Advertising shifting hands

So we thought advertising about products and services was the sole discretion of the brand managers. Not any longer.
To reach to your consumers meant that marketers had to part with huge amount of money. Today reaching your customers has definitely become easier. A viral campaign is all you need. Create some videos and post on Youtube, Facebook and many other social networking sites, that’s all. If the customers like it they will make sure it reaches all.
So it means the life of the marketer has become easy. Well I guess on the contrary it has become very difficult.
We are facing a big shift in the way products and services are being advertised. The uncomfortable truth is that today what is being told about your product or service is no longer under your control. In fact the customers can advertise about your offering at no cost and much more effective way than the marketers can think of.
So even if one of your customer service executive puts down the phone over an unreasonably demanding customer, in a matter of few minutes all the social networking sites would be trashing your image as an ardent service provider. So should we call this customer empowerment, certainly yes! The sad part is as someone said, “Power corrupts, and absolute power corrupts absolutely”.
The first time I heard about twitter, I shrugged it as yet another social networking tool which would die its natural death. But the way it has made our voice heard to thousands and millions of people within moments is giving sleepless nights to many CEOs worldwide. So a flight of Jet Airways getting delayed by 30 minutes, the whole country knows within minutes the quality of service has gone down.
As a customer I feel truly great because the internet has given so much of power to my voice and certainly the companies have to answer to my reasonable problems because even I have paid for it. But the problem is that it will not be long when these reasonable problems would become unreasonable. That’s no rocket science to predict! We all know that whatever you offer today as customer delight becomes the expected tomorrow.
The other thing is that its normal human tendency to exaggerate our problems. And we all love to criticize, don’t we? And being customers we would always side with the side we belong to; isn’t it?
Even though we Indians today are slow in buying products online, we surely browse ten websites to read what others say about the product. It’s the virtual word-of-mouth. While the real word-of-mouth was believed because it came straight from someone’s mouth that we trusted, over here we tend to trust people whom we don’t even know exist.
It would be interesting to see how this virtual word-of-mouth would tread in future. Surely the problem of credibility will arise and then the customers would listen to may be a few trusted online sources.
But the problem that the marketers would increasingly face in future would be of control. It would be out of their control on who talks what about your offerings and that would make a lot of difference to your brand image. As the marketing head of Colors, Mr. Rameet Arora says, “There's no way great advertising is going to sell a bad product or bad advertising is going to sell a good one”.
You have to make sure that you give a consistent brand experience at all the touch points to customers. Just saying it won’t help because your customer’s voice has become stronger than yours.
The marketers have to learn how to face these new challenges and be consistent, so that your customers also speak your language.

Price wars started by Tata Teleservices. Impact and solutions

Tata Teleservices might not realize but it has started something it may regret in future. “The price war”. TTSL has made a overall loss of about 2500 crore in FY2009. Compare it to others like Airtel (Approx 2100Cr profit in third quarter) and Idea (Approx 1000 cr profit in third quarter). TTSL holds 8% of the telecom market share. The latest move of price slashing is a desperate attempt to gain market share. And it has.

For two continuous months, TTSL has topped the new subscriber increase rate. This prompted first Aircel, then IDEA (in some circles) followed by Airtel and now Reliance to charge 1 paisa/second call rate.

Per second billing: It makes sense to have such a billing system where consumer does not have to pay for time he/she did not talk. However, 1 paisa/second makes little sense to me. OK, it is 60 paisa/minute. So whats the big deal???? The big deal is that inspite of lowering of rates, the average time a person spends on phone has gone down by 7%. Some people argue(they have a point) that it is because of the inflated connections shown by the telecom companies in India. This also leads to ARPU of Rs. 70/new user these days.

One thing is clear to me: I am in for per second billing. But 1paisa/second makes no sense to me. As a shareholder of many of these companies, I want them to make profits for me every quarter, and this move may erode the top line of the company affecting bottom line too.

So I propose differential pricing. Lets say, for first 30 seconds you would be charged 3 paisa/second and after that 2 paisa/second. Therefore, a person who talks for 1 minute pays Re 1.5, 90 paisa for second minute and 60 paisa thereafter. Thus average rate goes down as he talks for a longer period of time. This gives you incentive to talk more. :)

Price War: I am not in for this. Sorry guys. It does not help the industry. In marketing e were taught the concept of EVL (Economic value line). Price wars leads to shifting of line downwards which leads to loss of the industry as a whole.

Effects of Price War

Increased barrier to entry: There are 13 telecom players in India right now with a few more eyeing lucrative market. However, this price war has lead to increased barrier of entry.

Consolidation in next 3-5 years: I am sure next 3-5 years will see consolidation in the industry and prices moving up again.

Future of Tata: I wish them best of luck. They have the momentum right now, both with number of new subscribers and losses. I would love to see you afloat (Attention Mr. Ratan Tata, How much loss can you allow your beloved company to make???) in next 5 years, you endorsed one of my favourite celebrity couple once and your “Hello Hello” campaign was a genius. ATB