Saturday, December 13, 2008

Collectivism: the new what and how?

Since last few days, I am in India enjoying the sunny weather. I am also working on a paper focusing on cross-cultural consumption. While referring to some literature for the consumption in India and the impact of culture, I came across the idea of 'collectivism' (also known as 'high context culture' or simply put 'strong societal bond'). India as a country is highly associated with the same, however, it seems that something different is happening all around me.

While walking on the roads of Ahmedabad, I observed something really interesting. I observed a tendency among people to take advantage of the situation in their favour without thinking about what harm will it cause to others. For example, I saw many drivers (especially on 2-wheelers) driving on the wrong side of the road and they hardly took any care of others including pedestrians. Honking was their ploy for making others aware but that was also used to intimidate (with the high decibel).

While talking to many young and elderly around, I found the strong feeling of using the situation to ones own advantage in many walks of life. I am unsure how to define this but it surely is far from collectivism.

I believe this is how culture evolves from one end to the other and the pendulum keeps swinging...

Tuesday, November 18, 2008

Download my book on Marketing Research

It took me some time, but I have been able to finish the compendium I wrote on 'Marketing Research'. It is now available on

The book contains eight chapters focusing on the marketing research process in details and it's more of a how to guide. It has been written keeping novice researchers and practitioners in mind. Have a look.

Would love to hear from you all about it.

Happy Reading...

Sunday, November 16, 2008

Management and family

MCC has recently acquired a small but successful Swedish software company. Its head founded it three years ago with his son Carl, and was joined by his newly graduated daughter Clara and his youngest son Peter 12 months ago. Since the acquisition MCC has injected considerable capital and also given the company its own computer distribution and servicing in Sweden. This has given a real boost to the business.

MCC is now convinced that rewards for sales people must reflect the increasing competition in the market. It has decreed that at least 30% of remuneration must depend on individual performance. At the beginning of this year Carl married a very rich girl. The marriage is happy and this has had an effect on his sales record. He will easily earn 30% bonus, though this will be small in relation to his total income, supplemented by his wife’s and by his share of the acquisition payment.

Peter has a much less happy marriage and much less money. His only average sales will mean that his income will be reduced when he can ill afford it. Clara, who married while still in school, has two children and this year lost her husband in an air crash. This tragic event caused her to have a weak sales year.

At the international sales conference national MCC managers present their salary and bonus ranges. The head of the Swedish company believes that performance should be rewarded and that favouritism should be avoided; he has many non-family members in his company. Yet he knows that unusual circumstance in the lives of his children have made this contest anything but fair. The rewards withheld will hurt more deeply than the rewards bestowed will motivate. He tries to explain the situation to the American HR chief and the British representative, who both look sceptical and talk about excuses. He accedes to their demands.

His colleagues from France, Italy, Spain and the Middle East, who all know the situation, stare in disbelief. They would have backed him on this issue. His family later say that they feel let down. This was not what they joined the company for.

What solution would you suggest?

Thursday, November 06, 2008

Re-negotiate the contract

A year after the BIG mining company had signed a 10 year long term contract with a foreign buyer to buy zinc in 10 annual instalments, the zinc market collapsed due to credit crisis. Instead of paying £6 a ton below world market price, the buyer now faced the prospect of paying £4 above.

The buyer faxed BIG to say it wished to renegotiate the contract. The final words of the fax read: “You cannot expect us as your new (and long term) partner to carry alone the now ruinous expense of these contract terms.”

BIG negotiators had a heated discussion about the situation.

What of the following statements would you suggest?

  • A contract is a contract. It means precisely what its terms say. If the world price had risen we would not be crying, nor should they. What partnership are they talking about? We had a deal. We bargained. We won. End of story.
  • A contract symbolises the underlying relationship. It is an honest statement of original intent. Where circumstances transform the mutual spirit of the contract, then terms must be renegotiated to preserve the relationship.
  • A contract symbolises the underlying relationship. It is an honest statement of original intent. But such rigid terms are too brittle to withstand turbulent environments. Only tacit forms of mutuality have the flexibility to survive.
  • A contract is a contract. It means precisely what its terms say. If the world price had risen we would not be crying, nor should they. We would however, consider a second contract whose terms would help offset their losses.

Research, what research?

Today, while looking through BBC website I came across this story about left and right handed people and the differences in their behaviour. The story is as follows:


Left-hand people 'more inhibited'

People who are left-handed are more likely to get anxious or feel shy or embarrassed about doing or saying what they want, according to new research.

Those involved in the Abertay University study were given a behavioural test that gauges personal restraint and impulsiveness.

Researchers found left-handers tended to agree more with statements such as "I worry about making mistakes."

They also agreed that "criticism or scolding hurts me quite a bit."

In total, 46 left-handed people were compared with 66 right-handers.

'Wiring differences'

The left-handers scored higher when it came to inhibition, especially when a situation was new or unusual. Women were also more held back than men.

All groups responded similarly to statements such as: "I often act on the spur of the moment" and "I crave excitement and new sensations."

Dr Lynn Wright, who led the study in Dundee, believes the results could be due to wiring differences in the brains of left and right-handers.

"Left-handers are more likely to hesitate whereas right-handers tend to jump in a bit more," she said.

"In left-handers the right half of the brain is dominant, and it is this side that seems to control negative aspects of emotion. In right-handers the left brain dominates."

What do we do in the name of ? Should we call this publishable research? How many left-handers after reading this will feel inhibited after this? How could we conclude about 'brain wiring' on the basis of the findings?

Boy, I am worried.

Would love to hear your views too on this.

Thursday, October 30, 2008

The culture conundrum

Mr. Geddy Teok, an American – Chinese (second generation) employee of a large New Jersey pharmaceutical firm, was based in Tokyo, Japan. His main aim was to get a major joint venture going with one of the largest Japanese pharmaceutical manufacturers. After four years of negotiating, the supreme moment had come for signing contracts. Obviously the lawyers from HQ in New Jersey were well prepared and sent the contract to Geddy one week before the ‘ceremony’.

After four years of Japanese experience, Geddy was shocked when he received the document from the USA. He thought: “I could not even count the number of pages. There were just too many. But I remember the number of inches it measured when laying it on the table. I would guess that with every inch one of the Japanese would leave the room in despair. I hope they come will come with a group of ten. Then at least I will keep one person to talk to. The Japanese will sign the contracts, but this can’t be taken this far.”
Geddy Teok decided to call HQ and ask for some help. The legal department said that the relationship was so complex that the contract needed to cover many possible instances. Moreover, a consultancy firm that advised them regularly said that Asians in general and Japanese in particular had a reputation of being quite loose in defining what was developed by them and what came from the USA: “we better have some pain now and be clear in terms of our relationship, than to run into problems later because of miscommunication. If they sign it at least they show that they are serious.”

Geddy was in despair, but he only had a day to decide what to do. The meeting was tomorrow. Should he perhaps call the Japanese CEO, with who he had built up quite a relationship? Or should he just go for it? Geddy framed his dilemma quite clearly. “Whatever I would do, it would hurt my career. If I insist on the Japanese partners signing the contract they will see it as proof of how little trust has been developed over the years of negotiations. This might mean a postponement of the discussions and in the worst case the end of the deal. If I reduce the contract to a couple of pages and present it as a ‘letter of intent’, HQ in general and even worse the whole legal department will jump on me, jeopardizing my career.”

If you were Geddy, what would you do?

(Adapted from: Riding the Waves of Culture: Understanding Cultural Diversity in Business by Fons Trompenaars and Charles Hampden Turner)

Thursday, October 23, 2008

A cultural perspective on Indian business mindset

Today, I received an email from one of my friends relating to if Lehman Brothers were an Indian enterprise. It makes it quite an interesting read and relates to some deep rooted Indian business values. An interesting read for sure. Here it goes....

I happened to run in to Nanubhai on Dalal Street . He was eating Khaman Dhokla in a farsan shop.

Kem cho (How are you), Nanubhai?"

"Saru che." (I am good.)

He was looking glum but gestured me to join him.

As I bit into the tasty dhokla (a Gujarati dish) with tangy chutney on the Friday afternoon, which was fast turning into a 'Manic Friday' as per Dalal Street lingo, he was staring at the bull near the entrance, which overnight had become a Russian bear hugging everybody that passed the Street.

Nanubhai is a well-respected Dalal Street dada with an answer to every shareholder's query.

"What went wrong with Lehman Brothers?" I asked.

"Lots of things. If the founder brothers, Henry, Emanuel and Mayer were alive this wouldn't have happened. Lehman Brothers were more than a 150-year-old company. But yet, it had no Lehman in the company. Such a situation can never happen in India ."

"Are you trying to tell me an Indian would have handled this differently?"

"Bilkul (absolutely). If it was an Indian firm, Lehman Brothers would have fought as soon as their father died and divided in to three companies. They would have diversified into clothing, polystyrene, petrochemicals, vegetables, movie making, telecom, drilling oil, mobile phones, retailing, books, spectacles, gyms, wellness. In short, anything and everything under the sun. They would have made money for themselves and their shareholders."

"But when there is massive failure there would be no option but to file for bankruptcy?"

"Fail-wail chance hi nahin! (no chance of failure) Even if they encounter tough times, they would have friends like Mulayam Singh and Amar Singh (politicians) to bail them out. They could finish off competition by befriending the finance minister and getting duties levied on the imports of competition. They would fund and befriend ruling parties. Unfortunately for Lehman Brothers in 2008, without a Lehman on the board or some Indian business brothers at the top, they couldn't open the survival kit to stay afloat."

As we were sipping double kadak chai (tea), I asked:

"Did anybody anticipate this global meltdown?"

"Anticipate? Mazak chodo! (seriously) I will tell you something. America has some 45 Nobel laureates in economics from 1970. From 2000 alone there are 15 Nobel laureates in econometrics sitting on company boards, treasury benches and in places like Harvard, Stanford etc. Kisiko kuch patha nahin tha (nobody knew anything)! How come none of these had any inkling to the disaster awaiting the banking circles all over the world? Even the finance ministers of G-7 talked of strong "fundamentals" of world economy around this time last year! Two months back the only topic they were discussing was the rise in oil prices."

"What will happen if it goes all on like this?"

"Some American economist will study this, write a new a theory and get Nobel Prize next year, dekhna (you see). Seriously, they forgot things like control, double check, systems-in-place etc and brought in vague words like Subprimes to give loans left, right and centre."

"What will happen to the Indian market?"

"It's already having the Lehman Brothers' effect. Our finance minister seems to like the figure 60,000. While presenting the budget earlier in the year he pledged Rs 60,000 crore to write off loans given to farmers. Now he is pumping Rs 60,000 crore to help out the banks! I don't know what he will do next. He is again from Harvard!"

"What is the lesson to be learnt from the Lehman Brothers' episode?" I asked as we were leaving.

Nanubhai took a spoonful of snuff said:

"You know, we have an old elementary rule for keeping hisab-kithab. Divide a page into 'Left' and 'Right' with a line in the middle to denote Debit and Credit. In case of LB, as somebody said, nothing was right in the 'Left' and nothing was left in the 'Right'," concluded Nanubhai

Storytelling is such an art and the author of this (whoever it is) has nearly perfected it. With a use of sarcasm s/he brings about a fabulous caricature of the Indian business culture. Though, as an Indian I do see a lot of businesses breaking free from it, the real questions is that, are we?

Sunday, September 14, 2008

Marketing practices in European Mid-Sized firms

Recently, Keith Perks and I published a paper on the marketing practices in entrepreneurial mid-sized firms in high-tech and conventional industries. We studies companies from France, Germany and Italy. The research started as a debate we had on the interface between entrepreneurship and marketing which has emerged as one of the major research constructs in the past decade. However, there was relatively little or no research focusing on the mid-sized firms. We selected firms on the basis of following criteria.

Criterion 1: Entrepreneurial involvement-privately owned
Criterion 2: Operating in high-tech (electronic, telecommunications and software) or ‘conventional’ industries (mechanical engineering, metal).
Criterion 4: Located in Italy (high-country culture context), France (medium-country culture context and Germany (low-country culture context).
Criterion 5: Employing between 100-499 staff.

Our research explored the ideas of entrepreneurs on market orientation issues namely; opportunistic behaviour, sales and marketing approach, strategic planning effort, and customer orientation. Our research further explored the entrepreneur’s conceptualization of marketing and approaches to strategy and planning. We employed a grounded theory and multiple case methodology approach exploring perceptions and practices of marketing among entrepreneurs in France, Germany and Italy. As our focus was to gain in-depth information in-depth interviews as a method was employed.

Findings (excerpts only):
1. Opportunistic behaviour:
The pattern of responses related to seeking opportunities in foreign markets indicated that entrepreneurs in our study sample spent a substantial amount of their time seeking opportunities in domestic and international markets. Most respondents stated that they spent 25%-50% of their total time travelling and developing the market for their company. This phenomenon was observed across countries and business contexts.

2. Sales and marketing approach:
SMEs are frequently reported as rarely having marketing departments or employing marketing professionals. In our analysis there is evidence that several of the firms have marketing departments and marketing professionals in product management and marketing communications. This is prevalent among the high-technology firms. However, among the ‘conventional’ industries there are no marketing departments or marketing professionals. While differences were observed across industries, there were no differences across countries.

3. Strategic planning effort:
In most cases the entrepreneurs’ discussed strategy in terms of intuition and experience rather then formalized managerial analysis and decision-making. The firms also referred to the involvement of the top managers in leadership and strategic direction and vision. Some of the respondents articulated explicit views which indicated they were using formal strategy making and business and marketing plans. However, many of them also suggested a cautionary approach towards the structured marketing planning process. The ‘academic way’ of developing marketing plan was also questioned.

4. Customer orientation:
All entrepreneurs stated with emphasis that they work closely with their customers and are engaged in developing solutions and innovations in collaboration with them. It could be observed from the discussion that the customer orientation was not only limited to the marketing activities and relationship building but also channelled into the production, engineering as well as the R&D departments. The issue of positive customer partnership in innovation was observed across all of the responses. However, activity intensity and integration of customer partnership ranged widely.

Overall, we found interesting similarities among European mid-sized firms and their market orientation. We observed the sector specificity and its impact on market orientation however the no significant impact of country culture context. Several other interesting findings are summarised in the paper published in the ‘International Journal of Entrepreneurship and Small Business’. The full reference to the paper is:

Perks, K. J. and Shukla, P. (2008), "An exploratory study conceptualising marketing thought in entrepreneurial medium-sized firms in high-tech and conventional industries in France, Germany and Italy", International Journal of Entrepreneurship and Small Business, Vol. 6 No. 2, pp. 192-211.

The findings provide insights to entrepreneurs and budding entrepreneurs across the world as to what factors they should focus on while managing a growing firm.

Friday, August 29, 2008

Luxury consumption and relatively little impact of recession: added evidence

In the earlier blog on 'Luxury consumption: will it be affected by recession' I stated three reasons why top end luxury firms were less likely to get affected by the recession. The three reasons I stated were: (a) consumers at large were changing their attitude towards luxury consumption; (b) luxury firms were attracting consumers from much wider regions (especially from emerging markets) than developed markets and (c) world tourism was up which to me has a significant connection with luxury consumption.

Today, in Financial times Lex has written an article (attached below) which provides added evidence to what I suggested.


Luxury still sells – for now. Luxury goods shares went into a designer dive last autumn as investors took fright that $1,000 handbags and $300 sunglasses would be the first things credit-crunched consumers stopped buying. In fact, first-half 2008 sales for the big luxury groups were buoyant. Friday’s earnings figures from PPR and Hermès bolstered confidence that sales were not been maintained at the expense of margins. At PPR, the 13 per cent increase in operating profits at Gucci Group – which includes brands such as Yves Saint Laurent and Balenciaga – outsparkled less bling-bling performance from Redcats and Conforama, its retail businesses. At constant currencies, Gucci’s profits were up 36 per cent.

Not all the growth is coming from the Abramovich class in emerging markets. Luxury goods groups have broadened their appeal to young professionals prepared to save up for that Bottega Veneta handbag. They have also been careful to put their golden eggs into different baskets by developing multi-brand portfolios and geographically diverse businesses.


Sunday, August 24, 2008

Managing luxury brands in recession

In the earlier blog 'Luxury consumption: will it really be affected by recession?' I provided my perspective on luxury consumption and effects of recession on it. I stated why there will be little affect of recession on luxury consumption. Furthermore, in a sequel to that blog I wrote another blog titled 'consumption tendencies in recession: early evidence' wherein the propositions I had forwarded were supported by consumers representing various countries and industries.

Respondents in my exploratory study confirmed the relatively lesser effect of recession on consumption pattern with regard to luxury goods. However, they also raised concerns as to companies should not be complacent about it and must take actions to offset the relative decrease in spending. In this blog, I will focus on how and what actions companies should take to gain from the recession.

1. Spend on your brand

During a vibrant and growing economy consumers spend freely. Therefore, having an unclear brand position, while not optimum, is not as risky as during a recessionary period. In growth times, the brand’s weakness in the marketplace is less obvious, as consumers tend to be more forgiving and are not so price-conscious. However, when times get tough, consumer spending habits change dramatically. With negative news percolating from all media avenues the consumption fear sets in and they require much further motivation for spending. In recessionary times, consumers, not only spend less overall, but they become far more selective in how they spend. They gravitate away from brands that fail to provide a clear, meaningful, relevant and emotional engagement.

Conventional wisdom suggests that in times of recession it is better to tighten the belt and cut costs and most companies immediately cut their marketing and branding efforts. However, this is where the opportunity beacons. When others are cutting their spending and loosing the emotional engagement with customers, it will pay in the longer term to spend on the brand.

2. Spend on brand relevancy

The brand spend doesn't always mean monetary spend in every case. It is about generating a buzz around the brand and with the present day technology such efforts can be choreographed much easily than one can think. However, a word-of-caution for those ever so enthusiastic marketers. While creating and opening new communication avenues understand the limitations of it and the consumer engagement process. History of such communications is littered with companies overdoing it and in turn failing to become relevant. With luxury brands, relevance is an extremely important issue and therefore, one must move with caution. However, recession is the best time to build relevance and such relevance will stick for long-term.

3. Avoid the SALE mentality

The increasing wall-street driven short-term focus to outperform competitors everyday is another pitfall associated with most marketers. There is not a single firm in the world which can ever do that. Remember that proverb 'every dog has its day'. This is how simple it is. You cannot outperform the market everyday and every time. It catches up on you. In recession times short-term focused marketer go on sales promotion overdrive. This has a direct impact on the brand erosion and consumers get confused as to what the brand stands for.

Instead of sales promotion spend on engagement. Make your brand relevant. Cement the position of your brand in the customers' minds. Stop the sale mentality. However, simple and logical this may sound, most marketers who are continuously involved in operational thinking miss this and kill their beloved (mostly by the consumers) luxury brands.


Saturday, July 26, 2008

Luxury Consumption Tendencies in Recession: Early Evidence

In my last blog post (Luxury consumption: will it really be affected by recession?) I stated that luxury brands will not be affected as much by recent recession as they did in past. The main reasons I gave were (a) consumption tendencies of masses (where Armani, LVMH, Gucci, Prada and such others have become a regular consumption item); (b) geographical scope and the emergance of emerging markets in Asia and (c) tourism trends (where Chinese, Indian and other tourists are flocking the Western markets and buying luxury items in numbers).

This led me to do a quick a quick study asking some professionals in my network regarding what they thought about their consumption pattern of luxury brands (those Armani and Gucci) and consumption spending such as entertainment and eating out in posh restaurants. Furthermore, I did put a poll on webpage to see random responses of consumers regarding their luxury consumption habits in recessionary times.

The results corraborate to what I have stated earlier. The poll results show that a large majority of consumers (72%) are unlikely to stop their spending on luxury brands. Furthermore, the professional whom I asked showed a similar response however, an interesting theme emerged from the answers wherein added conscious effort to luxury consumption was observed.

For example, following is a response from one of the heads of marketing at an MNC healthcare firm:

"I wouldn't stop consuming luxury goods in these recessionary times. However, my decision process would be much more thought about, would be longer and would be priority based."

An academic from a reputed University in the UK

"it gets me thinking about my own habits in these times and I realise, as i sit here looking at my new G3 iphone, that no, i'm unlikley to stop consuming luxury goods."

A product manager states:

"But one thing i have started doing is calculating the expenditures and doing some preplaning before buying any luxury. Despite of being female who luvs buying, by doing little excercise i put a control on many things."

An analyst from IT industry

"won't stop but reduce buying them."

A similar response from another IT analyst

"To a certain extent, yes. Best to be a bit Frugal"

Another interesting observation confirming point (a) raised above was also observed from one of the respondents who happens to be a project manager.

"I would, and have, certainly reduced, though not stopped consuming luxury goods. Come to think of it, many of them are near-necessities now !"
Furthermore, from the below response one can observe that how luxury consumption is woven into consumer mind-set.

A business analyst states that:

"No i won't as long as my credit cards don't dry out ..."

Another market intelligence professional:

"I wouldn't. Why? Because of its emotional and recognition value"

The early evidence as stated above demonstrates that while there would be some restraint on luxury consumption, most consumers will not stop buying and consuming luxury brands. This is reflected in a business manager stating:

"I think the cusumer will be impacted and the companies shd have different strategies for different segment."

All the above responses show an interesting effect of recession of luxury consumption and show how consumer mind-set has changed regarding luxury brands and their consumption. In the next blog, I shall discuss how companies can manage thier marketing effort in such recessionary times for luxury brands especially.

Friday, July 11, 2008

Luxury consumption: will it really be affected by recession?

The talk of medium-term recession is in the air. The mainstream media everyday reports so many gloomy results on various fronts that reading a newspaper in the morning makes the breakfast an undesirable event at times. One of my friends has just told me she has actually stopped eating breakfast, for the reason being the prices of food products have gone drastically up and it’s getting harder to make ends meet.

Consumers consume products to satisfy two major needs, namely, (a) utilitarian needs: basic needs such as food, thirst, shelter etc. and (b) hedonistic needs: which includes largely wants such as entertainment and status which mainly focus on pleasure.

Luxury consumption adheres to the later part of the needs and if asked any consumer would state that in tough times the first they will cut is the luxury consumption. However, in my opinion, it doesn’t seem to be the case. Over the past few years of unprecedented economic growth, luxury consumption has caught the eyes of the masses. Historically, such pleasure seeking behaviour was observed in more ‘well to do’ class of society. However, in recent years, our appetite to consume luxury products has increased voraciously.

From my own experience, finding a Louis Vuitton, Gucci or Prada accessory while sitting on a train in London Underground is as common as a finding the Metro newspaper (available freely to every reader on London underground).

On the academic front, we have good many forecasting models which provide some assistance in predicting how utilitarian products will fair in such recessionary scenario. However, we only have anecdotal evidence with regards to luxury products.

Financial analysts using historical sales data predict that luxury goods companies such as Moet Hennessy Louis Vuitton (LVMH) or GUCCI are traditionally hit hard by economic downturns. There is evidence of the same too as LVMH saw it profits drop by at least 20% in the aftermath of 9/11. According to Financial Times, in 2008, Bulgari felt slower sales growth in March, Richemont at the end of last year, while Gucci sold less in the first quarter than last year.

Furthermore, analyst at Lehman Brothers, points out that 50-60 per cent of the luxury goods industry's consumers remain in classic, developed markets, which are hit hard by the recession. While there seems evidence that luxury goods consumption will be hit hard, I tend to disagree with the analysts due to following:
1. Mass consumption behaviour: As I stated earlier luxury products have come much closer to becoming necessity in case of many affluent customers who still represent middle class in the socio-economic classification terms. This was hardly the case in earlier market scenarios.
2. Geographical scope: Half of the luxury consumers live in the Eastern emerging markets. The glitter of Dubai and Shanghai shows the dominant presence of Eastern consumers in consuming luxury products. While market such as India and most other parts of Asia underexposed to global luxury brands, the scope of growth is too hard to predict.
3. Tourism trends: There is an unprecedented growth in terms of tourist travelling from Asian markets to the Western markets. For examples, Indian tourists took the number one spot in terms of visitors to the UK displacing Japanese consumers who has reigned on that spot for a long period of time. Tourists have a huge tendency to purchase luxury goods as souvenirs and such behaviours have to be accommodated in the overall prediction however that will be too difficult to address without substantial research.

The above three points, when included in any economic analysis of luxury products can skew the overall results. They surely seem to have the propensity to create a mini ‘black swan’.

Wednesday, June 11, 2008

Service failure II: Norwich Union (Indesit Washing Machine)

In my earlier blog entry AO(HEL)L..., I stated that I shall be discussing two more service disasters and a case of service recovery. Well, here I am writing about another service failure from a service company.

Indesit washing machine It happened so that after buying the washing machine 2yrs and 7 months ago, it suddenly stop responding to washing programme option 3. We thought it was a minor thing and so didn’t really think much of it. However, one fine weekend while sifting through some old bills I realised that while buying it from Argos we had paid £99 for the machine insurance and it included repairs.

The next thing was to call the company and they asked me to call the insurance company (Norwich Union – aka NU). I had seen some ads by them and thought ahh… this is a good firm and they will sort things out quickly. However, like AO(HEL)L… it became Indes(h)it for us.

The first time we contacted Norwich Union (NU) the lady took the details and stated that an engineer will come to your place in between 8 – 5pm on a certain date after 3 weeks. My spouse waited whole day for that engineer to arrive however, he didn’t turn up. In the evening I called up NU to find the reason and we were told he didn’t find parking space as we live in the city centre and so he couldn’t come. This time we were given another date after 2 weeks. This time the engineer did turn up and opened the machine up and then said, ohh… the programme 3 is not working mate and I am sorry but I don’t have the electronic panel to fix that. I was absolutely furious. Shouldn’t they tell the engineer what the problem was (we had already mentioned that)? The engineer said he will be back in a week and gave us another date. So on that specific date my spouse again waited for him but to our surprise he didn’t turn up. Luckily he had given us his mobile number and so we called him up where he said, his territory had been changed by the company and so we will have to rebook the appointment.

I was getting anxious now as the time for the insurance term to expire was coming nearer and we all know how notorious insurance companies are overall. I called up NU again asking about this mishap and booked another appointment. This was another 3 weeks. This time I was at home waiting for the engineer and to my shock he didn’t come. I called up the company at 7pm at last after waiting all day for the engineer and they told me that because we live in a city centre, the engineer needed parking permit to park his vehicle and COULD WE BUY HIM ONE? I literally laughed out sarcastically asking the lady on the phone that is it now my duty to do so? Her response was kind of, if you want the service, get the permit? It really got me upset so I asked her to put me to a supervisor. After re-explaining the phenomenon another date after 2 weeks was given to us.

We waited again on the day for the engineer to arrive, and to our amazement, he again didn’t. So I called up NU again and they said, that you live on the back of the building and from your window, the van cannot be seen and it is the company policy that the engineer must be able to see the van from the service point. This was getting ridiculous so I told that lady that now I am recording this call and my lawyer only shall contact the firm. Suddenly, I was put to a supervisor and I explained the whole situation again. It was nearly 3 months since we reported the fault and insurance expiry term was looming large. This time we were given a date after 7 days.

Interestingly enough, I had told that supervisor that please tell the engineer the programme 3 is not working so bring appropriate stuff to resolve that issue. However, as you can imagine when that engineer turned up at 3pm on that fine day, said ohh the problem is with programme 3. Funny enough, he didn’t have the right equipment but he said he is leaving his tool kit at our place and will be back in an hour with the right electronic equipment. He did come after an hour and in 20 minutes time it was fixed.

While reflecting on this issue there are some interesting questions which are raised here.
First, it makes you think that how ridiculous service system exists in the UK and we still call ourselves a service economy. Why can’t companies give something like 2 or 3 hours lag at the max when providing a service or delivering some stuff? Why customers have to spend all day waiting for that person (delivery or service) to arrive? Why can’t they do such things before or after this 8-5pm time (that is the time most people will be back from work)? Isn’t this commonsense? Don’t these people understand the value of time at all (we roughly wasted 100 man hours our time on this 30 minute solution)? And in this age of technology is it really that difficult to actually provide some specific time for service or delivery?

I believe there is a great opportunity for differentiation for medium term for companies in the UK and elsewhere in the developed markets.

Sunday, May 11, 2008


An open letter to Jackie O’Leary, Vice President of Member Services Office

Yes. The title sounds bit funny and might make you think what am I writing here? Well, this time I wanted to explore the service delivery and my own experiences of the same with it.

Over the next three blogs I am going to explore three major service failures I have observed and have been in the middle of it. And as they say the system (house being the right word) always wins, I felt victimized in almost all cases.

The three of them are going to be:
1. Internet service provider (AOL)
2. Credit card corporation (NatWest credit card)
3. Consumer durable (Indesit washing machine)

So here comes the first one.

Being an academic I teach, train and consult, current as well as future managers about service and relationship marketing in global context. However, when I talk to the companies somehow they completely indifferent to it. Reading Harvard Business Review and such other practitioner focused journals make me think the world is changing and for the betterment of the consumers’ service experience but reality bites and that too very hard.

For the last four and half years, we stayed loyal to a single ISP (AOL) even if at times I paid £17.99 for the most basic connection in comparison to the much cheaper alternatives. The idea being it serves the purpose so we didn’t mind giving away a little more. However, after about 3 years of being with AOL I realised the prices had dropped significantly and so I called them up saying why not give me a better deal for my loyalty. Interestingly enough the answer was a BIG FAT NO.

After a day of searching through the web of other deals and such, I realised I was paying nearly £10 more per month and so called up stating I wish to stop AOL services and would go to another ISP and know what, the same moment I was given a better deal, £10 off every month from there on. How quickly things change when you know the right tricks. However, I was bound to a 12 month contract for the same.

In February 2008 we moved house, it was merely from one end of the building to another end of the building. The post code didn’t change. The telephone number didn’t change. The only change was the change in house number.

British Telecom, within 5 days of notifying actually got the telephone line transferred (now that’s a surprise, isn’t it?). I thought this was going to be the tough part but it was really a piece of cake. The thing I thought was going to be easy was the easy movement of internet connection which turned out to be a nightmare.

I called up AOL on 18th Feb 2008 stating that we have moved house, and the telephone line remains the same so how much time will it take for the move to occur. I was told it could take 20 working days and that came as a surprise. Now I don’t know what is the situation in other market but in the UK broadband connection is tied to a telephone number so you can only use internet when accessing the through that specific telephone number (the telephone remains free but the connection is tied to that number).

I felt bit frustrated in about 2 days without internet at home and so called AOL who generously suggested that I can use their free dial up service for the time being. They provided me the set up instructions however, it never worked, after a full day of trial and error got me through to their service but it was complete reversal of what they had said. You also have to remember here that almost all the companies relating to telecommunications in the UK offer 0800 (free phone numbers) whilst you wish to join their service, however when you become their customers they provide you with 0844 or 0845 or 0870 numbers which are charged from 4p to 7p per minute. This way they avoid a lot of consumers talking to them.

Do you see now, why 95% consumers never talk to companies about why they left?

However, here I was, stuck, with a crappy dial up service (when you have used broadband for so long believe me, it feels that way). On 26th Feb 2008 I used a new interactive web based customer contact (live chat) service provided by AOL and to my surprise I was told that by the next Monday (3rd March 2008) the connection will be on. I was happy.

As I came back home on Monday from office, the first thing I did was to connect my PC to the modem and know what, the connection was not working. I thought of calling AOL and asking what was the trouble but remember calling AOL is not as easy as that. The 0844 499 5555 number costs you 5p a minute but moreover, there is seldom a chance that you will get connected to a person before 20 minutes. By that time you will have heard Frank Sinatra and what not (this is what they play in background when you hold with that lady saying every 5 – 10 minutes please hold, your call is important to us) for ample times.

However, I called up thinking this was important and let’s get it sorted. After an hour worth being on phone I was told that my house move request has not gone through and I wasn’t provided any clear reasons for the same. I was shell shocked. So, I decided to use the live chat service again and there came the shock of the month. service agent said that…

“I've checked it and I do apologise as the house move hasn't gone through and unfortunately we cannot place the house move again at the moment as we are currently unable to place a house move due to a system problem here I'm afraid.” (by the way this is when I started saving all the chat sessions with them.)

Apologise, what apologise. So, I asked him why was I given a confirmation twice (once via email on 18th and later on 26th by one of the service agents)? The answer was…
“I do apologise that you were told you could connect as that isn't the case… The only option we have is to place the house move again when our system issue is resolved. I would advise to call back in 4 - 7 days for an update…”

Here I was, frustrated to say the least and stuck. I went to the AOL website after an hour using my dial up and you know what, that time itself I put a house move request and got confirmation on email saying they have accepted my house move request.

On 5th March, 2008 I decided to contact AOL again for checking if that request I had placed had gone through and hoorraaaah… it had gone through. However, when I asked what has gone wrong I was told…

“There seems to have been a problem with your line at your new address. When the broadband was requested to be placed on your new line I see that the request was repeatedly placed for the new line and after four attempts to place the order the system finally cancelled to order placement.”

Obviously I asked why this was the case and the answer…

“As to what the problem with your line was exactly I'm afraid that would not show in our system and you would have to contact BT to enquire.”

I now thought, BT was the culprit and I was discussing this with some of my students who also agreed with that. However, when I contacted BT about this, they said, the agent should not have asked me to contact BT about it as BT wholesale deals with this request and ISPs have a direct contact with them not an individual customer. I pressed my case though and the BT service agent actually told me that there was no problem with the line and it was working perfectly well. This got me further frustrated.

So on 7th of March, 2008 I went on live chat again to talk to AOL agent about there being no problem on the telephone line and what has happened to my request. The service agent then told me the news stating that…

“Broadband is live on the number _________ and the postal code _____.”

I said that was not the case and that’s why I am talking to you however suddenly she left without giving any answer. I was now connected to another team member to whom I had to go through the same security checks and explaining the phenomenon again. And here came another Shock, much bigger than I could absorb.

“I have checked your account & we have no received any house move request from you.”

I was angry to the core now. I felt the system was toying with me. I was told to call AOL via telephone and get the exact details of why this was happening. However, as I knew from my earlier experience nobody had exact details at their end. Still, I called and the result was the same. No real result. I was furious.

Not much of trust was left and so I decided to use live chat again to check what was happening with the house move request. This time the service agent told me that…

“Ok - when I check that number with BT, they say broadband is currently active on it. Have you tried connecting?”

I told her I have tried connection more than a few times to no avail and she transferred me to the technical support team. The service agent told me that…

“According to the system here your broadband is active, you seem not to be getting a DSL signal on the modem itself and is not working from there. The best thing which I would suggest would be to phone AOL on contact number 08444 99 5555 and from there we can test your line and see is the Broadband signal leaving the AOL server and making it to your front door as it doesn't seem to be at the moment.”

So I asked why he can’t do it right at that point in time and he stated…

“This cannot be complete from Live Help as the line cannot be in use with broadband or Telephone service, so this is why we would not have access to the tool and contacting AOL on the number above is the fastest and best way to get your connection back online.”

What a fantastic system integration, isn’t it? I was further told by the agent that if you don’t have another phone line at home…

“The team which do have access to test your line will check your modem, then disconnect the call and run the line test and they will phone you back with results from there.” (Which will not even happen in your dreams).

Following the agent’s advice I called up AOL within 10 minutes and after nearly a 2 hour long call and having heard the songs (while on hold for about 75% of that call) more than ample times I was told by a 2nd level agent that I had a ‘BT wholesale Line error code 2012’ on my phone line. What a perfect sense this words make to a consumer, don’t they? When asked for explanation, I was told that I should wait for minimum 24 hours before they run full diagnostics and let me know what the situation exactly was. I fail to understand what did they do since 26th February then?

Obviously, after 24 hours I decided to contact live chat again. This time I was given some more information.

“I would like to inform you that the issue is still with BT, they are working on it.... the problem occurred due to some technical fault at the exchange... I would advise you get in touch with us in another 48 hours and we'll have an update on it.”

I could feel light at the end of the tunnel. So, on 11th March after 48 hours had passed, I religiously went on to live chat to see what had happened to my house move request. I was told…

“At the moment there is currently a cease been processed on the line and this is due to occur by the 14th, after the 14th we will be able to order broadband on the line for you… Once the cease has been processed for you, we will have to order the broadband for you, and this would occur within the next 7-10 working days.”

I was also told by the agent…

“I will keep an eye on the order for you. I will email you with an update, would that be okay for you?”

However as you can imagine like Crocodile’s tears, that never happened. So on 14th March I went online again to see the status of my order. This time I directly contacted the technical support team as last time I connected the house move team and they transferred me to them but to my surprise I was told to contact house move team this time. When I put forward my query, the answer given to me was…

“I can see the system error that has been preventing us from ordering your broadband. I will try to overcome this error now.” “I can work around the problem from here. Can I take your new address, postcode, and telephone number please?”

I felt a feeling of WOW that at last the broadband will work soon however to my surprise that was not the case. This is what I got from that agent…

“The best package that we could offer in your new area would be the following: AOL Broadband Wireless up to 8Mb with WiFi Router 6 months £9.99 then £14.99 (18 Months Commitment)”

I was stunned. I stated that I have been a customer for so long and I am already happy with what connection bandwidth I had and the price I was paying for that. I also asked what exactly had happened to my house move request and the answer was shocking to the least…

“What has happened is as follows: There is a system error which prevented the house move request from being completed. The latest update is that this error cannot be rectified. Therefore, my only option is to place you onto a new package, instead of carrying your old package to the new location.”

At this point in time, I really decided to cancel my AOL account. I called up AOL and asked them to cancel my account however, the service agent lulled me into false promises and told me that he can get this sorted and get me on the broadband quickly. I believe him and waited for another two days. Nothing worked out and so I called up AOL again (remember that minimum 20 minute waiting period every time) and cancelled my broadband however forgot to ask about my MAC code as I was unaware of the same.

Now this MAC code is something which you need to get your line transferred. I realised that in about 10 min of cancelling my contract and so called up AOL where I was told the cancellations happen immediately and so they can’t give me MAC code now. If I want MAC code they will have to reactivate the account and which shall take 4-7 working days.

I had two options:
1. To reactive the account, get the MAC code and transfer to another ISP (time taken 4-7 days + 15 days more for another ISP to get it going)
2. Leaving that MAC code and just wait for AOL to cancel the account on that line (10 – 20 working days) and then apply to another ISP for a new broadband connection (15 more days).

In the mean time I had to go to China for a week (last week of March) so I needed to get this working soon so my family and I can keep in touch. Looking at the options I decided the option 1 and what a colossal mistake that was. After 4-5 working days I called up AOL again and was told that the problem was not resolved and so I cancelled my account after about again being 2 hours on phone.

This is how AOL became AO(HEL)L for me.

Service failure of a kind at so many levels that it is beyond my grasp. In the era of customer orientation this is what we are offered and we don’t speak about it for the simple reason being, we let go. My point is, for how long? and why?

Do share your experiences and let's make our viewpoints heard...

Saturday, March 29, 2008

Middle-aged consumers & conspicuous consumption

When it comes to the issue of branding, there is plethora of knowledge (or rather information) available with regard to the youth market. Research abounds in examining their purchasing behaviour and other extensions of youthful statements. When it comes to conspicuous consumption, purchasing things, especially expensive things in a way that people notice, young consumers are in a league of their own – or are they?

For every youthful consumer there is a middle aged one with more money (and more credit) to spend who would rather like to be noticed too. Those in the 40-60 age brackets are more likely to have a higher income and a better job – a career in fact. They are out there spending their hard earned cash on big ticket items such as cars and houses, big, big ticket items. Bigger ticket items than a few clothes or a better mobile phone which the young consumers focus on. Yet to read the marketing literature you would hardly think so, until now.

This led me to focus on this interesting segment in the latest study published in the Journal of Product and Brand Management on “Conspicuous consumption among middle age consumers: psychological and brand antecedents”. Using the context of automobiles the study looked into how psychological and brand related factors affect this segment’s conspicuous consumption. While their utility matters, automobiles also provide a great opportunity to display status, personality and self-image. People may feel they need cars, although that has become contentious in this more environmentally aware age. But they also provide a great opportunity to say “this is who I am”. It seems that making this statement crosses the generations. How we choose to make it is where there is room for difference.

Marketing's missed opportunity
Coming to terms with conspicuous consumption among the middle aged is to begin to address marketing's missed opportunity – although it's tempting to assume that there are savvy car sales staff who know the emotions rather well already. However, the study reveals that there is more that they can do, opportunities that are being missed. The survey focused on customers of the BMW, Mercedes Benz and Lexus dealerships in East Sussex in the UK. Focusing on how consumers associate themselves with these brands holds the key to marketing them successfully.

It is an interesting and conflicting area to look at. It leads us in to human emotions that pull in opposite directions – the need for uniqueness and the need for conformity. The Irish management academic Ivor Kenny dubbed it “freedom and order”. With conspicuous consumption the drive for uniqueness is the key. On this dimension, the greater the uniqueness of the product the higher the value ascribed to it – the more of them there are around the less they are deemed to be worth.

A study conducted in the 1950s when language was simpler noticed the snobbishness effect and the need to jump on the bandwagon. Essentially if other people are getting them I want one too; the need to be different and the need to be the same once more. We are a contrary species!

It does get slightly more straightforward however as with conspicuous brands, such as BMW, Mercedes Benz and Lexus, buying behaviour is affected more by the personal factors – it says who I am, it will enhance my image – than the societal factors – e.g. gaining respect. Understanding this is at the heart of addressing the missed opportunity.

Big names not quite hitting the spot
Automobiles are designed and built by engineers so perhaps we should not be too surprised when product and engineering features dominate the marketing messages, even for prestigious cars. Lexus' “The pursuit of perfection” reflects technical aspects of the vehicle, BMW's “The ultimate driving experience” highlights performance. It is emotion that will by and large determine the success of the sale. The big brands are spending a fortune on glossy promotion without hitting the spot in terms of the message through which consumers will engage with their brands.

The study found that psychological and brand antecedents are crucial for brand engagement in conspicuous consumption market. The study further highlights the factors that middle aged customers consider when making buying decisions for conspicuous products. The study integrates multiple standards into a single framework for comparison.

The psychological associations to measure are:
* gaining respect;
* gaining popularity;
* noticed by others;
* showing who I am;
* symbol of success;
* symbol of prestige;
* indicates wealth;
* indicates achievement;
* interested in status; and
* enhances my image.

The corresponding brand associations are:
* brand symbolism;
* self-concept and brand image congruency;
* brand familiarity; and
* brand aroused feelings.

These are the factors to measure and the associations to stress. The opportunity is there for the taking.

In western society a prestigious car bought by someone in middle age is often considered a “mid-life crisis”. Well it's mid-life, but something more significant – an ongoing and sustainable pattern of purchasing behaviour, and an opportunity to get the message right, and do better.

Saturday, January 05, 2008

The 5 killer myths for any business OR how to fail successfully in business...

The era of Globalization is penetrating every nook and corner of the world. The warfront of today is the marketplace wherein people buy or sell products or services. Everybody wants to achieve the highest volume of customers and the largest market share. However, the same phenomenon is now making the ride rough for entrepreneurs across the world.

With my numerous interactions with entrepreneurs from South Asia, Europe and North Africa as an academic, researcher, trainer and consultant, I have been able to observe some deep rooted problems associated with failing businesses. Most times such failures are blamed on market, competition, and several other external characteristics. When I started researching about the same phenomenon in India in late 90s I found some interesting psychological barriers within entrepreneurs' minds which I call 'the 5 killer myths for any business'. Recently, in a similar study in the UK we found similar myths prevailing within the entrepreneurial community. Interesting enough, the Indian entrepreneurs were largely goods oriented manufacturing unit owners and the UK entrepreneurs were service oriented organizations. Here are those 5 myths as I have observed across the board:

  1. The Product Growth Myth: The belief that as our product is doing well in the market regularly for some years, there will not be any problem for the coming years.
  2. The No Alternative Myth: The substitute of our product has such features that the market will not accept.
  3. The quality myth: The market accepts quality first and cheap products will not be accepted by the market.
  4. The no change myth: The growth would continue even if we don’t change as the market has accepted the product.
  5. The Friendly Environment Myth: The environmental factors will not affect us much.

Let's look at them in little in-depth with some examples.
  1. The Product Growth Myth: While working on an EU funded project I came across this industrial cluster called 'Rajkot Diesel Engine Industry Cluster'. The cluster had observed phenomenal growth since 70s and it started losing out in early 90s due to Chinese and Korean competition in the market. However, it took the cluster 10 years to realise the same mistake and guess what, it is still struggling to catch up to earlier levels of growth. Will it ever get it back is the question and we all know the answer. When the entrepreneurs start getting complacent about innovation, we know the cycle of decay (or sure fire failure) is not far away.
  2. The No Alternative Myth: In Egypt, in the period of Eid, children use Fanoos (lantern), made up of paper and it is attached with a stick. They go to the houses in neighbourhood and ask for sweets and stuff. This kind of celebration is also observed in other parts of world at different times such as Diwali times in India or for that matter the 'trick or treat' at Halloween. Well, till 2003-04 these Fanoos were made in Egypt only by local craftsman. However, as the Business with China grew a Chinese businessman saw the opportunity and did some changes to the concept of Fanoos. He used a small battery powered light instead of the candle and change the paper Fanoos to a plastic Fanoos. Result, as one can imagine, a durable, safe and easy to handle Fanoos which is far better than its earlier incarnation that was used for centuries. The local industry is nearly wiped out within 2 years time. If you think market will not accept your substitute, it is one of the best ways to fail.
  3. The quality myth: This myth is so omnipresent that at times it is easy to overlook. Every entrepreneur I have met has talked to me about how their product is a great quality product and what great care they take in production processes. My only question to them is, does your customer really care about it? And every time the answer has been a big YES. Somehow I rarely get the same answer from their customers. If customers really cared for quality, why M&S in UK was struggling as a retailer while Tesco and ASDA were growing like never before. How come Primark (low end clothes retailer) is one of the most successful retailers in the UK? How come George (another low end clothes retailer) became the fastest selling apparel brand in the UK? Consumers don't understand an entrepreneur's obsession with quality. They want VALUE FOR MONEY. As Wal-Mart does that day-in and day-out it is now world's largest company and bigger than all its competitors combined in the US. How could have one imagined this just 40 years ago when Sam Walton started in Bentonville, Arkansas. Remember, quality lies in customers' minds and however good or bad you are is decided by them in their minds. In fact, discrepancies between company’s perceptions and customers would not be at all unusual. However, even if the company is working itself to the proverbial bone on the quality regime, if customers view it as cheap, then it is cheap — in their eyes and that matters the most.
  4. The no change myth: This is another classic myth. I call it the bread-winner symbol. Once a product or service has become a bread-winner for more than two year, entrepreneurs become obsessed with it. Buddha said 2500 years ago 'change is the only permanent constant' and this statement is truer today than ever before. All the examples, I have quoted above fit in this area. Furthermore, while talking to some service firms in the Essex area of the UK, I asked the entrepreneurs when was the last time s/he or their employees had been to some kind of training to improve their skills. The answer was shocking. In 90% of the case it was never. In the other 10% of the cases it was more than a year. In today's world, if we don't update ourselves not even God can save us.
  5. The Friendly Environment Myth: I have observed this myth mostly in developing countries like India, Egypt and such others where entrepreneurs are quite dependent on local, state and national government for subsidies and protection. As the waves of globalization has hit the shores across the world, there is very little the local, state or national governments can do to avoid the global competition and if entrepreneurs are not prepared for it, their fate is already known to us. This myth also is observed in other parts of the world very much through market phenomenon. It was in late 2005 or so I saw an interesting concept pet shop in Brighton, UK. All pink décor an it looked lovely from outside, however, the first questions which came in my mind after seeing that shop in the town centre that how long will it survive? The logic of the entrepreneur behind it was quite sound, as 7 out of 10 British pets get presents just in Christmas itself. However, within two years time the shop has been shifted for many environmental reasons as one would imagine. Another programme on BBC called Dragon's Den really captures this phenomenon to the core.
Well, when considered these myths may seem a product of environment however the starting point may be different than what seems obvious. Most times when the environment is blamed for failure, it is actually the person behind the business who fails to observe such changes. My suggestion would be for every entrepreneur to take a 'thinking vacation' and observe as to is any of these myths is present in their minds or business? If so, the time to act is sooner rather than later.