Business Model Patterns

Marketing to Teens

Introduction

Electronic media already are playing a significant role in the lives of children and teens, many of whom enjoy access to their own personal media devices. They also are the first to grow up in a world saturated with networks of information, digital devices, and the promise of perpetual connectivity. They are in many ways the defining users of the new digital media.

Many websites allow users to interact with others on a real time basis. The trend is now shifting from communication to commerce and many companies have started leveraging the digital media to reach out to the growing segment in the market.

The Planning Commission’s report for the 10th five year plan puts the number of teenagers in the country at about 230 million, up from about 120 million in 1971. Being a teen has never been easy and especially so in today’s world, say experts. That is particularly true of children growing up in urban areas, who are exposed to satellite TV and internet. “In metros, teens ape westerners but if they are still expected to be ‘good Indian boys’ and girls’, it creates tremendous conflict.

How to Market to Teens

Teenagers have strong opinions and views that they want to be heard. Use marketing techniques that ask for their feedback, or allow them to express themselves. Social networking sites like Facebook have become an outlet for advertisers to get teens involved and create two-way channels of communication. Teenagers not only respond to the product but also provide information about their preferences, needs, and wants when coming up with new ideas.

Teens have a much shorter attention span as compared to adults. So getting straight to the point is the mantra for effective engagement. No long background information spiels about your product. This will only cause them to lose interest and divert their attention somewhere else. They are used to short, relevant messages that they can relate to.

Position your company as one that truly cares about and supports the issues they feel are important. For example, start your own cause or find an established one to support and connect yourself to. Things such as the educating a child, for example, have become increasingly popular. Promote the cause by means of information on company website or social profile and build a platform for the teens to express themselves, get heard and call out actions taken as a result of the whole exercise.

Take advantage of trends and big-named people. This does not mean you have to hire expensive celebrities to be in your advertising. Instead, find ways to connect your product to the phenomenon. If you want to do a sweepstakes, give away tickets to a popular concert.

If you have established yourself online, offer cool downloads, or connect yourself to websites that teenagers enjoy such as social networking sites, gossip columns, popular televisions shows, etc. Finding a way to incorporate your brand into their everyday interests will produce positive results in image awareness.

What to Be Aware of When Marketing to Teenagers

Never assume. Because there are many niche markets and tastes are constantly changing, do not assume that you know what teenagers want. Make sure your message is well researched- including feedback and opinions from focus groups consisting of teenagers. They are, above anyone else, who can tell you the most.

If you are using websites, online communities, or other forms of online marketing, make sure to constantly be changing and adding new concepts. This will keep them coming back on a regular basis to your site, and stop you from being old news.

Just like marketing to other segments, make sure your message is age appropriate. Do not speak down to them. They understand a lot more than teenagers from ten or twenty years ago, so market accordingly. If you are speaking to them like children, they will not listen. Instead, they will most likely become offended and be turned off by whatever message you are trying to convey. Even though they are still young, they want and expect to be treated like young adults.

Initiatives underway..!!

Teens are pretty hands on with their smart phones & tablets and prefer to browse on the same. They are really impatient as well. Most marketers put their films on YouTube as soon as they break on television. Bharti Airtel even launched its broadband campaign; Impatience is the New Life, first on the net. Sensing the drift in the market Aircel bundled internet into its service. The pocket internet service helped Aircel enlist better customers – 2 million of its 30 million customers use the internet service. Johnson & Johnson has launched a complete skin care range targeting the teens – including spot treatment gel, face washes, oil control moisturizers and oil control wipes. In fact, the brand now offers a comprehensive range to deal with various teenage skin issues—including Daily Care Range, Oil Control Range and Acne Control Range. Dermalogica is another brand that has focused on teens in a big way, launching large campaigns toward this segment. The brand’s Clean Start initiative and products were unveiled in January 2010 with much fanfare, including free makeovers and gift hampers to young adults and teens during a Dermalogica-sponsored college student-managed international film festival.

Way Forward

The companies see a huge potential market in the teens’ segment which is still unexplored. The advertising and promotional campaigns targeted towards teens are only going to increase going forward. A lot of these are likely to take the digital/ social media route to market. 

Reverse Innovation Reloaded..!!

The role of emerging markets

In fact, the needs and opportunities in the developing world are so different from those in the developed world that the very first requirements for reverse innovation success are humility and curiosity. One must let go of what he has learned, what he has seen, and what has brought him the greatest successes. In fact, it is best to assume that one have just landed on Mars.

Developing countries will become R&D labs for breakthrough innovations in diverse fields as housing, transportation, energy, health care, entertainment, telecommunications, financial services, clean water and many more.

Reverse innovation has the potential to transform wealth in the world. Growth in developed countries has slowed down. Much of the growth is now in developing countries. The 2008 financial crisis and the more recent debt crisis [in Europe] have only exacerbated this situation. As such, we are likely to see the center of gravity for innovation shifting from rich to poor countries.

How would Reverse Innovation benefit India?

Primarily Reverse Innovation would lead to further boom in industrialization. As more and more multinationals adopt and opt to produce and/or invent new products in India for local as well as western markets, the Indian economy would witness an increase in FDIs and also the indigenous multinationals would instinctively raise their investments to build advanced R&D facilities that would inspire cutting edge innovation and engineering. It also means the engineers would experience higher employment opportunities, and the consumer market would profit from better products developed to cater to their needs at reasonable prices.

Besides OEMs, Reverse Innovation would also lead to the overall development of the entire eco-system comprising of Tier I and II suppliers, technology vendors, educational institutions which support, fortify and facilitate this unprecedented growth through concurrent engineering, providing smart and agile engineering and production solutions to complex challenges, and development of resources.

Implications of reverse innovation for developed countries

If Western multinationals do not innovate for customers in developing countries, they not only stand to lose growth in these countries, the implications are far worse. Emerging giants will do the innovation and bring those innovations into rich countries and disrupt multinationals. We are already seeing strong local players such as Tata, Mahindra, Haier, Lenovo, Goldwind, Suzlon, Cemex and Embraer. The list will increase, no doubt. The biggest competitors for multinationals are local companies from emerging markets.

For multinational corporations, reverse innovation is not a "nice to have" boost to revenue growth rates. It will power the future -- not just in emerging markets, but everywhere. Many tremendous rich-world business opportunities will arise first in emerging markets. To compete, global corporations must be just as nimble innovating abroad as they are at home. The future is far from home.

Way forward..!!

The emerging economies have the world’s highest projected economic growth rates by a wide margin. The possibility of missing out on such growth should be more than enough to compel many of today’s multinationals to tackle the challenge of reverse innovation. And, again, the full implications of standing aside while others tackle the reverse innovation challenge are even more consequential. Failure abroad can lead to failure at home.

Innovation is expensive and risky. As such, it is hardly surprising that many established global companies discount the need to innovate when competing in emerging markets. How can it make sense to spend heavily on an innovation for a market in which customers have so little money?

Because in an ever lengthening list of industries, it is the only way to win.

Reverse Innovation

Introduction – What is reverse innovation?

Historically, multi-national companies innovated in west (developed countries) and sold those products in east (developing countries).  Reverse Innovation is doing exactly the opposite.  It is about innovating in east and bringing those products to west. Reverse Innovation is the strategy of innovating in emerging (or developing) markets and then distributing/marketing these innovations in developed markets. Reverse innovation has two parts; one is that companies got to innovate in east and then bring those innovations into west.

Who is doing what?

Many companies are developing products in emerging countries like China and India and then distributing them globally. One has to look at innovation paradigms in companies like GE, P&G, Nestle, Pepsico, Tata Motors, Godrej, etc. these companies have shed the conventional way of innovating in the west and have really generated dramatic growth by means of reverse innovation that has created huge market not only in the east but also in the west.

GE – GE MAC 800: GE’s innovation on the GE MAC 400 to build a portable low-cost ECG machine to cater to the rural population who cannot afford expensive health care was launched as an improved version a year later in 2009, in U.S. as MAC 800.

P&G – Vicks Honey Cough – Honey-based cold remedy: P&G’s (Vicks Honey Cough) honey-based cold remedy developed in Mexico found success in European and the United States market.

Nestle – Low-cost, low-fat dried noodles: Nestle’s Maggi brand – Low-cost, low-fat dried noodles developed for rural India and Pakistan found a market in Australia and New Zealand as a healthy and budget-friendly alternative.

Pepsico – Kurkure and Aliva: Pepsi is planning to give developed markets (particularly West Asia) a taste of its salted snack Kurkure (and also another snack Aliva). The product enjoys huge success in India and has become a Rs. 700 crore brand within a decade of its launch. The success is attributed to product innovation and a good marketing strategy. E.g. Made from corn, rice and gram flour, zero per cent trans fats and no cholesterol, Rs-3 small packs for pushing sales in the lower-tier towns.

Tata Motors – Tata Nano: While companies like Ford set up its global automobile platform in India and catered to the niche premium segments in India, Tata introduced the Tata Nano for the price conscious consumer in India in 2009. Tata plans to launch Tata Nano in Europe and U.S. subsequently.

Godrej – Chotukool Refrigerator: In 2010, Godrej Group’s appliances division, Godrej & Boyce Manufacturing Co Ltd test-marketed a low-cost (dubbed the world’s lowest-priced model at Rs. 3,250) refrigerator targeted mainly at rural areas and poor customers in India. The product runs without a compressor on a battery and cooling chips. The company wants to use a community-led distribution model (as an alternative channel of distribution) to push for product growth.

Key Drivers

The fundamental driver of reverse innovation is the income gap that exists between emerging markets and the developed countries. The per capita income of India, for instance, is about US$3,000, whereas it is about $50,000 in the U.S. There is no way to design a product for the American mass market and then simply adapt it and hope to capture middle India. You need to innovate for India, not simply export to India. Buyers in east demand solutions on an entirely different price-performance curve. They demand new, high-tech solutions that deliver ultra-low costs and "good enough" quality.

to be continued...

Carbon Dioxide absorbing Paints

It is easy to think of plants as passive. But they keep working at a complex process that fuels the whole planet: photosynthesis. With the help of solar energy they put together food from water and carbon dioxide that forms the basis of the food chain. What if a similar approach is followed by buildings? What if buildings came alive? What if they could breathe carbon dioxide (CO2) like plants? This is no longer a science fiction. The increasing carbon footprints are posing a greater threat to the environment that is increasing the greenhouse emissions thus leading to increase in global warming. There are efforts being made globally to address the issue of increasing carbon footprint.

One such effort to reduce the carbon footprints is by means of paints that can absorb CO2. Initiatives in this direction are being pursued by several industry players – The Real Milk Paint Co, Mitsui OSK Lines (MOL) and Avatar London, to name a few.

The principle on which the phenomenon discovered by Avatar is as follows: The wall paint consists of chemicals, referred to as protocell by the researcher, that are engineered to behave like organic microorganisms – with the added benefit that they can be manipulated to do things nature cannot. This chemical can produce simple chemical reactions when it comes in contact with CO2 molecules, turning the CO2 into calcium carbonate, or limestone, which stops the greenhouse gas from rising up into the ozone layer.

As a by-product of this process, the limestone produced by the protocell could naturally "heal" micro-fractures in walls, channeling through tiny breaks, helping to extend the life of any structure it was painted on to.

The thickness of the limestone will grow over time, creating insulation and allowing the building to retain more heat or indeed preventing it from heating up underneath the sun.

The layer of limestone could take anywhere between a year and a decade to form depending on the concentration of carbon dioxide in the surrounding air. However the researcher says that "eventually we will see protocell technology become self-repleting (able to replenish itself) and (it) will be considered alive."

The technology, if the same becomes commercially viable, will certainly be a step towards reducing carbon footprint and global warming at large.

Retail Re-revolution

Overcrowded malls, long queues for billing, waiting to park the vehicle have become a common experience for customers. To make shopping a better experience for the customers the shopping malls have come up with several offers to lure the customers to shop on weekdays in order to avoid overcrowding on the weekends. But this has also not solved the purpose. It goes back to the demand-supply theory – the malls are less and the customers are far too many. Having said this, a major chunk of the local kirana/ mom-n-pop stores which fall under the so called ‘unorganized retail’ category bear the brunt of it all in terms of reduced sales, even lower margins. The retailers under the unorganized retail type are able to offer services like home delivery, credit period, delivery of products on a need basis, option of returning the stuff back to the retailer in case it is not good, etc. In spite of the fact that they offer more non-tangible benefits, they are still loosing ground to organized retailers.

Turning around their business has become the need of the hour for the retailers. For this, they are taking several steps:

• Give a longer credit period
• Sell a price lower than the MRP (maximum retail price) thus taking a cut on their margins
• Increased frequency on home delivery of products on need basis
• Give the whole customer experience a personal touch – giving sweets, gifts to customers during the time of festivals
• Take orders on the phone
• Some have also gone to the extent of hosting their websites in order to promote the products and offer of the day

The above steps have slowed the ground losing process for these mom-n-pop stores. The battle may have been won but the war is not over yet.

According to a McKinsey report published in September 2008, called 'The Great Indian Bazaar: Organized Retail Comes of Age in India', organized retail in India is expected to increase from 5% of the total market in 2008 to (14-18)% of the total retail market and reach US$ 450billion by 2015.

One thing still favoring the mom-n-pop retailers in India is government regulations that create high entry barriers for the bigger retailers

• Land market regulations: Unclear land titles and red tape creates barriers to entry and business turnover
• FDI restrictions: Reduce competitive intensity among domestic players

One approach to deal with the arising situation is as under:

The mom-n-pop/ kirana stores need to come together and form an association within a shopping area/ community. For example retailers 1, 2, 3 and 4 decide to form a cartel and work together on improving sales for each other.  Retailer ‘1’ sells readymade garments, retailer ‘2’ has a restaurant, retailer ‘3’ sells groceries and retailer ‘4’ has a snacks cart. Now in a hypothetical situation where in say a customer goes to buy readymade garments shops for say Rs. 5000/- and the retailer gives him a shopping voucher worth Rs. 250/- which he can redeem at the restaurant owned by retailer ‘2’ provided his bill amount is in excess of Rs. 1000/-. Now in case the bill amount is more than Rs. 1000/- at the restaurant, the customer gets a voucher worth Rs. 50/- which he can redeem at the groceries store provided he shops for Rs. 500/- or more. Now in case the bill amount is in excess of Rs. 500/- the customer gets a shopping voucher worth Rs. 20/- which he can use at the snack cart provided his bill is more than Rs. 100/-. The sharing mechanisms should be worked around in a manner where in all the ones involved in the association can benefit out of it.

Another approach to deal with the above mentioned situation is:

The mom-n-pop/ kirana stores selling similar stuff but located in different localities need to come together and form an association. For example retailer A, B, C and D are in similar business of selling readymade garments but are located in non-competing areas. They can come together and can engage in bulk sourcing from the supplier. Since the city of delivery is the same there will not be any extra transportation cost involved as well. This will give the retailers an opportunity to play around with margins.

Only an ‘out of the box’ thinking will be able to revive the mom-n-pop/ kirana stores. They really need to act fast else face phase out or elimination by the bigger organized retailers.

Natural Language

Introduction

All of us use search engines on the internet. Typically we type key word or multiple words and the search engine comes back with the ‘search results’ page with the links. Just imagine if one types in the natural language, the way we speak, and the search engine comes back with specific summary of all the relevant information.

What is Natural Language Processing?

Natural-language processing (NLP) is an area of artificial intelligence research that attempts to reproduce the human interpretation of language. NLP methodologies and techniques assume that the patterns in grammar and the conceptual relationships between words in language can be articulated scientifically. The ultimate goal of NLP is to determine a system of symbols, relations, and conceptual information that can be used by computer logic to implement artificial language interpretation.

What’s happening around?

Companies are working on the theoretical issues of computational linguistics and developing technologies such as speech processing, machine translation, universal and application-specific dialog engines, information retrieval, text mining and hypertext databases, automatic text summarization, natural language understanding and generation, etc. One key objective is to provide advanced NLP software for multiple languages and modalities exploited in business applications. Another fundamental objective is to provide the sophisticated NLP technologies required to linguistically enable human-computer interfaces.

Applications

Natural language processing provides both theory and implementations for a range of applications. In fact, any application that utilizes text is a candidate for NLP. The most frequent applications utilizing NLP include the following:

• Information Retrieval (IR) – Provides a list of potentially relevant documents in response to a user’s query
• Information Extraction (IE) – Focuses on recognition, tagging and extraction into a structured representation, certain key elements of information, e.g. persons, companies, locations, organizations, from large collections of text. These extractions can then be utilized for a range of applications including question-answering, visualization, and data mining
• Question-Answering – Provides the user with either just the text of the answer itself or answer-providing passages
• Summarization – Can empower an implementation that reduces a larger text into a shorter, yet richly constituted abbreviated narrative representation of the original document
• Machine Translation – Various levels of NLP have been utilized in MT systems, ranging from the ‘word-based’ approach to applications that include higher levels of analysis

How will search engines make money?

Various business models emerge:

• More specific and focused advertisements on the searched pages
• Database of users based on age group, gender, location, preferences, etc. – A huge source of data that could potentially be a gold mine for market/ consumer research and tracking the changing/ evolving preferences of people
• Search itself could become paid in certain cases
• Bundle the text platform with voice recognition, streaming media, voice recognition & understanding emotions, biometric, etc.
• Search within emails – information from one cloud made available at a cost
• Enterprise content management – more a B2B approach

Limitations

The greatest challenge to NLP is representing a sentence or group of concepts with absolute precision. The realities of computer software and hardware limitation make this challenge nearly insurmountable. The realistic amount of data necessary to perform NLP at the human level requires a memory space and processing capacity that is beyond even the most powerful computer processors.

Conclusion

While NLP is a relatively recent area of research and application, as compared to other information technology approaches, there have been sufficient successes to date that suggest that NLP-based information access technologies will continue to be a major area of research and development in information systems now and far into the future.