MARKETING SPECIAL ....How to Turn Online Data into a Pricing Strategy That Works

How to Turn Online Data into a Pricing Strategy That Works

o    If you’re a frequent online shopper, you already know you’re being watched. Companies collect reams of data based on your browsing and purchasing patterns. There’s so much data, in fact, that it’s easy to get lost in the numbers. That’s where Ken Moon comes in. A professor of operations, information and decisions at Wharton, Moon is researching how retailers can use online data to create effective pricing policies. He visited with Knowledge@Wharton to discuss his paper, “Randomized Markdowns and Online Monitoring,” which was co-authored with Kostas Bimpikis and Haim Mendelson of Stanford University’s Graduate School of Business.

An edited transcript of the conversation follows.

Knowledge@Wharton: Could you give us a summary of your research?

Ken Moon: I do research in empirical operations. That means two things: I work with data, sometimes in collaboration with companies, hospitals or marketplaces. And I’m really trying to be prescriptive about decision-making in my research. In this particular project, we worked with a retailer that is active online. It was a very detailed, customer-level data set. What’s interesting about it is that you can track a single customer both online and offline. For instance, if the customer today were to go on his or her phone, look at a product, go to a computer tomorrow, look at it, and then walk into a store another day and buy it, we would be able to track all of those things. It really opened up a lot of avenues to explore.

One thing that’s very interesting about this particular project was that we were able to look at a very information-rich environment in a way that we see in our everyday lives. If we think a product that we’re interested in might drop in price, we can check our smartphone. It’s also the case now that these companies can track all of this information at a very individual level. For both sides, it’s a very information-rich environment. It’s very interesting to think about how that affects the decisions of companies that are active in this space and how it affects outcomes for customers and consumers.

Knowledge@Wharton: When you were looking at this data set, what did you find about price monitoring?

Moon: I think one broad takeaway is that information seems to matter. You do have customers who are very intensive in their monitoring. They’re typically the more price-sensitive customers. But also, their opportunity cost to be doing this sort of monitoring is very low, so they are going to be checking very often. Your most price-insensitive customers are not checking very often. It’s about every 20 days, on average, between visits. It’s a very big difference in terms of how these consumers are able to access information, even from this very ubiquitous channel. And it makes a big difference in terms of outcomes as well.

Knowledge@Wharton: Is there a clear indication of how companies should be playing with price based on how someone is monitoring price?

Moon: Those are exactly some of the issues that we wanted to explore in this research. One of the interesting things that we found is that, even in this very informationally rich space, sometimes very simple policies and very simple decisions can be very effective. You can capture most of the value as a firm.

To give an example, the retailer that we worked with follows a very simple pricing policy. For each product, you’re going to start at a certain price, a list price. Then at a certain point in time during a season, you drop the price down to its sale price, which is a very predictable percentage of that initial list price. Finally, you move to another predictable price, a clearance price, where you’re trying to just get the products off the shelves.

What’s interesting there is that the consumers understand what prices they’ll see. It’s very predictable. But all the retailer did was to make the timing of those markdowns unpredictable. By doing something very simple like that, it really exacerbated the informational asymmetry in terms of the cost of monitoring. Those customers who were price-insensitive, for whom it was very costly to be monitoring often, were the ones who couldn’t take advantage of a markdown when it happened. They understood that, so they would buy earlier. There is an interesting aspect there where this sort of pricing has an allocative role. You’re deciding who buys at what price.

Knowledge@Wharton: It seems like more companies have moved toward unpredictable pricing. There used to be the price, then it went on sale, then it went on clearance. Now it seems that items could be 50% off one day, 30% off the next day, or it could be full price and then 50% again. Is that unpredictable strategy hurting retailers?

Moon: I think it depends on the market. In this sort of setting, we find that being predictable, being simple but also having some degree of flexibility, is actually the right way to go. You are capturing, from the first perspective, most of that value. If you think about an industry where that sort of quickly changing pricing has been very successful, an example might be the airline industry. You might be on a plane, and you sit next to someone who’s paid a very different price for the same ticket. I’m pretty price-sensitive, so I might have bought a cheaper ticket.

The other thing in that setting is that when they do that very successfully, the plane tends to be full. They tend to be able to allocate all the seats that they have. That’s sort of the price I think you pay for having that cheaper ticket. But the same message carries over into this setting. We find that when you do this sort of pricing correctly, with these simple sort of policies, you’re able to sell a lot more units. You’re able to put more products profitably in the hands of more people who want those products. There’s an allocative role there. I think an important message here is that, from a consumer welfare standpoint, this sort of pricing can have ripple effects that have positive implications.

Knowledge@Wharton: What are some practical ways that retailers can apply this research?

Moon: I think one is to be able to understand why certain price policies might work, including ones that you’re using already. In the case of our retailer, we asked them, “Why are you using this type of policy?” They almost think of the customer sort of like a pet or a dog, where if you train them the wrong way, they’ll just start expecting to wait for a markdown. This was their way, heuristically, of not training the customer by introducing this uncertainty, making them unsure. But what we found was that you have different types of customers who have these different costs of monitoring this channel, and that’s really what’s driving what was good about this way of pricing.

If you have a lot of data, be able to understand, even with a simple policy, why it is effective. The second message there was that simple works. In this setting where you were trying to, say, give coupons to your most price-sensitive customers and identify who they are, you have this mountain of data, recording all of their behavior online. What we find is that there are some very strong signals from that data. You only need a few things. If you look at how people monitor online, the frequency with which they monitor, that’s a very strong signal of their price elasticity. You don’t need to always be using all of that information. Tracking something very simple, like the ratio of purchases to visits online, is a very strong signal and captures almost all of that value that you would have from a sophisticated analysis of all the data.

Knowledge@Wharton: What are you planning on looking at next?

Moon: The most related thing would be looking at these informational costs, these frictions, in a number of other settings. I’m doing some work in online marketplaces and other places where you can get very interesting data at the granular level. But more broadly, there are a lot of settings that are becoming much more informationally rich, whether it’s firms that are able to track you online, as a patient, in the marketplace or even in the workplace. An important aspect of these changes is to be able to understand how it affects firms who are experimenting to see what they can do with this sort of data, and how comfortable consumers and workers should feel about these changes. It’s a very interesting space from a research standpoint. I’m excited about it.

http://knowledge.wharton.upenn.edu/article/creating-retail-pricing-strategy/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2017-06-06

PERSONAL SPECIAL..... Before You Make Your To-Do List, Make a To-Be List

Before You Make Your To-Do List, Make a To-Be List

    

As you crawl into bed, thump your pillow to make the perfect little cave for your head to rest in, pull the covers up tight under your chin, and let go of that big sigh that indicates the day is finished, how do you look back on the waking hours you just experienced? How do you measure the quality of your day?

Measuring Your Day by What You Do

Most of us will measure our day by what we did. We will reflect back and count the things on the to-do list we were able to check off. The more check marks, the better.

How well we did will also come into play as we reflect back on our doing. The more praise we received for it, either the self-provided kind or that offered by others, the higher we rank our day in terms of quality.

Most of us will measure our day by what we did.

We may compare our daily accomplishments to those of the people who trudged through the hours with us. “Did I do more or better that Jim, John, or Mary?” No matter how much we goofed up, if Mary goofed up more, than we can sigh with relief and call it a good day as we close our eyes for the night.

The Not-So-Good Days of Doing

What happens, however, if you never got done what you wanted to get done or if what you did was simply more of the same old drudgery that fills most of your days? If you didn’t do what you had planned well or, heaven forbid, you screwed up royally and had others chastise you for it, chances are you are thumping your pillow a little harder than necessary.

Your ability to fall asleep may also be disturbed as you ruminate regretfully over all the things you did that you wish you didn’t. Tonight you may be giving Mary something to smile about.

So is it safe to say you had a bad day when you didn’t do enough or do it well enough? Only if that is how you choose to measure life quality, the way I did for most of my life.

Learning the Hard Way

I have given the Marys of this world plenty to feel good about over the years. I have spent many nights abusing my pillow and tossing and turning as I reflected back on the dids and did nots of my waking hours. I spent my days as a check mark addict, a praise dependent, and a competitive comparison seeker.

I was compelled to set one goal after the other; to constantly add “just one more" thing to my mile long to-do list. I believed I had to do in order to feel like I was enough. So I did and I did and I did until I could do no more.

We seldom determine the value of our life experience by how we are or on the beingness of it all.

I got sick. I was forced to cut back on the doing and face the reality of my situation. Now, I consider myself a pathological doer in recovery.

Most of us still measure the quality of our daily experiences, the quality of our lives by what we do. We seldom determine the value of our life experience by how we are or on the beingness of it all.

What would happen if we did?

A Day Based on Being Rather Than Doing

What if you and I ignored the urge to check out the check marks on our to-do lists before getting into our PJ’s and brushing our teeth? What if we sat quietly somewhere before bed and reflected on how we were that day; how we felt and how others seemed to feel around us rather than on what we accomplished and who we did more than? Would the quality of our day change?

The Important Questions to Ask at the End of the Day

I know the quality of my life has changed since I began to measure my day differently. In fact, my life improved almost immediately when I began, at the end of the day, to reflect on the questions that really matter. Here are some questions worth asking yourself:

●︎ How was your day? Really?

●︎ Were you feeling peaceful and calm at certain points of your day? If so, you can give yourself lots of points for that.

●︎ Were you loving and compassionate with Mary when she spilled coffee all over the stuff you were working on, or did you refrain from honking your horn at the slow driver in front of you that made you fifteen minutes late for your appointment? Give yourself even more points, if you said yes. Your day score is getting better.

●︎ Were you mindful and aware of the beauty around you? Did you appreciate it? Did you whisper a few words of prayerful gratitude? If so, better still.

●︎ Did you seek stillness and quiet at some point for a few minutes at least? Did you take a moment to just breathe and observe the life force within you?

●︎ Did you reach out a hand of support or offer a few kind words to another, not because you had it on your to-do list, but because it was something you were inclined to do from the heart?

●︎ Did you smile often? Did you laugh? Did you find moments of unexpected joy? Did you seek them?

●︎ Did you love what you were doing or most importantly did you love the people around you?

Congratulations! All these things make for a great day.

Is There Room for Improvement?

Even if you have big beautiful checkmarks beside everything on your to-do list at the end of your twenty-four-hour time block, there may still be room for improvement in the being department. How would you answer the following questions?

●︎ How was your day? Really?

●︎ Were you tense, irritable, stressed out in the process of the doing?

●︎ Were you experiencing rage, impatience, or resentment for more than a few minutes today?

●︎ Did you complain or criticize a great deal?

●︎ Did you consciously seek to do more or better than someone else?

●︎ Were you unkind or unloving to anyone or anything, including yourself?

●︎ Did you fail to reach out to someone you knew was in need?

●︎ Did you forget to notice, let alone appreciate, all the beauty of life that was going on around you and in you?

If you said yes to a few of those questions above, maybe it is time to work on improving the quality of your day and of your life.

Take Heart: Tomorrow Will be Better

Don’t be too hard on yourself, though, for you are not alone. Many of us will answer yes to those questions if we are being honest. Most of us spend too many moments of our day diminishing its quality by getting too wrapped up in doing. Even in my recovery, I find myself slipping from time to time back into unhealthy doing.

The quality of your life is determined by who you are, not by what you accomplish.

Recognizing the problem is the first step to healing. The good news is, from that awareness, we can grow from the less than good days of being. We can begin to experience life the way we were meant to, with peace and joy.

All it takes to begin the change is three simple steps.

Steps to Improve the Quality of Tomorrow

1. The first step is to be more conscious, before you drift off to sleep, about how you are living your life regardless of the things you get done or do not get done. Use today as an example. Reflect, learn and grow from the hours you just experienced.

2. Next, than doing. Of course you will have to do something but prioritize the living component over the doing component for the upcoming 24 hours.

3. Finally, write a to-be list instead of a to-do list for tomorrow. It may look something like this:

Tomorrow I will be

●︎ mindful

●︎ aware

●︎ peaceful

●︎ a person who seeks reasons to smile and laugh

●︎ loving

●︎ appreciative

●︎ forgiving

●︎ thoughtful

●︎ supportive

●︎ still

●︎ quiet

●︎ faithful

●︎ honest

●︎ a person who simply wants to be

The quality of your life is determined by who you are, not by what you accomplish. We are, after all, human beings not human doings.

Let’s base the value of our day on that small bit of wisdom and live accordingly. Just be.

Now settle down and have a good night’s sleep. You have earned it!

This post was republished with permission from tinybuddha.com.

NANCY DALEY

https://advice.shinetext.com/articles/why-a-to-be-list-can-matter-more-than-your-to-do-list/?utm_source=Shine&utm_medium=Blog

BOOK /TECH SPECIAL.... A ‘World Without Mind’: Big Tech’s Dangerous Influence

BOOK ..  A ‘World Without Mind’: Big Tech’s Dangerous Influence

French philosopher Rene Descartes famously said “I think, therefore I am.” But in the digital age, what we think and how we live are being influenced in a big way by just a handful of tech firms: We are informed by Google and entertained by Apple; we socialize on Facebook and shop on Amazon. It’s time to reclaim our identities and reassert our intellectual independence, according to Franklin Foer, a national correspondent for The Atlantic and former editor of The New Republic, in his book, World Without Mind: The Existential Threat of Big Tech. He recently joined the Knowledge@Wharton show, which airs on SiriusXM channel 111, to explain why these firms’ hold on society is a cautionary tale for the future.

An edited transcript of the conversation follows.

Knowledge@Wharton: Tech companies such as Amazon have truly transformed themselves over the last couple of decades [and become a big part of our lives].

Franklin Foer: Amazon is really one of the most impressive specimens in the entire history of American business. It started off as a bookstore, then it morphed into becoming the ‘everything’ store. And it’s morphed beyond that. We know about Amazon Web Services and how it powers the cloud. We’ve seen how it just keeps expanding, culminating most recently in its decision to purchase Whole Foods. The same could be said for Google, which set out to organize knowledge but then became Alphabet, which has this massive portfolio, including a life-sciences company that aims to make us immortal.

Where do these companies end? Do we have a problem with their size? These are questions that go to the fundamental nature of our economy and whether we can really have a competitive, capitalistic system. There are more fundamental questions [we need to ask] about the future of our culture and our democracy because these companies amass tremendous troves of data about us. Those troves of data are portraits of our psyche. They use this incredibly powerful information about us in order to alter our behavior. There’s a huge amount of convenience that comes with that, but there are also real, important questions that need to be asked of these companies.

In the last couple of months, we’ve started to ask some of these questions. The outcome of the last election, with the proliferation of fake news and the debate over Facebook’s culpability in that question, has triggered a real backlash against that company. There are a number of flashpoints that have shifted the debate [about society and technology] considerably.

Knowledge@Wharton: There are three or four companies, which are giants in the tech world, that have unbelievable amounts of control over so many things in our society.

Foer: Absolutely. The Europeans call them GAFA: Google, Amazon, Facebook and Apple. There are a couple of reasons why these guys have triggered so much anxiety and why I found myself drawn to asking hard questions of them. The first is the accumulation of data. The second is the way in which that data ends up getting leveraged. We’re in the realm of algorithms and machine learning and artificial intelligence, where the advantages that accrue to the companies that have mastery over those things end up compounding over time.

So the gap grows between those big four and everybody else. We may already have reached the point where people have stopped trying to chase them. In Silicon Valley, the greatest ambition now is not to displace Google or Facebook. It’s to get bought by Google and Facebook. There’s a real question about [the future of] entrepreneurship here. Where are the opportunities? If you cease to exist in an economy where you can displace those big players, the incentive to aim for the stars and to try to create those kinds of unicorn companies diminishes.

Knowledge@Wharton: You write in the book, “As these companies have expanded, marketing themselves as champions of individuality and pluralism, their algorithms have pressed us into conformity and laid waste to privacy. They’ve produced an unstable and narrow culture of misinformation and put us on a path to a world without private contemplation, autonomous thought or solitary introspection. A world without mind.”

Foer: There’s so much about technology that’s so wonderful. I have a daughter who’s 12 years old. When she was born, there was no iPhone, there was no Kindle, there was hardly social media. Over the course of this decade, incredible things have happened. They’re real monuments to human creativity, and it’s hard not to bow down before these creations.

But the magical qualities of these creations shouldn’t distract us, shouldn’t preclude us from asking skeptical questions because the stakes here are supremely high. Over the course of the long history of humanity, we’ve always had tools that have been extensions of us. You could argue that technology is one of the things that defines us as a species.

But what’s getting automated right now isn’t upper-body strength. We’re not automating our ability to plough the fields or make widgets. We’re talking about the automation of mental exercises. These companies have technologies that are intellectual technologies. [They come] between us and reality. They are the filter we use to get news and information. They intend to create virtual realities that we’re going to be inhabiting, and they’re trying to complete this long merger between man and machine.

Soon, these technologies are going to be not just worn on our wrists or worn as glasses. They’re going to be implanted within us. We need to ask the biggest questions about what makes us human, what are the things that we want to preserve in this transition? You can’t fight the flow of technology. But we should also assume that, as human beings, we have agency. We have the ability to shape our own destiny, and we should be active in doing that, not just passively accepting whatever comes next.

Knowledge@Wharton: How impactful have some of these changes been on retail? Malls have gone significantly down in the last few years, and manufacturing has become more automated.

Foer: Let’s just take that one question of the future of retail, for instance. My dad was a small-business owner. He had a small chain of stores. He taught me a real appreciation for the value of small business and capitalism. He was also — in a weird combination — an antitrust lawyer, which really affected my thinking about capitalism, the virtues of having a competitive, diverse marketplace and what that means for us as consumers. But we also need to think about what it means for us as citizens.

While prices may be low [with automation], we need to start asking questions about the future of work. As stores disappear, a big source of jobs is evaporating. I think about it in terms of what makes life meaningful. If we live in a world where we’re planted in our own houses and we’re able to summon every movie, every book to our fingertips, that takes away a great opportunity to go out and experience culture in a collective sort of way. I think about commerce as being a fundamental social experience. When I go to the store, I get out of my house. I interact with other people. It may seem trivial, it might seem incredibly superficial, but those interactions are really important to us in the way that we think about our fellow human beings and about the quality of our own lives.

What comes next when commerce is entirely virtual? How will human interaction change? How will our society change? Are we happy with those changes? At what price [comes] convenience and efficiency? I don’t pretend that these are easy answers, and I don’t pretend that we’re not accruing incredible benefits from all of these changes. But we should also spend a little time thinking about what we’re losing in the process.

Knowledge@Wharton: How do you see Facebook’s role in how we consume media changing in the future?

Foer: I want to talk about this from a very narrow perspective, which is that I’m a journalist. Over the course of my career as a journalist, the profession has become extremely dependent on Google and Facebook. As advertising markets collapsed, there became this need to scale up in a quick sort of way, and the only way to get revenue was through growing traffic. The only way to grow traffic was by relying on these platforms. That meant that journalism needed to master these platforms. It’s a very unhealthy state of dependence. The values of those platforms end up becoming the values of everybody who depends on those platforms.

As an editor, the type of work that we did changed because we needed to succeed in Facebook. It’s kind of a debasing thing where the headlines we wrote had to be sensationalistic in a way that could travel on Facebook. The subjects that we had to write about had to tap into the hive mind that existed on Facebook. Instead of shaping the news, instead of making choices that were ennobling for our readers, trying to expand the minds of our readers, we ended up doing a whole lot of pandering. It can’t be healthy in the long run.

I edited a magazine that was left of center. The mood that exists in the world right now is not left of center, it’s kind of left. I found that, just to get traffic, there was this temptation constantly to pander to what politicians call “the base.” I see this all the time. It’s a dissent to be somebody who disagrees with whatever the consensus is — it’s to be cast out. Ultimately, it’s just not healthy for our politics to have these two tribes.

We think about our politics as extremely polarized, and it is. But it’s also extremely conformist right now. If you live in one of these two tribes, your informational ecosystem is extremely restricted. Facebook is a feedback loop where you get what you want to hear. We just get driven further and further into our corners through this technology that’s giving us what we want.

Knowledge@Wharton: What about Apple’s role?

Foer: Of the four big companies, Apple is the one that troubles me the least. I dislike the way in which it collects data. But at the end of the day, Apple is a hardware company and less involved in the sorts of intellectual technologies that I’ve described. Apple has done things to remake the music industry, for instance, that probably on balance I don’t like. But if I were to rank the four companies in terms of their perniciousness, I would put Apple at the bottom of the list.

Knowledge@Wharton: What about Google?

Foer: To me, the problem with Google is its ever-expanding goals. The thing that bothers me about Google is that there’s almost a religious intensity to what they do. [Co-founders] Sergey Brin and Larry Page come from the world of artificial intelligence. Artificial intelligence is this incredible thing, but there are different ways to practice artificial intelligence. There are all sorts of ways in which it’s an incredible convenience. But there are other people who want to achieve what’s called ‘AI complete,’ which is to create an artificial intelligence that is truly akin to a human intelligence, that has an understanding of language. There’s a whole, almost messianic vision that comes with it.

I’m sure you’ve heard of Ray Kurzweil, an amazing engineer who has this idea of singularity, of this moment where we completely merge with the machine, and the machines become smarter than the humans. We end up downloading our brains into this virtual world where we live forever. It’s really a religious vision. Ray Kurzweil is the director of engineering at Google now, and I think that Larry Page has a version of this sort of fantasy that he entertains. That’s his ambition for the company.

It’s a bit of sci-fi fantasy, so I’m not really concerned about singularity. What I’m concerned about is that when you believe you’re on this kind of messianic mission, and when you treat your job with that kind of religious fervor, all of the temporal concerns, all of the concerns about law and ethics and the present and what you might be destroying, end up getting thrown out the window. This is a problem that I have more generally with these companies.

You might think that I wrote a left-wing book, but I think I wrote a pretty deeply conservative book where I’m really worried about the fate of important institutions. There’s a lot of wisdom built into the things that we’ve developed over time. I worry that some of these companies are just so fervent, so hubristic and self-confident about what they’re doing that they don’t really pause to consider what’s being destroyed in the course of rushing to a glorious future.

Knowledge@Wharton: We’ve also transformed into a society where income inequality is a staggering issue.

Foer: Absolutely. We need to look at the ways in which these companies exacerbate the divide, the ways in which they sit on these piles of cash. If you work for one of these companies, your life is amazing, right? We all know about their famous corporate campuses and the incredible benefits that come with working for one of these monopolistic firms. But what we see a lot of in the economy is not just a gap between the rich and poor in the aggregate sense. There’s almost a gap between the rich and poor within each of these sectors.

If you’re the second or third player in one of these fields, you don’t get paid the same because these companies collect the monopolistic rent. They are able to because they have such a dominance in their field and they don’t actually have to worry about competition. They can sit on piles of cash and distribute it in whatever way they want. They can hoard it, as Apple does, or they can distribute it to their workers in terms of benefits that keep their workers tethered to those companies. But everybody else in the economy doesn’t have the pleasure of benefiting from monopolistic rents, so the gap grows.

http://knowledge.wharton.upenn.edu/article/world-without-mind/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2017-10-19

GADGET SPECIAL.... Headphones that will surprise you with specs and price

Headphones that will surprise you with specs and price

From wireless earbuds to planar magnetic headphones, these options are bang for your buck

EARBUDS - RHA S500

Earbuds are loved for their portability and noise-isolating capabilities. They’re great for brief walks around the neighbourhood, morning commute or a day at the office. In this contested category, the RHA S500 is a great choice. It has impressive clarity and precision of an in-ear headphone, along with a comfortable fit.

PLANAR MAGNETIC HEADPHONES — Tidal Force Wave 5 Headphones

Planar magnetic headphones use a magnetic field to move the diaphragm of a speaker, and a thin sheet of coil allows for greater sound uniformity. Tidal Force’s Wave 5 Headphones utilise this technology yet cost less than half of what other companies charge. They sound incredible. If you are an audiophile, you should check out the Wave 5.

WIRELESS EARBUDS — Anker SoundBuds NB10

These wireless earbuds from Anker offer good-sounding inear headphones (and battery packs, chargers and cables) all for a great price. You will love its warm sound and remarkable bass response. Its demureness makes it great both when you are at the gym and out of it.

NOISE-CANCELLING HEADPHONES — CB3 Hush Noise Cancelling Headphones

The best noise-cancelling headphones can eliminate noise while maintaining hi-res audio quality while others accept the trade-off for what it is. The CB3 Hush are in the latter camp. It may not be the best sounding headphones out there, the CB3 deliver on its promise of effective noise-cancellation.

ON-EAR HEADPHONES — Skullcandy Grind

These bass-heavy headphones bring a built-in microphone to the mix and offer good sound quality. They are light, but not fragile. They are powerful, but are directional enough that sound doesn’t spew out everywhere, alerting your neighbours that you are listening to Taylor Swift again.

ON-EAR WIRELESS HEADPHONES — Creative Sound Blaster Jam

For those looking to cut the cord, the Creative Sound Blaster JAM is the way to go. It’s lightweight, sounds great and is affordable. The foam earpads sit directly on top of your ears instead of encompassing them entirely, something some folks find more comfortable. However, it may let in some ambient noise.

techradar.com

ETP 22NOV7

STARTUP SPECIAL.... 9 Fast Food Chain of Odisha, Eyeing to be an MNC

STARTUP 9

Fast Food Chain of Odisha, Eyeing to be an MNC

Green ChillyZ, be it anytime of festivity, be it any season of the year, has become the salvation of die-hard food-lover. The joint which started with four people and a small outlet at master canteen, is now the talk of well-known food joint in Odisha. It has made its presence evident in Bhubaneswar, Cuttack, Barhampur and Khurda.

M Keshav Rao, founder of Green ChillyZ, believes nothing is achieved in life without hard work, strong determination and a trusted helping hand. “I’m indebted to my younger brothers whose support lead me this far. They have played an equal part in the successful Green ChillyZ venture from the very start”, says Rao proudly about M JayaprasadRao, Director of Operation and M Tejeswar Rao, Director of Marketing. They have a vision to make Green ChillyZ multinational brand.

When asked about the venture of Green ChillyZ, Rao says, “Green ChillyZ started when the fast food industry was unorganized and in its nascent stage and healthy-hygienic non-vegetarian dishes were only restricted to star hotels. It all started with 4 members and a small outlet and the passion to achieve something big in the food business sector that kept us going through all adversaries. Though the super cyclone hit Odisha hampered us, but that did not deter our spirits. We started again & there has been no looking back since then.”

It is doubtful to get the glimpse of the elaborate dishes of high end restaurant at a roadside joint but Green ChillyZ has overcome that limit. “We’ve always believed in experimenting with the menu depending on the customer requirements. Specializing in biryani and tandoori, we serve the gastronomes with its non-veg specials like Green Chillyz special biryani, tangdi kebab, tawa chicken, handi mutton and much more. Introducing the Berhampur style chicken pakoda and bamboo chicken as signature dishes, left us amazed to see the overwhelming response to the dish. With growing demand, we have added Chinese and South-Indian cuisines to the menu”. It also facilitates home delivery, pick-ups and catering.

“We do not consider anyone as our competitor. We only compete with ourselves. Denizen’s trust and blessings is the testimony to the hard work and quality of service that Green ChillyZ has always stood for”, says Rao boldly, as he states competition always strengthens the sector.

Rao shared his views on the highway restaurant on NH5, Bhubaneswar, “ We thought of coming up with a multi-cuisine family restaurant on the city outskirts. The restaurant will be of great help to tourists visiting Bhubaneswar, youngsters fond of long drives and customers traveling regularly to the city for business. So Green ChillyZ: The highway restaurant was opened to the public on 1st March. With South Indian breakfast, Indian, Chinese and tandoor culinary delights, a classic ambiance along with high quality of service it will be a gastro-Green ChillyZ food-coupons and the grand winner of November month will get a chance to dine with the Ollywood star Sabyasachi Mishra at Khurda Green ChillyZ restaurant.

Due to the huge demand, Green ChillyZ is looking for franchisee partner across the country. In this era all are searching for good jobs for their source of income & people desire to be a good businessman or want a constant source of income. This brand is creating opportunities to bring forth good entrepreneur with excellent return. Rao says, “We also want to recruit people from villages in our outlets and give them a chance to learn and grow. They will be trained to deliver the same unmatched standards.”

He advises budding entrepreneurs entering the fast food industry, “ Struggle and work hard! Challenge will come, but never give up. Focus on quality over quantity for long term success.”

For more details contact: Visit Website: www.greenchil

BUSINESS SPECIAL...... How a Yoga Guru Is Mastering the Consumer Goods Market in India

How a Yoga Guru Is Mastering the Consumer Goods Market in India

Can an Indian yoga master and spiritual guru pose a threat to established multinationals in the fast moving consumer goods (FMCG) market in the country? Baba Ramdev, a 51-year-old politically networked saffron-robed yoga expert and astute businessman, certainly believes so. Patanjali Ayurved, the company he front-ends, recently posted revenues of Rs.10,561 crore ($1.6 billion at Rs64.34 to a dollar) for the financial year 2017 (April 1, 2016 to March 31, 2017). That’s double of what it posted last year. What’s more, while most FMCG firms in the country grew around 8% to 12% annually over the past five years, Patanjali has grown over 20 times; in 2012, it reported a turnover of Rs.446 crore ($69 million).

Positioned on the plank of ayurveda and the goodness of natural ingredients, Patanjali prides itself on being a home-grown brand that offers its products around 15% to 30% cheaper than competition and ploughs back its profits into nation-building activities such as education and supporting farmers. It is the fastest growing FMCG firm in the country and has one of the widest product portfolios. In January this year, a study by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and market research firm TechSci Research, said: “Patanjali Ayurved has turned out to be the most disruptive force in the Indian FMCG market.”

At a recent press conference in New Delhi, Ramdev and Acharya Balkrishna, CEO of Patanjali and a close friend of the yoga guru, declared the company’s 2017 results. Incidentally, Patanjali is an unlisted firm with no obligation to disclose its numbers. Balkrishna owns around 95% while the rest is held by a small group of individuals. Ramdev himself apparently has no stake in the firm. Addressing the media, Ramdev and Balkrishna said that profits have grown 100% since last year. They are now looking to double the turnover to Rs.20,000 crore ($3.1 billion) in the current year and aiming to cross Rs.1 trillion ($15.5 billion) over the next five years.

Towards meeting these targets, the company has planned various steps. These include investing Rs.5,000 crore ($777 million) in new manufacturing facilities, rolling out new products and increasing the distribution and retail network. Patanjali’s retail presence includes a mix of exclusive franchise outlets, modern trade, neighborhood stores and online. So far, the company has invested mainly through internal accruals. It is now looking to raise bank loans.

Ramdev has always been very vocal that he is fighting against the “economic colonization” of the domestic market; Patanjali advertisements talk of “rescuing India from economic slavery and loot of foreign companies” and appeal for “boycott” of foreign firms. At the press conference in New Delhi, he said: “So far, FMCG has meant MNCs in India; we have broken that monopoly.” In a direct reference to the American oral care giant Colgate-Palmolive, he added: “We don’t know when Colgate will close its ‘gate’ … they have already de-grown.”

Ramdev was referring to the impact Dant Kanti, Patanjali’s toothpaste, has had on Colgate-Palmolive. He claims it has a market share of 14%; industry analysts say it could be anywhere between 4% and 14% depending on the sampling universe. The American firm derives nearly 75% of its India revenues from toothpaste and is the leader in this category in the country. In a presentation to investors, the company said that its market share in India dropped from 57.4% in 2015 to 55.6% in 2016. Several brokerages have flagged competition from Patanjali as a threat to MNC giants in the toothpaste segment. For instance, in January, broking house Prabhudas Lilladher said in a report on Colgate-Palmolive: “We believe that toothpaste is perhaps one of the few categories where Patanjali has been able to create a strong niche and has right to win.”

The Patanjali Effect

That Colgate-Palmolive is taking cognizance of Patanjali is evident from some recent measures. For instance, while earlier the company, which has been in India for the past 80 years, had herbal variants with neem and clove, last year it launched an India-specific toothpaste called Cibaca Vedshakti. Positioned as “packed with the goodness of natural ingredients to help keep dental problems away,” it includes lemon, cloves, eucalyptus, basil, camphor and thymol. Cibaca Vedshakti is priced lower than Patanjali’s Dant Kanti. In an investors call in 2016, Bina Thompson, senior vice president, Colgate-Palmolive, said: “In India, consumers believe strongly in natural ingredients.”

Earlier this year, Hindustan Unilever (HUL), the Indian subsidiary of Unilever, the Anglo-Dutch consumer goods giant, launched around 20 products including toothpastes, shampoos and skin creams under its relaunched brand Lever Ayush. These products have been co-created with Arya Vaidya Pharmacy, a leading Ayurveda institute. Interestingly, while Ayush was launched as a premium brand in 2001, the relaunched Lever Ayush is positioned as a mass brand with products priced between Rs.30 and Rs.130 (less than $2). HUL has also rolled out natural variants under brands like Tresemme and Fair & Lovely in India and is reported to be bringing in a new brand called Citra, an organic skin care line from Indonesia.

In an investors call in October last year, acknowledging Patanjali’s growing presence, Andrew Stephen, head of investor relations at Unilever, said there were a “couple of great examples” in India in the herbal segment that “everybody is looking forward to with great interest.” Talking to business daily Economic Times in December last year, Sandeep Kohli, executive director-personal care, HUL, said: “Ayurveda is a growing trend …. Lever Ayush is designed to attract and retain consumers with authentic ayurveda-based offerings.”

Indian firms with strong ayurvedic offerings are also reworking their portfolios. At Dabur India, for instance, ayurvedic products currently contribute around 60% of the company’s domestic sales. Dabur plans to increase this to 75% by 2020. “In India, herbal and ayurveda will be the dominant themes for us. There is a realization that there is a bigger opportunity for us in ayurveda than we thought,” Sunil Duggal, CEO of Dabur India told business daily Business Standard last year. In an earlier interview with Economic Times, Duggal had said: [Ramdev] is someone no one has dealt with before and therefore there are no existing analogies which can match him. So, we have to deal with [Patanjali] differently.”

Abneesh Roy, senior vice president at Edelweiss Financial Services, notes: “Because of Patanjali, ayurveda is becoming core to the strategy of all other companies.” Ankur Bisen, senior vice president-retail at consultancy firm Technopak Advisors, agrees. “Take for instance, [Indian] companies like Dabur, Emami and Hamdard. They have been selling ‘Indian’ products like red tooth powder, chyawanprash (an ayurvedic formulation that helps build immunity), etc., for decades. But they took the route of multinationals to position these products as modern products or underplayed these products in the market. Patanjali’s success has made them re-think the approach.” S. Ramesh Kumar, professor of marketing at the Indian Institute of Management Bangalore (IIMB), adds: “MNCs and others will be forced to introduce lower- priced offerings.”

“Patanjali Ayurved is a rising star that came in from literally nowhere and put the fright into long entrenched competitors across the FMCG space,” says Harish Bijoor, brand-strategy specialist & founder, Harish Bijoor Consults. According to Bijoor, Patanjali has trifurcated the FMCG segment in India. “The first: MNC competition. The second: Indian MNCs fighting the [global] MNCs, vertical to vertical. The third: Baba-cool companies of the type represented by Patanjali Ayurved and the likes of Sri Sri Ravi Shankar, Baba Ram Rahim and a whole tribe of gurus who also happen to make FMCG.”

 Racing Ahead

At present, Patanjali’s portfolio comprises more than 500 products across food, personal care, home care and health care. Cow ghee (clarified butter) is its highest selling product with sales of Rs.1,467 crore ($227 million), followed by toothpaste (Rs.940 crore/$146 million) and shampoo (Rs.825 crore /$128 million). Other key products include bathing soap (Rs.574 crore /$89 million), mustard oil (Rs.522 crore/$81 million), wheat flour (Rs.407 crore/$63 million) and honey (Rs.335 crore/$52 million). It even has noodles in its product collection. The company claims to have 15% market share in shampoo, 14% in toothpaste and 50% in honey. Currently, the bulk of Patanjali’s products are manufactured at its facilities in Haridwar, which is around 130 miles from New Delhi; the rest are from third-party manufacturers.

India’s branded FMCG segment is estimated to be more than $65 billion at present and, according to a study by the Confederation of Indian Industry and Boston Consulting Group, it is expected to grow to $220billion-$240 billion by 2025. Media reports say that Patanjali, which began as a small pharmacy in 1997 and ventured into FMCG In 2006, is now the second largest FMCG player in India after HUL, which clocked Rs.30,782 crore ($4.7 billion) for the trailing four quarters. (India accounts for around 8% of Unilever’s sales and is the biggest among emerging markets). Patanjali is reportedly ahead of giants like Nestle India (Rs.9,159 crore/$1.4 billion), Colgate-Palmolive (Rs.4,010 crore / $622 million), GSK Consumer Healthcare (Rs.3,784 crore/$587 million) and P&G Hygiene and Healthcare (Rs.2,388 crore/$370 million). It is also giving old and established Indian firms a run for their money. ITC’s non-cigarette FMCG business clocked Rs.10,337 crore ($1.6 billion) for the trailing four quarters, Godrej Consumer Group Rs.9,134 crore ($1.4 billion) and Dabur Rs.7,690 crore ($1.1 billion).

Edelweiss’ Roy feels it would be more accurate to put Patanjali among the top three or four FMCG players in India since firms like P&G also have unlisted entities in the country which should be taken into account. At the same time, he adds: “Patanjali is easily the most successful FMCG company in India in the past many years. It is … giving well entrenched companies a run for their money. By next year, it should become the second largest FMCG company in the country.”

Bijoor thinks that further doubling turnover in one year is “a stupendous task,” but he adds that “with all the plans in place and considering the fact that Patanjali products are distributed in only 6% of retail outlets nationally today, the potential exists.” However, Bijoor notes, it’s important to recognize the fact that the brand is still “largely regional and suffers from poor distribution.”

A.K. Prabhakar, head of research at financial services firm IDBI Capital, feels that Patanjali’s $3.1billion target for FY 2018 is unrealistic. In an interview with Business Standard, he pointed out that other firms are resorting to aggressive pricing to take on Patanjali. “I believe 20% to 25% growth is a more realistic and achievable target.”

 A Dream Run

So what is the magic behind Patanjali’s phenomenal growth so far? Experts cite three key factors. Ramdev’s personal brand equity, Patanjali’s disruptive pricing, and the company’s positioning of the goodness of ayurveda and natural ingredients.

 Take Ramdev himself. Indians, by and large, have always had a leaning towards spiritual gurus. Ramdev, with his friendly demeanor, seems to have a special connection with them. His yoga camps, televised yoga sessions and free health consultations are all extremely popular. Ramdev is also highly politically networked and seen to be particularly close to the Bharatiya Janata Party headed by Prime Minister Narendra Modi. He has strong nationalistic leanings and is vocal about them. One of Ramdev’s pet agendas is repatriation of black money. Another is to drive foreign companies out of India. All these along with his business acumen (Ramdev is closely involved in all critical aspects like new product development and pricing), and many a controversy (he claims homosexuality is a disease and that he has a cure for it), make for a potent combination. The brand ambassador of Patanjali, Ramdev, is a brand by himself.

An October 2015 Edelweiss report co-authored by Roy says: “For the consumers, Baba Ramdev remains the face of Patanjali and its products. Baba Ramdev, during his yoga sessions, showcases the Patanjali products. After the session, he makes the attendees aware of the benefits of using Patanjali products. Till date, close to 70 million people have come in contact with Baba Ramdev through his yoga camps and it is believed that this can increase to 200 million going ahead. This highlights the potential reach that the Patanjali brands can have without much mainstream advertising. Also, being associated with Baba Ramdev helps in creating a perception among consumers that being ayurvedic, Patanjali products are healthy.”

“Ramdev’s widespread popularity, propelled by televised yoga camps, has provided the brand push for Patanjali,” says Devangshu Dutta, chief executive of consulting firm Third Eyesight. Pointing out that over the years Patanjali has successfully built the momentum to “displace previous ayurvedic market leaders in the consumer’s mind and create a credible alternative to multinational brands,” Dutta adds that Patanjali’s “Indianness” is a challenge to multinationals, while its sheer size and penetration is a challenge for other Indian companies. “A flat management structure enables rapid decision-making that allows the business to be extremely flexible and aggressive when it needs to be.”

 On the controversies surrounding Ramdev, Dutta notes that worldwide, successful brands are built more on public relations than on advertising, and controversy is a very strong driver of PR. “In that sense, the Patanjali group has had rich dividends from its approach to PR. Starting from the image of a swami in saffron robes propagating consumer products to using food safety concerns around market leaders’ products to their advantage and openly taking a swadeshi [nationalistic] stand against multinational brands, the Patanjali group’s PR voice is strong and clear. Whether this will remain so as the business grows is something only time will tell.” (In 2015, when Nestle’s Maggi noodle brand was embroiled in controversy over high levels of lead and MSG, Patanjali quickly launched instant noodles to plug the demand gap.)

 Another strong plank of Patanjali is good quality at disruptive pricing. Most Patanjali products are priced around 15% to 30% lower than competition. In a media interview, Balkrishna said: “We buy raw material directly from farmers and we work on a single channel right from the farmer to the end consumer and that is the real reason why our quality and costs are under control.” Other factors that contribute to Patanjali’s competitive pricing include lower overheads (salaries and administrative costs, for instance, are much lower than those of regular corporates), lower distribution margins and lower advertising and promotional spending.

Interestingly, while its advertising costs are lower than others (according to Balkrishna the company’s ad-spend is less than 3% of turnover), Patanjali is among the top advertisers in the country. Balkrishna attributes this to tough negotiations. “Differentiated advertising” has been a “pivotal factor” propelling Patanjali into the limelight, notes Edelweiss’ Roy. He points out that Patanjali ads highlight the pricing difference with competitors, educate on the benefits of the product, emphasize that Patanjali is an Indian firm and claim that unlike MNCs, Patanjali is extremely involved in charity and nation building. “From our survey it has emerged that these advertisements create a buzz among the target audience and encourage trials,” says Roy.

IIMB’s Kumar points out that with its positioning of “value for money,” Patanjali would be successful in several categories “due to the simple reason that the penetration of brands in most categories is still low in an emerging economy.” Bisen of Technopak Advisors feels one reason for Patanjali’s success is “the subtle shift in consumer lifestyle and needs that manifested in a latent demand that other companies missed out.” Another reason is the “package of wellness, nationalism and natural synced with the social and political narrative” of the country. Bisen adds: “Positioning the quality, purity and natural promise at value pricing created a strong demand pull. This pull was aptly serviced through an ecosystem of distribution that supported fast proliferation in the market. No other FMCG major earlier used exclusive brand outlets for their product range.”

 Sustaining Momentum

Going forward, does Patanjali have the potential to make a big dent in the performance of other players? It’s a mixed bag, says Bisen. Pointing out that it is easier to grow in a few categories and reach scale, he says: “In the FMCG space, if the initial idea is a success, the challenge comes in replicating the idea to other categories, managing growth and managing category extensions. Also, the leading FMCG majors have all spent significant time now to appreciate Patanjali as a key competition and have developed strong counter-offensives. Therefore, the initial years of easy march may now hit some [roadblocks].”  Potential threats for Patanjali, Bisen notes, include “spreading itself too thin, [a] change in the social and political narrative that dilutes the nationalism theme, and strong response from competition.”

Another headwind could come from the new goods and services tax (GST), whose objective is to replace all taxes levied by the federal government and the states with one central tax. At present, ayurvedic products are taxed only 5%, but under GST the levy will go up to 12%. This could impact Patanjali’s pricing significantly.

 Patanjali needs to be “totally paranoid” about quality as it expands, says Bijoor. “If Patanjali messes up on quality as it expands, it will pay the price. That price will be a quick glass-ceiling for its volumes.” IIMB’s Kumar suggests the biggest challenge for Patanjali is to scale up and make the products available across the country. “This involves several aspects of sourcing, manufacturing and distribution.”

 An October 2016 Edelweiss report observes that distribution remains an area of improvement for Patanjali. It notes that according to a survey it conducted, while 35% users believe that availability of Patanjali products is a problem, 49% of non-users have not used Patanjali due to non-availability. The report adds that buying Patanjali products from kirana (neighborhood “mom and pop”) stores is still small at around 26%, while for most other consumer goods companies this is 70% to 80%.

However, a January 2017 Edelweiss report seems more optimistic. It states: “Patanjali has over 5,000 retail outlets and its products are available through around 1 million shops. By FY18, it plans to scale up its shop portfolio to over 3 million. Apart from this its products have strong presence across modern trade. Once it has 3 million outlets, its penetration will be comparable to the likes of Britannia, Colgate, Dabur, etc., though below HUL’s network of over 7 million shops.”

Patanjali watchers also say that any major impact that Patanjali makes on global multinationals is likely to be restricted to India.

New Battle Fronts

In the meanwhile, Ramdev wants to open other battle fronts. To challenge restaurant chains such as McDonald’s, KFC and Subway, Patanjali plans to enter this segment. “We are working on the business plan and branding,” Ramdev told press reporters, adding that the company is working to put together around 400 vegetarian recipes. “When we get these recipes together, all these multinationals serving chicken or mutton will have a hard time countering us.” Patanjali is also planning to enter the apparel business with jeans and sportswear and compete with firms like Levi’s, Nike and Adidas.

Not everyone is enthused about these proposed expansions. Says Bisen: “I am wary of category extension beyond FMCG so early in the journey, when the market potential in FMCG itself is huge. Dairy, processed food and condiments are all exciting spaces. If I had private capital to allocate, I would focus on consolidating my position in the chosen space.”

A sharp critic when it comes to Patanjali’s “greed” to spread across categories, Bijoor says: “There is a line it must draw for itself. Using ayurveda is a good thing to do. But stop where ayurveda stops, and stop where ayurveda looks ludicrous.” He cautions that Ramdev and Balkrishna must not dissipate attention at this stage. “Width is important, but depth in those areas where you have achieved early and big success is a must. Never compromise on that.”

“To my mind, the Patanjali brand is rooted intrinsically in well-being, so growth in food seems a natural outcome to me but not packaged, fast-food and snacks,” says Dutta. “Similarly, there are areas of apparel, such as yoga-wear, which would be a natural extension, but jeans would seem to challenge the integrity of the brand.” At the same time, he points out that most brands these days “don’t care to create or maintain a core ethos” and most consumers have “only a passing, superficial engagement” with them. In such an environment “more tangible and immediate factors, such as the price and availability” play an important role. Dutta notes: “Currently, the Patanjali Group is following economic logic, the way any business would – identifying areas in which it can create significant turnover and margin using its brand name and goodwill.”

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