer and the consumer. Bad news for the small-retailer in the big city. RETAIL DARWINISM is here! (@harishbijoor)

———————-

Good luck to all politicians.

Oktoberfest

Creative Commons / Nico Kaise

 

I was so close to making it to the event in 2007 when I had to come back from Germany in August 2007. It is highly unlikely that I’ll make it to Oktoberfest as a bachelor; and I will not become a “Bierleichen”.  But, it is still in my Top 50 Things-to-do list. The question is, when?

Who is the ‘Aam Aadmi’?

So goes a definition of ‘Aam Aadmi’:

“..these are the guys who’ll show up to vote when nobody else cares, as long as you make a few empty promises about delivering tap water, jobs, housing, free TV sets, or under-the-table booze.”

I sometimes think that ‘Aam Aadmi’ is just a fictitious character created and patented by the politicians. Schemes after schemes that supposedly benefit ‘Aam Aadmi’ are announced by the government. Yet, why only a few see the actual benefits? Why, you and I, never figure in the overall scheme of things?

I also think that ‘Aam Aadmi’ is a clever ploy by these politicians. It just makes leading a comfortable life aspirational; so we remain fixated  on ‘Roti Kapda & Makaan’ and they can pass off as ‘thinking politicians’.

An office without Google

If you don’t know what do, just Google. Google has all the answers!

So much of our work life depends on Google that it is unsettling to think of an office without Google.

In the past, a cluttered desk with piles of printed papers, books and other paraphernalia was an existential necessity for a professional. You don’t need that clutter anymore to surmount professional challenges. You just need Google. With all the knowledge accessible through Google, the organizational focus has moved from the objective knowledge to the creativity of individuals.

Google is not just about the search capability. Google has changed the way we collaborate and share knowledge; and how we look at technology, customers and business models.

It will be interesting to shut off Google for a day and measure the impact on employee productivity (and their morale).

I bet it will be substantial.

Colgate on LinkedIn

Somebody at Colgate-Palmolive is thinking about Social Media!

I took part in the poll ‘What do you look for in a toothbrush?’ on LinkedIn out of curiosity. It is not obvious to me why they chose LinkedIn to market tooth brushes. Are the older and wiser folks on LinkedIn not using Colgate anymore? Wondering …

Anyway, here’s a snapshot of the poll results:

Colgate Poll

No surprises here. Cleverly designed poll. Results match the product features! Display ad confirms this.

Colgate Brush Ad

What is a Social Video?

Social Video is the newest addition to our marketing arsenal. It is a new way of engaging consumers with video as the medium. Unlike traditional ads, here the content is mostly co-created by the consumers and shared within their social circles (networks). Some describe it as “advertising powered by social”. Put simply, it brings together the power of video, social sharing and co-creation (innovation) to drive deeper and beneficial engagement with the target audience.

What’s new in this?

Agreed, companies have been advertising since Stone Age. What has changed is:

(a)    Social sharing at the click of a button: Social networks make it easy for the users to share and propagate ‘ideas’ that resonate with them.

(b)   New age media: Is not controlled by the media houses. Consumers control it. Amidst all the brand and messaging clutter, they now have the ability to shut out unwanted messages.

(c)    Video making simplified: A digital camera on every mobile phone, infinite (free) storage and innumerable desktop tools to process these videos, means video making is now easier than ever.

Another transformation that has taken place due to web/information explosion is that, the consumer is now better informed about products and his own needs. Also, the tendency to make buying decisions based on ‘Social Proof’ is on the rise.

Social Video (Marketing) is about leveraging that ‘Social Proof’, in other words, turning satisfied customers into your evangelists.

How is it done?

This is mainly done through crowdsourcing or engaging the community (of users) to generate content in return for rewards, recognition, fun etc. The content thus generated is not (usually) further processed. The end result might not be as polished as an agency product, but it still works fine. Marketers organize all the content in way that makes it easy to share and interact (feedback).

Read this article on crowdsourcing.org for a step by step process of running a social video campaign.

If you come across any good case studies for social video marketing, please do share them here.