The Internet juggernaut rolls on

Here is a selection of a half dozen "Internet news" items over the last three days, each of which is about the increasing usage and adoption of the Net. It's "happening" ( both in India and elsewhere) :

In India :

1. IPOs to go "online only"

SEBI (the Securities & Exchange Board of India) is considering a move to make applications for IPOs exclusively online. This seems prompted by the recent deluge in applications to IPOs like Reliance Energy, with many more such IPOs to follow.

This is now feasible since demat accounts are online and all major banks also have a provision for online banking. An online IPO application will cut the allotment period to 5 days from the current 21 days,says SEBI.

This will result in savings in funds tied up for those extra days. Importantly, it will also save applicants the bother of cumbersome paperwork. The move is likely to benefit banks too since many people now will open online banking accounts. This will save costs for banks. A win win situation for all.

And this will certainly give a fillip to Internet growth in India. So far only secondary stock trading is posssible online - and that too is optional. In contrast, IPOs applications will be online only.

2. Lawyers to go online

The Hindustan Times reports (couldn't locate the online version) that the Bar Council of India has managed to successfully persuade the Supreme Court that lawyers should have their own website. So far, as part of their professional ethics code, lawyers were barred from all sorts of advertising & soliciting. However, lawyers pressed hard for this and the Supreme Court seems inclined to let this go through.

Should be interesting - I've had trouble getting to find a lawyer when I needed one - for my odd personal matters.

Also, with an estimated 1 million lawyers in India, this spells big, big business for domain name & website hosting companies around the corner. Also, there's a good possibility to create Web 2.0 type of sites for lawyers, read my other posts or contact me if you want to know more :-)

3. CRY (Child Rights & You), possibly India's best known NGO, has opened an "office" on Second Life (under the Bollywood section I'm told, not sure why Bollywood though :-)

4. Online job hunting is #1

Kelly Services, the manpower company, has published the results of a survey among 3000 Indians which shows that online job hunting accounts for 40% of all jobs placed, ahead of other methods. The survey has other interesting nuggets for would-be job hunters and recruiters.

And, worldwide :

5. Ecommerce on a roll

Nielsen Online has come out with a survey which shows that as many as 875 million people around the world have ever shopped online. In Korea, 99% of all online users have ever shopped online.

6. Online music going the legit , ad-supported way ?

Ad-funded legit P2P music services are in. The latest one to launch is QTRAX, New York. They will have 25 million music titles available, a number 5 times as large as the iTunes store. Being legit, the company claims, they will be avoid viruses (unlike semi-legit sites like Limewire). And listening to all these 25 million titles will be free ! The company spent three years doing deals with the music labels.

So, if you are an online buff, happy stock hunting, lawyer selecting, giving to charity, shopping, job hunting and music listening.

A fuel-cell / battery-powered Tata Nano

In my long post on the Tata Nano of Jan 14, I had said there are three things required to be done before we all "bless" the otherwise well-intentioned Nano . Here is the "framework" I proposed :

(1) Introduction of incentives and disincentives to confine the sales of the Nano and other cars to rural and semi-urban areas, rather than to the severely congested urban areas of India
(2) Introduction by the Tatas of an electric powered Nano, even if this be at a significant added cost, as an imperative owing to the climate change problem
(3) JVs between Tatas and world auto makers to co-produce electric Nanos for the global market so as to replace the 600 million cars already in existence (and which contribute to over half the world's global warming today, if I remember my numbers right )

It looks like the Tatas have already been at work for some time now on (2) and (3) above. I didn't quite know that. My soothsaying in my above post of Jan 14th seems to be in the right direction :-)

Thus, on (2) viz. electric vehicles :

Fuel cells (liquid hydrogen powered), electric vehicles, hybrid (petrol + electric) engines and also biofuels have been under consideration or development by the Tatas for some time now.

Much of the work has been for the Tata Motors buses and some on their mini-trucks and the Indica car.

In Nov 2007, it was announced (here is one report and here is another) that in 2008 we can expect to get fuel-cell powered Tata buses.The Indian Space Research Organisation (ISRO) is partnering with Tatas in developing the capability to handle the liquid hydrogen (they know how to handle liquid oxygen already, for their rockets). Liquid hydrogen and air are put through a fuel cell installed the vehicle, resulting in electric energy and water vapour.

If this launch goes through as scheduled, it will be nicely timed (from the business sentiment point of view) for the Tatas indeed, what with the Nano's commercial introduction scheduled for October 2008.

Of course, there will obviously be a lot of things (stations to handle the liquid hydrogen, for one) required to make this initiative succeed commercially.

On (3) above :
Yesterday came the announcement that the Tatas have signed an agreement with Chrysler to produce for them up to 50,000 Ace mini-trucks for the U.S. market, that will be (electric) battery operated.

What we now also need are appropriate signals or measures by the regulatory authorities to make the Nano and other cars more of a semi-urban and rural transport - see (1) above and my post of Jan 14th below.

Now let's see when the Nano goes electric...

These are all-long haul measures, btw. But it's important to have a framework like the above measures (1), (2) & (3) in place that takes us all in the right direction.

Na, No to the Nano ?

Everything that could have been written about the $2500 Tata Nano has, within days, nay hours of the launch, probably already been written. Juicy nuggets on how the Tatas did it, what the common man and what Detroit think, what this means for all concerned et al are all out. A lot of the discussion is around : overall, is it a good thing or bad ?

NY Times says it looks like a mango while the Wired says "It's almost smiling".Someone called it the ultimate reverse status symbol. A record 130,000 people (200,000 by another report) visited the Auto Fair in Delhi on Sunday, 12th January, drawn primarily by the Nano.

Everyone agrees however that the Nano is an innovation of consequence, not unlike the Model T of 1908 which led to mass penetration of automobiles in the U.S. and the Volkswagen in Germany's 1930s which led to the autobahns.Increased auto sales will result.

It's time therefore to do a sum up and, as a true blooded marketer, give one's own take. Are the benefits to consumers and society greater than the negative consequences ? Here is a six part answer to this question.

1. What are the facts regarding the Nano's entry ?
2. What are the positives ?
3. What are other, indirect benefits of the Nano's entry?
4. What are the negatives ?
5. What can be done to overcome the negatives?
6. To sum up, under what circumstances can one say the Tata Nano's introduction is a good thing ?

1. First, the facts :

• The Nano was conceived 10 years ago by Ratan Tata and been 5 years or so in design / production.


• A team of 500 Tata engineers worked on this.


• The production will commence in October 2008 in Singur in West Bengal and the cost thereof will be Rs. 17 billion (1700 crores). Over a 100 plus vendors will be used to manufacture components needed.


• The capacity of the plant will be 250,000-300,000 cars p.a. going up in 3 years to 1 million cars p.a.


• The engine is a 2 cylinder 624 cc as against 796 cc of the Maruti. It is rear mounted with the boot in front. Unconventional design is seen elsewhere too e.g. the battery is placed under the driver's seat.Among other things this design helps reduce the car's dimensions, thereby cuts material consumption and costs.


• The body is all steel, rather than alloy or high tensile steel like all other cars. (No doubt owning Corus & Tata Steel will be of help here).


• Lest anyone copy the design, there are 34 patents already filed for the car itself, as well as 200 patents on related items.


• The basic or standard version comes at Rs. 100,000 + VAT tax + transportation without an A.C. ,radio or automatic windows. There will be two deluxe versions. As against this, most American cars cost above $10K.The Maruti costs over Rs. 200,000 and the next cheapest car in the world, the Chinese QQ by Cherry Motors that costs $3000.


• No one has yet sat in it and the company has yet to provide details.
  

2. Here are the direct positive benefits of the Nano :

• In India, entire families travel on 2-wheelers. This is very unsafe. This in fact was the primary motivation in creating the Nano. (Ratan Tata)


• It has 20% more inside space than the Maruti 800 despite being smaller than it. It is 10 feet 2 inches long which is 9 inches smaller than the Maruti and 4 feet and 11 inches wide which is 3 inches wider than the Maruti.


• It will give 20 km / litre as against 16-18 km/litre got in city traffic for Maruti. Other existing cars give less than the Maruti. In contrast,small mobikes give 50-75 km/litre.


• All steel monovolume body will keep out wind & rain too. (Not clear what this is, seems to be that the shape of the Nano keeps the inclement elements out).


• The Nano is safe, it has passed all the crash tests required in India. These happen to be the full front crash tests. As and when it is launched abroad, it will be ready to meet the offset and side crash test required there.


• On emission norms, it is Bharat III & Euro IV compliant, with CO2 levels levels lower than even current 2-wheelers.

3. The indirect benefits accruing from the Nano's introduction:

• Big benefit in semi-urban and rural areas. (This also seems to be Ratan Tata's chosen target market).
  In India,the average distance between a district court, nursing home, child welfare centre, adult literacy centre, college, railway station etc. from a village is 15 km. And the average distance of a bus stop from a village is 4 km. This is where the Nano will add real value.


• Our avg. road density is 3.5 4-wheelers per km of roads, which is lower than in countries such as Brazil, Malaysia, Mexico, Thailand and Indonesia. What this means is that congestion will be restricted to the urban cities.


• 8 million in the number of 2-wheelers sold annually; these owners can potentially upgrade to a 4-wheeler now.


• Big boost to the automobile industry, the world's biggest industry, a leading contributor to GDP and an employment multiplier. (This and some of the stats above by Dilip Cherian, Director General, Society of Indian Automobile Manufacturers).


• Big boost for brand India. Evidence that Indians have design and manufacturing capabilities, are innovative.


• Emerging consumer base worldwide will be a major engine of growth. Will lead to debate on many things viz. manufacturing methods, materials, energy efficiency and transportation. Will lead to innovation in other things. The Nano's innovation is itself within the "Sandbox" of affordable price, scalability in volumes, high aspirations & efficient utilization of resources. (This gyaan by management guru C.K. Prahalad, for whom it is a Nano leap into the future. Vijay Govindarajan, the strategy guy too thinks it is a great example of innovation).


• Thus, while many argue (see below) that the Nano will choke infrastructure, other like the professors above believe that citizens and interest groups now have a reason to lobby the government to increase infrastructure dramatically.


• This launch shows that in India, contrary to any contrary perceptions, one can be both successful and honest. (Vir Sanghavi - writing in The Hindustan Times - on the Tatas).

4. The negative implications of the Nano launch :

• Some are skeptical of the Tatas being able to deliver a quality car. They quote the Indica. These critics say that Tatas cars have initial quality problems and "drive like a truck".


• Increased congestion is social problem no. 1. Mumbai for example has 700,000 vehicles and 500 are added daily. This growth rate could easily double or more with the introduction of Nano and other, competing low cost cars. Road network is not growing to meet this expansion nor is parking. South Mumbai has been said to have just 9000 parking spaces across 89 parking lots. My building has absolutely no more parking space.


• Higher pollution. Inspite of a reduced fuel consumption (20 km/litre) and low CO2 emission (Euro IV norms) per car, the higher volume of sales of low-priced Nanos will increase overall air pollution. 2-wheelers and 4-wheelers are today any case the #1 contributors to air pollution. Our public policies have not allowed for enough public transport so cheap automobiles will lead to high congestion.
  Apparently, disposal of used engine oil & tyres is a problem too.


• To pollution, add high fuel consumption and increased import bills / dependencies thereof for the Indian economy. See this news item.


• Global warming. Note that currently 57% of CO2 emissions in India are due to the transport sector.


• Increased propensity for road accidents. In the developed world, road accidents are the leading cause of death among below 30 year olds.

5. What can be done to overcome the negatives like congestion & pollution, especially in the urban areas ? The following have worked well in cities like Singapore & London:

• Increase the onetime tax on vehicles from current 7% of purchase price to 15% (Singapore is 150%, Shanghai 50%)


• Congestion tax for vehicles entering city


• Insist on 3 person occupancy on high density routes


• Dedicated bus lanes


• Compulsorily scrap old car when you buy new one


• Increased parking charges


• Car-free days in month


• Even and odd car days


• Walk-only zones for pedestrians


• Vastly improved public transport


• Greater public acceptance of car pooling


• Improved social consciousness leading to reduced propensity to purchase cars

6. Under what circumstances is the Nano socially justified ?

Social costs like congestion, pollution and CO2 emission are overwhelming for vehicles. The Nano's entry can be justified if :

1. It's entry is restricted to rural and semi-urban areas through various incentives and disincentives of the type mentioned in section 4 above.
2. The Nano is converted to an electric vehicle. Even if it costs $5000 extra to enable this, the total cost of a Nano EV would still be lower than most cars sold in the developed world today.
3. The Tatas enter into JVs with automakers the world over to manufacture Nano EVs.And public opinion and public policy in these markets ensures replacement of the hundreds of millions of automobiles currently on the roads with these non-polluting vehicles.
   
   Else, the Nano's entry sets a bad precedent : the ensuing flood of low priced cars in the world will lead to grave social costs.
   
   Note what an Indian auto industry offficial (quoted by Shyamal Menon in The Hindustan Times) said on congestion:
   
   “You cannot appeal to people’s consciences or, when they are stuck in traffic, point out that they themselves are part of the problem. People want others off the road, not themselves. All you can do is price the problem out of existence through taxation or government intervention. Market forces will not work – just look at how long people are willing to sit in their cars in Mexico City or Bangkok - for the independence a car brings.”
   
   On CO2 emissions, climate change is accelerating, with just a few (~7-8 years according to one estimate) left to reverse the problem.
   
   Unless Tatas,the auto industry,policymakers and consumers alike take a broad-based view of the consequences of the Nano, one could be in for some hard times.
   
   Thus the "poem" by one Ravneeesh Mehra in his posting on a message board in rediff.com :
   
   NANO MEANS: New Anti Nature Organisation and as below
   
   1) Nano space on roads
   2) Nano clean air 2 breathe
   3) Nano space 2 park
   4) Nano space 4 pedestrians
   5) Nano margins 4 dealers
   6) Nano steps 2 combat global warming
   7) Nano tolerance among old drivers with all the new/ unprofessional drivers coming on the roads
   8) Nano enjoymment in driving in future
   
   In other words, unless the Tatas, the global auto industry and policymakers i.e. governments the world over take the long-term,pragmatic three-point view given above under section 6, we need to say Na (Hindi for No :-)) or No to the NaNo.

Growing India's financial services market

The great thing about being a marketer in India is that there are many half-filled glasses (that need filling), many bare feet (which need shoes). Market penetration rates are typically single digits for most emerging categories (telecom at 25% penetration and growing at nearly 1% a month is an honourable exception).

The marketer's story - being recanted in this blog - is essentially about tracking this market penetration rates story and about the lessons / actions marketers need to draw/employ to move the needle faster.

The panel discussion

Thus, there was this interesting panel discussion by The Ad Club, Mumbai at the Taj Lands End Hotel on Fri, Jan 4th that I attended. The theme was the "latest trends in global consumer banking" though it was all in context of India's financial services market.The speakers were Sanjeeb Chaudhuri of Citibank and Ajay Kakar of Reliance Capital with Anuradha Sengupta, Features Editor of CNBC serving as moderator. The audience was small (~50) but keen. The Club & the hotel did themselves proud with great refreshments prior to the show. Well-known ad honchos from the Mumbai scene viz. Pranesh Misra of Lintas & Palekar of Eureka Forbes played host.

Sanjeeb Chaudhari of Citibank EMEA (Europe, Mid East & Africa) and ex-RHL, Unilever & Colgate, who began his Citibank career with Diners cards in India in 1989, spoke about the retail banking consumer in Europe. His main themes :

1. Consumers are today overwhelmed with an overpumping up of advertising volume. Citibank U.K. itself sends out 100 million pieces of direct mail - in a country of about 30 million people.Do Not Call lists, spam blocker for mail, ad blockers and fast forwarding of TV commercials (TiVo)are all symptoms of an overwhelmed consumer.

2. Meeting the needs of this overwhelmed consumer are key. Sanjeeb predicted that there is going to be a regulatory push on protecting consumer interests i.e. privacy.

3. In this environment, brand building has to be more bottom-up and P2P.Brands need to find a way to be invited to the conversation. "Tribes" and blogging are in.

4. Be obsessed with the consumer. In banking, one tries to build the brand around life events e.g. marriage, birth, anniversary. Reinforce the brand with every interaction. And for this, use technology. Also,develop a topdown competence within the organization. For example : Contact optimization. Citi Europe can today create an unstructured product for a single customer (customer of 1) in 24 hours.

5. Another example of using technology for becoming customer-centric is "Lights out automation" or, automation that minimizes human interaction. Scotia Bank used a mix of simple and complex triggers to achieve this. A third technology : interaction marketing, which is what supports inbound marketing. A fourth requirement : site optimization. Lloyds TSB has optimized their site for visitors.

6. At each touchpoint, we have : Touchpoint <=> Decision engine <=> Database

Ajay Kakar of Reliance Capital (and ex-O & M) presented the story of the Indian financial services industry from a marketer's perspective.

1. Over 40 plus years after the industry started out with UTI's ULIP (in 1964),there are today 32+ mutual funds with assets totalling Rs. 550, 000 crore.But,this translates to a mere 4% market penetration after all these years. And there is a similar low penetration in other financial services : 2% for general insurance (despite 14 players here) and 17% for life insurance.The key issues impacting this penetration rate are as under.

2. While - overall across product categories - the Indian consumer is getting sophisticated per se, aspiring to be a global citizen et al, when it comes to personal finance he remains a simpleton. He is confused between financial categories, cannot distinguish one from the other. He also sees many similar products with similar claims.He does not and cannot evaluate between all these.

3. People delay their decision to invest. In addition to finding it confusing to decide, they don't seem to find it exciting to do so.

4. The financial services companies/banks have brought this upon themselves.These players tend to have identical products, offers and marketing.It is difficult to differentiate between products within a brand or across the value propositions of different brands.

5. Separately, all that Indian companies seem to be doing is customer acquisition.Companies are not looking to create value.Listening to customers is not happening.

6. The solution for such early stage markets is education i.e. educating cosnumers and would-be consumers. That is what Prudential did in the U.K. (Sanjeeb). Unfortunately, the cost of such education is too high to be borne by a single player alone. Thus,it's necessary for the indutry to get together and talk,abandon their individual positions and look at a mutuality scenario.The sentiment of the panel and the audience though was that this today looks like a distant proposition.

7. We need training academies for our people who sell financial services.

8. Direct Selling Agents (DSAs)wield a disproportionate influence today on the business ("have led the financial companies to a near abdication of control over the business").

9. In this business, trust is paramount. The customer is more interested in whom is he buying from rather than what he is buying. Who is saying that the product is "safe" to buy,is what the consumer seems to be asking. Is this product being referred by a known person ?

In fact,said Sanjeeb,trust is so important that a trusted non-financial services company can well enter the field and "disintermediate" financial servies companies.

Lessons from the panel discussion for marketers & Internet folk

• Ajay's observations are good food for thought, nay a brief, for marketers and advertisers looking to create a mass financial services brand
• Since upmarket & early adopter users in India would behave similar to consumers in evolved markets like Europe, Sanjeeb's thoughts are pointers to what needs to be done for these important segments.
• Since lack of trust is the # 1 issue preventing mass growth of investing, online social networks - where non-investors are in online contact with friends & acquaintances who invest - will help. See also here my presentation on Social Networking : Learnings & Opportunities.
  
  

Calling Product Managers

Product Managers are the lifeblood of the Internet industry. But here in India they are in short supply. Yahoo India , AOL India, Indiatimes, you name it, are all looking for some.

There are almost no schools (companies) where one gets trained in product management. There is no real big consumer technology industry (local manufacturing by the likes of Apple or Sony) either.

In contrast, "out there", they have outfits like these. This organization ought to be good, their white papers are a resource recommended by Vinod Khosla, no less.

Here's a great, great JD for a consumer Internet product manager. This one is by Ibibo, the South African/Gurgaon/"Chinese QQ" company.

Well, prize bulls per this one JD simply don't exist. But :

• If you are indeed considering a career in the Internet industry or if you are an HR guy or recruiter here, the above JD is one which can give you a good idea of the product manager's role and what it takes.
• If you already are a PM in the industry, these are the sort of skills you want to have.

Likewise, here are some good job descriptions for two other key positions in a consumer Internet company, the CTO & the HR Head.