Lot of companies use new product introduction as their key strategy to increase there market share. Recently two companies LG and SONY announced same strategy. (You may refer following links from Economic Times for the news: LG and SONY) . Though the strategy is commonly use by various companies, I tried to validate the hypothesis that new product introductions boost market share and found following parameters (related with new product introduction only ) determine correlation between new product introduction and market share growth:
1. New product introduction helps in companies top line growth as product realization increases with speed of introduction. It is simply correlated with the differentiation till the point when the new variant becomes commodity in market. Companies with strong R&D leverage it with new products all time. Because of differentiation they fetch better price too. However, competition catches very fast especially in consumer durable industry and so the price advantage of innovation starts eroding. New product introduction should be a continuous process for the companies having strong R&D.
2. Even though top line grows in revenue term in point no. 1 above, it does not guarantee growth in market share in terms of volume of turnover. Two factors determine change in market share. One the selling capability of the channel which could be measured by working capital of sellers which in totality remains constant. If working capital of a dealer is constant it will cannibalize existing product in very first stage itself. Two is the cannibalization, which if planned properly, can help to reduce competitors’ shelf share in multi franchise sellers’ network. To increase working capital of selling network, companies should focus on wider distribution by exploring new markets through efficient supply chain management.
3. Whether the new product is introduced in one of the existing categories in which company is present or in a new category itself. If it is in existing categories it should be targeted for better profit than market share. Introduction in new category can give incremental revenue subject to capability of selling network including the organization itself in terms of knowledge, experience, working capital, coverage and branding.
4. It’s not only quantity of new introduction which matters but also the speed at which it is introduced to end consumer. Assuming if the period required by competition to replicate the product after announcement of launch is fixed, a better speed of sampling, consumer awareness activities and distribution will uplift the revenue in launch to uptake period of product life before maturity, the point at which competitor enters with similar product.
There could me many more strategies to define growth in market share, however; the above argument is only limited to issues related with new product introduction only.
This month various news covered three different takes showing successful business strategies, government intelligence and fizzled opportunism. Nano, IPL and political fuzz summarize this week’s headline.
Nano was launched with not a real product but a promissory trust by Tata, which will be delivered from July this year to common people of India. The launch looked more like a financial strategy. By the way of advance booking Tata’s not only assessing their financial and supply chain requirement but also raising funds which could ease their financial hitch which is global in nature now. It makes good business sense. Nano is a real innovation which has demonstrated Indian capability in both manufacturing and strategy. Though, the people of India should be proud of it, a lot of anti Nano SMS campaign started rolling by some people I don’t know whom. But I know it is by those who lost the opportunity which was always there to explore but they did not dare to innovate. Tata’s should not worry about this negative propaganda as their target customers are those, most of whom are not very technology savvy. This is the case of lost opportunity but our political leaders do not lose many. Post IPL shifting news of political reactions, lot of leaders politicized this issue by criticizing government on the grounds of security and national pride. My personal views are in favor of government as they took a stand which seems to be hard and conservative but it is in favor of countries biggest event, the general elections. More than that I am sure it is based on some intelligence information. If it’s true, it’s good to hear that intelligence is in place and government has courage to keep national interest above their own political interests. BCCI, too, demonstrated a business innovation by making IPL, which is truly Indian domestic sport, a global brand. Except viewer’s turnover at the matches, all the business interests are saved. What a week with good show of business strategy, intelligence and opportunism.
I saw a young man in hurry to catch the local train with a purpose. Then I saw a young boy moving his buffaloes in open field to feed them and enjoying alone by playing with a cricket ball. I also sew a sweet young couple moving along a village road, calm and cool without any talk. I see lot of similar and different people moving around with and without a purpose with some or other emotion without demonstrating any. Then I ask few questions to myself. Who among those are happy? Who among those going to create history? Who among those is both successful and satisfied with his or her success? Who among those inherited a lot to make his given identity and who’s going to create the same?
Then I saw a huge vegetation of forest land with dry but golden leaves waiting to disappear just before fall. I got some clue and some of my answer. The trees and disappearing golden leaves signify completion of a life cycle and transformation into a new one. End is not the right word so I am using completion which is destined. Good or bad, fruitful or fruitless the trees will lose their leaves. However; just before disappearing, leaves become golden representing prosperity which seems to be notional but actually not. Philosophically completion is good as it is followed by transformation and reincarnation and sets a fresh start. So in the end (actually at the completion) everything is good. All of my questions remain insignificant at this conclusion. Is that what Bhagvad Gita says as ultimate detachment?
I tried to derive the answer from Bhagvad Gita itself. The building block of human life cycle, philosophically, can be categorized into inherited wealth (money, language, religion, society etc. at the time of birth), learning (knowledge, attitude, skills, insights etc), Application of learning (KARMA), Wealth creation (Knowledge, money, language, religion, society etc) and finally dissipating wealth. In the whole process there is no physical gain. That’s why Gita questions attachment with physical gains. There should not be any confusion with inactivity. As there is a gain, the golden leaves, and the base of reincarnation, called spiritual gain. Spiritual gain comes from KARMA, the right activity for right purpose, the DHARMA, the ultimate goal. (DHARMA is not religion specific; it means the ultimate goal of human being). To know KARMA, adequate knowledge and adequate health is required to apply knowledge. This is where inheritance becomes important which is basically BHAGYA, the luck and it’s not in any one’s hand. So the only thing left is KARMA to gain real wealth. So the sights I mention in first paragraph have no difference. The real difference if can be measured with spiritual gains it would have been very easy to answer all my doubts. Even though, if I assume happiness close to spiritual gain, it’s almost impossible to decide by just watching. The rural boy playing with cricket ball and buffaloes could be happier than the chairman of a multi billion dollar company. Its difficult, so no measurement, no confusion. At the completion every things going to look like same, like golden leaves. Let’s gain a better root to make sure the new leaves waiting to sprout is more beautiful and healthy.
One of the key indicators of domestic consumption is agricultural growth. Agriculture and allied activities contribute around 20 % of GDP and feeds more than 58 % population. Now in the recent economic crisis when we started looking inward, which was right in place earlier too, for overall growth, the emerging concern is the growth of Agriculture which defines consumption pattern of India. During tenth plan (2002 to 2007) agriculture grew by merely 2.3 % against 7.6% of overall GDP growth rate.
The key issues I want to raise is the role of Indian industries and government in developing rural infrastructure, education and health, deploying policy and participating in rural value chain, pricing, insurance, credit and microcredit. Recent global economic turmoil forced us to think beyond urban population to ensure sustainable growth. Companies like Hero Honda, Marico, HUL are outperforming in today’s scenario only because of their rural penetration. Two things are common in these companies. One their product is well designed product to suit rural taste supported by (two) matching delivery mechanism. Take example of Hero Honda whose basic models (main volume and revenue generators) are well positioned for common man’s requirement like fuel efficiency and reliability. Along with their product they have matching delivery network too with widest coverage in tier two and tier three cities. Bajaj, one of the competitors of Hero Honda, closely matched their rural network compared to Hero Honda but failed to position right product. But all these strategies are meant only to take share of rural expenditure. The Indian industries should think beyond that towards participation in rural value chain and infrastructure developments. ITC’s e-Choupal is a good example where the model is not only participating in farmer’s value chain but also simplifying companies supply chain. Such innovation creates value for both company and customer. From government perspective, we need radical changes in agriculture policy, pricing mechanism, credit and insurance to farmers. Along with these a healthy investment in infrastructure, education and health will give sustainable results in long term.
Recently I had some discussion on centering with one of my seniors and discovered few insights which is worth sharing. Centering is a process of meditation in which one can concentrate all his knowledge to attain wholeness. This wholeness could be adequate enough to solve many personal or social problems. To elaborate more lets take an example of process of puzzle solving. Most of the puzzles can be resolved up to one missing data to get before final answer. It happens because we evaluate our options from some or other point of view at a time. In the process of juggling with puzzle, I am sure most of us have experienced, a stage comes when one start thinking on more than one dimensions and point of focus converts from some or other point of views to universal point of view and that is the time when one see the answer. This is the time when one sees the missing link and solves the puzzle. While centering is also the ultimate stage is when all of one’s knowledge becomes available at one point. So what? Is not it amazing to just think that you can access all your accumulated learning, insights and experiences are available to solve your problems? This is centering.
We carry different personalities which are developed in the course of our life. So we have different level of knowledge with different learning, experiences and insights. And believe me all of us have accumulated adequate knowledge to solve any of our problems. However; it’s almost impossible to use all your knowledge at one point of time. Centering through meditation is nothing but collecting all in you at one point and attain the feeling of completeness or wholeness.
The ultimate stage of centering is the point when attains all knowledge. In Hindu mythology it is often referred as “Bramha Gyan” which means knowing the Bramha, the creator of universe, the God. This is the position when one attains detachment from everything. It can be simply explained as if one knows everything, nothing remains significant. However; since gaining knowledge is a process, the centering is also a process. That is why we worship the image of Lord Shiva who is always in Yoga, the meditation or centering.
All the technical, social or philosophical discoveries are the result of centering only. It’s nothing but using your available knowledge to discover the unknown. Look around and think about all innovations and creativity, is not it scientific? If centering is a methodological process all of us can be innovative and creative. All of us can discover undiscovered and ignite multi revolutions at all levels, be it the world, the country, the society or the organization.