What a coincidence!!! We were given a case study on starbucks and was due tonight. First it was Howard Schultz, coming back to take over as the CEO. There was another news of how they closed down an evening to train its baristas [ they call all entry level employees as baristas]. Now its US operations president steps down and wants to spend time with her folks. Starbucks' revenue seems to be slowing down due to various reasons, be it competition from low end players like Dunkin Donuts..who are offering 99 cents coffee or from regionally specialty coffee houses. Even on the international front, I had read a news of how Coffee Day, the indian starbucks, got hell lot of funding to take over the europe, middle eastern and african markets. So starbucks may be in real trouble both in domestic and international markets. The fierce competition is so evident that starbucks is climbing down to offer 99 cents coffee too. Coffee day has taken a leaf from starbucks and is replicating the samething like offering an atmosphere to drink coffee. I still remember that coffee day also had the same model of operating its own shop and started with offering whole beans as well as ground/roast powder. The only advantage coffee day has over others is that its run by SM Krishna's [ex-chief minister of karnataka] son-in-law and coincidently started when Krishna was CM of karnataka, they also have access to coffee planters co-operatives in kodagu region. You can call it the coffee cartels...now a venture that has the blessing of cartel and super politician, can do anything to stop starbucks from entering indian markets. Indian govt will never allow a perfect competitive market as its always into over protecting its companies. This means starbucks forays into India is impossible, but they can do one thing to limit coffee day's entry into US markets but europe, middle east, asia and africa is already into coffee day's kitty, now what is to be seen is...would starbucks and coffee day open up their arms and form a JV? Doing so would open coffee day's entry into US and starbucks could get a free source in return and go in for zoning the world of who takes which part. Only Time will tell what happens. But as of now..starbucks seem to be sliding down due to recession concerns, rising costs of coffee, milk and transportations.
Monday, March 3, 2008
Gift cards a great gift for retailers?
Mail in Rebates (MIR) and Gift cards are more or less like guaranteed revenue into retailers account book. Till date i was of the feeling that atleast gift cards arent as slimy as MIRs, but was shocked to see this news
"You know that Sharper Image gift card you got for Christmas? Right now, it's worthless. And other gift cards in your wallet could lose their value, too. As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year."
So is it like free money for these retailers or where did this money go? did it get lost in costs incurred in running the business? I fail to understand this. of late these gift cards had become an headache with so many hidden costs and constraints on how soon you must use to get the value out. First time I came across the concept of MIR in the US, i couldnt understand the plot behind it. I was wondering what is the idea behind such a concept where you give away the product free after n-months or n-days by refunding the costs you incurred. Then there was a dot com site known as cyberrebate which used to list all the products and would offer you MIRs after 3 months or so. I resisted the move to fall for that, the logic was "there was nothing which comes for free" and i have already come across this fact after i lost some money on stupid things. One more thing is that what you pay is what you get, go for deals or cheap priced products and such ones will come for a very short duration. Now coming back to cyberrebate thing, many of my friends were paying for products and they got it too and got back the money too after 3 months, but what happened was that many people started pouring their money in the hope that they can get back the money and get to keep the product too...this phenomena triggered some of those companies listed on cyberrebate to go bankrupt as they were giving away products for free and give back their money too...in short they couldnt survive thus taking away people's money. One fine day, my friends discovered that cyberrebate itself filed for bankrupcy and closed down the site.
Then i figured out the secret behind offering MIRs
"You know that Sharper Image gift card you got for Christmas? Right now, it's worthless. And other gift cards in your wallet could lose their value, too. As more retailers file for bankruptcy or go out of business, more than $75 million in gift cards are at risk of becoming worthless pieces of plastic this year."
So is it like free money for these retailers or where did this money go? did it get lost in costs incurred in running the business? I fail to understand this. of late these gift cards had become an headache with so many hidden costs and constraints on how soon you must use to get the value out. First time I came across the concept of MIR in the US, i couldnt understand the plot behind it. I was wondering what is the idea behind such a concept where you give away the product free after n-months or n-days by refunding the costs you incurred. Then there was a dot com site known as cyberrebate which used to list all the products and would offer you MIRs after 3 months or so. I resisted the move to fall for that, the logic was "there was nothing which comes for free" and i have already come across this fact after i lost some money on stupid things. One more thing is that what you pay is what you get, go for deals or cheap priced products and such ones will come for a very short duration. Now coming back to cyberrebate thing, many of my friends were paying for products and they got it too and got back the money too after 3 months, but what happened was that many people started pouring their money in the hope that they can get back the money and get to keep the product too...this phenomena triggered some of those companies listed on cyberrebate to go bankrupt as they were giving away products for free and give back their money too...in short they couldnt survive thus taking away people's money. One fine day, my friends discovered that cyberrebate itself filed for bankrupcy and closed down the site.
Then i figured out the secret behind offering MIRs
- Most of well established companies give away MIRs for short periods either to take away market share from its competitors or to empty their inventory containing old stocks and get cash for the junk.
- 99% of companies giving out MIRs are those which arent well established and they use it as a vehicle to get the word of mouth out. They cut down on advertisements and employ this marketing ploy with a hope that the consumer using these items may refer them to their friends or give good reviews.
- MIRs also act as credit or free money available at 0% APR for 3 to 6 months, this way fledgling get the required capital to produce their wares.
- MIRs also have so many constraints that you must send it within this date and also send it after 1 month of purchase or send it with UPC barcode etc etc, these are tactics employed to loot people. When someone forgets to send or doesnt send it according to the requirements, the payout is null or void. Thus allowing free money to the companies.
On the other hand, gift card is like you put in some amount in a plastic card and give out to dear and near ones so that the recipient has full freedom to buy whatever he/she likes in contrast to a stupid worthless gift. This gives a guaranteed buy of something to the retailers and if someone doesnt use that card then the retailer has a great kill...got free money and has an unsold product which he can sell and make money. Usually its better to give away cash to the recipient as cash is worth more than a plastic card and they can use it for anything and wont be tied to shop at a particular retailer. But in the existing state of economy, when you pay all the salary you get as credit card balances, rent or on gasoline, there is hardly anything left to give as gifts. So the concept works well when you pay via credit card and put money into gift cards. So gift cards may thrive as long as plastic credit cards are around and so many people are living under the debt line. No doubt why gift cards used to be popular in india as atleast we can touch and see the cash and people do hoard money in banks :D
Warren Buffets shouts recession
According to economics, a recession is more or less like two back to back quarters of negative growth. Ben Bernanke is yet to confirm that its recession time, he is beating about the bush and indirectly talking of rise in gasoline prices and rising food costs. Just past Thanksgiving, christmas and New year, i had seen news of record breaking purchases and constant loud ringing of cash registers....that was just a quarter back. If that 4th quarter of 07 was a growth and its just 1st quarter of 08...how in the world could it be called recession? Just because there was a $400b housing slump doesnt mean that everything is gone in thin air. I think many more billions was lost in war and no one talked of recession then. Warren buffets is the first one to beat the death drum. This is more or less like rumor and gossip syndrome of someone talking about it and others act like sheep and follow blindly without thinking anything. There are two things to do now, either cut down on frivolous costs or pay the price for having an extravagant life.
Sunday, March 2, 2008
Virgin Mobile enters India
Sir Richard Branson is upto something again....latest is the act of entering india courtesy Tata Teleservices Ltd. Will this redefine the indian market? Reliance and Airtel will scramble to hold onto their positions and market shares? Disappointed with just 1 feature ... paying 10 paise for every minute in coming call...hmm a nice strategy to hook on new consumers. Unless one has their service, there is no way to make that 10 paise per call. Other than this, there arent any direct freebies or earth shattering feature. I was expecting free SMS to attract youth or something else that would target the youth segment. 100% FM-radio enabled is OK..But something like .... allow unlimited SMS between two mutually chosen number could increase user base. Consider a situation a boy friend - girl friend combo, they are the likely ones who would indulge in SMS or talks. So if this one is incorporated then they get 2 customers in a flash. Such things are more youth friendly :D
Old was better?
Personally feel that it was way better in the past than now. One such example is hotels/eat out places....just imagine a hotel which would serve you dosas, idlis and other non-gravy stuffs in banana leaf. The convenience in using the banana leaf is that you dont waste water on cleaning that, then no use of nasty non bio degradable detergents, no issue on hygiene regarding unclean plates. Disposal of these leaves is easy as it can become fodder for cows. This eco system is a lot better than the existing ones which pollutes the environment in every step. Too bad that there are hardly any hotels serving this way :(
Summar---Savings on
Summar---Savings on
- Low cost banana leafs
- No initial costs on plates
- No need for wastage of labor hours in cleaning plates
- No issue on hygiene
- Easy handling & disposal
- Eco friendly
Some Clarification
In my earlier post under "if chinese can why not indians?", i was talking of building everything which has an indian touch and not something that is in parts. I had a comment on the post
"PSUmba said... The Indians are ... Global Vehicles (www.GV-USA.com) of Alpharetta, GA has been named the USA importer for trucks from Mahindra & Mahindra. Look for a 2009 launch"
If one looks at the post, it mentions this point "The vehicles are expected to have a base price in the mid-$20,000 range and use diesel engines built by a major German auto supplier." Now when you go for JV or strategic alliances, the price of the product is the worrying factor and engine is the most important parts in an automobile. I can understand if it were small parts like bolts, nuts etc. But in this case, I cannot accept this one as an engineering marvel akin to TATAs. Its more or less like procuring private brands and putting on a label. From a business perspective it seems OK, but has nothing to do with long term planning so as to capture a market share. So if one looks at the automobile industry in the US, just to keep tab on the costs, some of small parts may be from other suppliers or may be from other country.
"PSUmba said... The Indians are ... Global Vehicles (www.GV-USA.com) of Alpharetta, GA has been named the USA importer for trucks from Mahindra & Mahindra. Look for a 2009 launch"
If one looks at the post, it mentions this point "The vehicles are expected to have a base price in the mid-$20,000 range and use diesel engines built by a major German auto supplier." Now when you go for JV or strategic alliances, the price of the product is the worrying factor and engine is the most important parts in an automobile. I can understand if it were small parts like bolts, nuts etc. But in this case, I cannot accept this one as an engineering marvel akin to TATAs. Its more or less like procuring private brands and putting on a label. From a business perspective it seems OK, but has nothing to do with long term planning so as to capture a market share. So if one looks at the automobile industry in the US, just to keep tab on the costs, some of small parts may be from other suppliers or may be from other country.
Send an SMS and track the Bus
Not bad at all, I didnt expect that communists in the east would allow such things. But kolkata has implemented this system and is helping commuter's keep track of their public transport system.
WBSTC officials said the system would benefit passengers and operators alike. "Passengers can even find out exactly how far away a bus is. This will help them time their departure from home. They won’t have to wait under the sun. As for operators, they would know how many passengers are taking a bus on a particular route during the day. This would tell us which are the busiest routes and help us cut down on unnecessary expenditure," an official said.
BSNL has helped get this system up and running. No idea how they have implemented it. One way could be embed a GSM module and use GPS to update the data ...say every 2 min or 5 min.
I dont see any need for such sophisticated service and no idea how it could be a revenue generator for BSNL if its not charging the SMS as premium one. The easier method could be, as the bus stops at particular stops, the driver or conductor could send in an SMS to the central unit where the data would be stored. So anyone sending an SMS to the central server could know the position of the time along with the last updated status. That way it could be like 50 paise per SMS and 20 such stops in a trip would mean just 10 bucks...rather than putting a GPS, then using a GSM module and constantly updating values.
The easiest way would be to put RFID tag in the bus and the receiver in the bus stops connected to telephone line. As the RFID receivers are placed on top of telephone poles, the theft of these devices to an extent could be avoided. As the bus pulls over, the reader scans the RFID tag and updates the servers. But the best way would be to put such a system in some local shops and help update the position values pertaining to each bus.
WBSTC officials said the system would benefit passengers and operators alike. "Passengers can even find out exactly how far away a bus is. This will help them time their departure from home. They won’t have to wait under the sun. As for operators, they would know how many passengers are taking a bus on a particular route during the day. This would tell us which are the busiest routes and help us cut down on unnecessary expenditure," an official said.
BSNL has helped get this system up and running. No idea how they have implemented it. One way could be embed a GSM module and use GPS to update the data ...say every 2 min or 5 min.
I dont see any need for such sophisticated service and no idea how it could be a revenue generator for BSNL if its not charging the SMS as premium one. The easier method could be, as the bus stops at particular stops, the driver or conductor could send in an SMS to the central unit where the data would be stored. So anyone sending an SMS to the central server could know the position of the time along with the last updated status. That way it could be like 50 paise per SMS and 20 such stops in a trip would mean just 10 bucks...rather than putting a GPS, then using a GSM module and constantly updating values.
The easiest way would be to put RFID tag in the bus and the receiver in the bus stops connected to telephone line. As the RFID receivers are placed on top of telephone poles, the theft of these devices to an extent could be avoided. As the bus pulls over, the reader scans the RFID tag and updates the servers. But the best way would be to put such a system in some local shops and help update the position values pertaining to each bus.
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