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Business of Brands
Ashutosh R Shyam & Ketan Thakkar
Mumbai: The sharp decline in the valueof the Russian ruble is casting its shad-ow on the earnings growth of SsangyongMotor, the fourth largest South Koreanauto maker owned by India’s Mahindra& Mahindra.
With the Russian ruble plunging over50% in the past six months, Ssangyong Mo-tor Company deferred shipment of vehi-cles to the North Eurasian country, andhas not delivered vehicles since the begin-ning of this year.
The Russian market is the car company’slargest export market, where it assemblesvehicles through a distributor. Russia ac-counted for nearly 25% of Ssangyong’s to-tal sales volume in 2013. But exports toRussia have dropped 41% — 21,258 units in2014 against 35,753 units in 2013.
In a recent interview with ET, formerCEO and the currentvice-chairman of Ssan-gyong Motor Yoo-il Lee,had admitted that thefalling Russian marketis a worry, and his com-pany will be focusing onmarkets such as Chinaand other Western Eu-ropean territories to re-
cover the lost volumes.“Russia is a huge market for us, but it has
declined by over 30% in 2014. With demandimproving in Western Europe and China,we will tap those markets, which mighthelp us a bit. China’s volumes were at10,000 units in 2014 — it will take time to re-place that kind of volume,” Lee added.
Ssangyong couldn’t meet its annual tar-get in 2014, with sales declining 3% to 1.41lakh units. And an adverse Russian cur-rency scenario may make it even more dif-ficult for Ssangyong to meet its target ofselling 1.6 lakh units in 2015. The only hopefor the company is — the good response itssmall SUV Tivoli has received in the Ko-rean market, and Ssangyong would be hop-ing for the same kind of response in otherEuropean markets and China as well.
Having almost touched break-even in2014, Ssangyong had to cope with revisedwages norms in the country, which affect-ed its profitability, and pushed back itsbreak-even by two years to 2016.
SsangyongDefers Exportsto Russia onWeak Ruble
Mumbai:Tata Motors, the first lo-cal auto maker to launch a sport-utility vehicle in India and ownerof the company that manufac-tures the famed Land Rover SUVs,is getting ready to make a strongcomeback into the segment that isgrowing at a quicker pace than theoverall automobile market.
It plans to launch as many as half-a-dozen utility vehicles across seg-ments over the next three-fouryears, say people with knowledgeof the matter, aiming to reclaim thespace it lost to Mahindra & Mahin-dra over the past decade-and-half.
The range would include vehiclesright from compact SUVs meantfor the urban buyer to rugged of-ferings targeting rural marketsand premium crossovers. Theseare among the eight-nine vehiclesincluding cars it plans to launch.
A Tata Motors spokeswomansaid the company doesn’t com-ment on future product plans.
Tata Motors, which created the af-fordable urban SUV segment in In-dia with Safari and rural UV withSumo, lost the plot to M&M’s Scor-pio and Bolero in the past decade.
From having a quarter of the mar-ket about 7-8 years ago, its share inthe local utility space has comedown to a dismal 5% in the April toFebruary period of FY15. Whilethe utility-vehicle (UV) market hasmore than doubled since FY07, thecompany’s volume shrank to half.While attempts to reignite the Su-mo and Safari range with new-gen-eration products have had little im-pact, its big bet of 2009-10, the Ariacrossover, also failed miserably.
The company’s renewed focus onUVs is primarily because of lowercompetition in the segment. It isalso a higher margin business,and for the company to make acomeback and hit sizeable vol-umes, UVs will offer a faster pathto recovery, say experts.
“Tata Motors is playing catch upand therefore, there has to be amassive push on SUVs. It is a time-ly and a right move, as the segmentis hot right now and offers highermargins,” said Hormazd Sorab-jee, editor of Autocar India. “Butthey must not bite off more thanthey can chew and they should ra-
tionalise their portfolio.”A big plus for it is that it can lever-
age UK unit Jaguar Land Rover’sexpertise, which will stand it ingood stead with competitive scena-rio intensifying, Sorabjee said.
One of the vehicles it is planningto introduce, acompact SUVbased on the Nex-on concept, will in-deed look like amini Evoque, saypeople in the know.The 5-seater willbe pitted againstthe Ford EcoSportand is expected tohit the market in
the festive season of 2016.But the first of the mark will be
chairman Cyrus Mistry’s own ba-by, a premium SUV called Hexa,which was showcased at the recentGeneva International Motor Show.Its launch is planned for the first
half of 2016. The company is alsoworking on regaining the ruralmarket share by introducing a rug-ged SUV, called Raptor. Then thereare joint products between JLRand Tata Motors, called the Q501and Q502. It is also considering a 7-seater version on the X1 platform,called X107, and a 9-seater on the X6platform, codenamed X602.
The new range along with the ex-isting vehicles — Sumo, Safari,Storme and Aria — will make TataMotors have probably the largestportfolio of UVs in India to rivalMahindra, which itself has manylaunches lined up in 2015.
“All homegrown companies aregoing to face intense competitionfrom MNCs, but I think Tata Motorsis better positioned over M&M,”said Autocar’s Sorabjee. “M&M ismore vulnerable in the long run, asthey are too dependent on SUVsalone, whereas for Tata Motors, therisk is more widely spread.”
Tata Motors Building a UVFleet to Get Back in the GameCo to launch about 6 utility vehicles across segments over 3-4 years
Focus on UtilitiesShift in focus to UVs driven by higher margins, lesser competition and growing segment size
Plans action across segments, right from compact SUV for urban buyers, rugged SUV for rural customers to even premium crossovers
A big plus for Tata Motors is that it can lev-erage Jaguar Land Rover’s expertise
22.0
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43.0
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47.1
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55.2
2
52.5
0
55.5
9
47.6
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41.7
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37.1
9
20.9
4
18.5
1
13.0
2
13.6
4
13.3
3
8.03
5.34
4.36
FY08FY07 FY09 FY10 FY11 FY12 FY13 FY14 FY15(Apr 2014 to Feb 2015)
Market Share in the UV Segment (%) Tata Motors M&M
Vehicle Project Code Estimated timeline
Premium Crossover Eagle or Hexa Jan to March 2016
Sub-4 metre SUV X104 or Nexon Aug to Nov 2016
Rugged SUV Raptor or X601 Late 2016
Premium SUV - A Tata-JLR joint project
Q501 and Q502 Second Half 2017
Tata Motorscreated theaffordableurban SUVsegment inIndia with theSafari andrural UV withthe Sumo
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Mumbai: Just about 19% of consumers drivemore than half the retail sales in India, ac-cording to a study by American informationand measurement company Nielsen that hasnamed the group ‘super consumers’.
The study has found that during new prod-uct launches, the trial rate among this groupis 20% higher, and impulse shopping about40% more than regular shoppers.
This explains why consumer product com-panies and retailers target this group with ex-clusive deals, focused campaigns and even in-cludes it to plan merchandise in stores.
“The super consumer is not necessarily themost economically empowered. But they arethe ones who will typically overreach abovewhat they normally must be spending becausethey are more emotionally engaged to the cate-gory,” said Adrian Terron, executive directorat Nielsen India. “Innovation by companies ismore likely to succeed if it is created for suchconsumers rather than a large majority ofpeople who buy products very functionally.”
But identifying such consumers can gettricky. For instance, while the perception isthat such shoppers must belong to the highersocio-economic class, one-sixth of the superconsumers belong to lower-income class. And
a third of the super consumer segment is agedunder 25 years, belying the notion that superconsumers belong to older age group withhigher disposable income.
Most retailers in India bank on their exist-ing database or loyalty programmes to scoutfor such consumers, and even have tailor-made strategies to woo them. “Our internaldata shows that we get half our sales from loy-alty members and within that, just 5% of loyalmembers account for half the sales. We do fo-cus-group study or seek their feedback onmerchandise-range planning, which helps inbuilding loyalty,” said Darshana Shah, seniorvice-president - marketing at HyperCity, a hy-permarket run by Shoppers Stop.
Such shoppers can be used as a litmus test togauge the reception that products and brandswill receive in the marketplace.
Just 19% Consumers DoHalf the Shopping Here A study says that some
brands even take feedback
from such ‘super consumers’
on merchandise planning
On a Shopping Spree
Super Shopper Contribution (%)
Food &Grocery
ImpulseFood
Non-Impulse
Food
Apparel Watches
Incidence of super shoppers
Contribution that super shoppers make to total sales
18 151320
28
42 4135
46 55
Study shows one-sixth of the super consumers belong to lower-income class
60
40
20
0
Mumbai: US-based Vantage HospitalityGroup, the world’s tenth-largest hotel com-pany by number of properties, has signedafranchise agreement with Indian compa-ny Miraya Hotel Management to establishits mid-market brands in the country.
“We believe the Indian hotel market isvery vibrant with great opportunities.India has a very strong and growing econ-omy, yet there is an imbalance of supplyand demand among its rapidly-growingmiddle-income economy,” said Bill Han-ley, group president of international de-velopment, Vantage Hospitality Group.
Sudhir Sinha, the erstwhile countryhead of American hotel brand Best West-ern, recently founded Miraya Hotel Man-agement with an aim to bring interna-tional mid-market and economy hotelbrands into India.
“We formed this company to be presentin the mid-market space, and Vantage,which is one of the fastest growing brandsin America, fits the segment where wewant to be,” said Sinha, managing direc-tor and chief executive of Miraya.
Through one of its arms, Miraya will
invest over $100 million (about .̀ 620crore) in acquiring assets in India to re-brand them under Vantage brands,apart from growing through manage-ment contracts. The company is scout-ing for opportunities in the Tier II andIII cities, along with industrial town-ships and religious circuits that are stillunexplored by the big brands.
The company is planning to set up 100hotels under the Vantage brands in the
economy segment in India over the next5-7 years. However, Sinha did not dis-close the brands as Miraya is likely tomake an official announcement in thefirst week of April.
Formed in 2002, Vantage, which hasover 1,200 properties worldwide, willprovide international brand, market-ing and technology assistance whileMiraya will develop the properties andoperate the hotels in India.
“There is a huge demand-supply gapin this segment (mid-market) especial-ly when it comes to internationallybranded hotels,” said Rohit Yadav, oneof the investors in Miraya and a mem-ber on its board. “Return on Investment(RoI) on the economy and mid segmenthotels is the highest.”
According to Yadav, the mid-marketsegment will offer an RoI of over 15-18%after two years of operation and the re-turns will only increase thereafter.
With luxury and upscale hotels find-ing it difficult to make money, top glob-al chains are betting on mid-marketbrands as they expand in newer mar-kets. More than 60% of the hotels thatare coming up are in the mid-marketcategory, which involves less capital ex-penditure and quicker profits, accord-ing to industry experts.
“While the mid-market space has hugegrowth potential, it’s no longer a cakewalk for the brands as Indian ownersare very discerning and they under-stand the nuances of this businesswell,” said Mandeep S Lamba, manag-ing director-hotels and hospitalitygroup at Jones Lang LaSalle India.
US’ Vantage Hospitality Ties Upwith Miraya Hotel for India ForayThrough one of its arms,
Miraya will invest over
.̀ 620 crore in acquiring
assets for Vantage brand
CO TO ESTABLISH MID-MARKET BRANDS HERE
New Delhi: Nepalese conglomerate CGCorp Global, which owns and operatesluxury hotels in 11 countries, is in talksto acquire a majority stake in Indian ho-tel management company Concept Hos-pitality that runs Fern Hotels, a personclose to the two companies said.
CG Corp Global, the international divi-sion of the 140-year-old Chaudhary
Group (CG), will spend about .̀ 50 crore onthe acquisition, the person said.
Param Kannampilly, chairman and ma-naging director at Concept Hospitality,confirmed the deal with CG Group, butsaid it will be a strategic investment. “Mycurrent partner is exiting the businessand CG group will come in place ofthat,” he said.
Binod Chaudhary, group presi-dent of CG Corp, had earlier toldET that the company would belooking to rapidly expand its hotelportfolio in India and the plan is tohave almost 3,000 hotel rooms under itsmanagement by 2020.
Known for its Wai Wai brand of instantnoodles, CG Corp runs hotels under‘Zinc’ brand. It also has a 50-50 joint ven-ture with India Hotels Company’s TajAsia for its properties in Sri Lanka, Thai-
land and Maldives, and a collaborationfor the same group’s Taj Safaris.
“We want to be known as a hotel compa-ny that has multiple options — both interms of luxury as well as affordable ho-tels,” Chaudhary had told ET. He said CGCorp would expand its international port-
folio across Africa, Sri Lanka andthe ASEAN regions. “The visionis to have 200 hotels globally by2020 and it would be a mix of own-ed, managed and leased,” he said.
Mumbai-based Concept Hospi-tality currently manages 13 hotels
across the country and has signed up an-other 15 hotels, according to its website.
Last year, the firm was said to be in talkswith Singapore’s SilverNeedle Hospitali-ty, which operates over 55 managed and li-censed properties in Asia-Pacific region.Kannampilly, however, had denied this.
Nepalese Conglomerate CG Corp inTalks to Acquire Concept HospitalityIndian co, which runs Fern
Hotels, says the expected
.̀ 50 crore infusion is a
strategic investment
25%RUSSIAN SHAREIN CO’S TOTALSALES IN 2013
Reuters
San Francisco: About 40%of adult Apple iPhone ownersin the United States are inter-ested in buying the compa-ny’s new Apple Watch, ac-cording to a newReuters/Ipsos poll.
The high-tech smartwatch,which will range in pricefrom $350 to $17,000 for an 18-karat gold model, is Apple’sfirst major new product infive years and consumer de-mand for the device is beingclosely watched by competi-tors and investors.
Owners of the iPhone are aparticularly important mar-ket for Apple as it launches thenew watch, which goes on saleon April 24. Because the watchneeds an iPhone to work fully,analysts say the most likelypool of initial buyers will al-ready have an Apple smart-phone in their pockets.
BTIG analyst Walter Piecyksaid that with more than 100million active iPhone users inthe US and closer to half a bil-lion globally, the survey was“pretty encouraging” for aproduct that has not been seenin shops, even if it was unclearhow much of the interestwould translate into purchas-es.
Pacific Crest Securities ana-lyst Andrew Hargreaves saidit was not clear how manypeople wanted or needed asmartwatch. But he expectedApple’s cache and marketingmight to deliver strong initialsales of the Apple Watch.
“Winning Apple customers ismore realistic at this point,”said Hargreaves.
The watch allows users tocheck e-mail, listen to musicand make phone calls.
Ipsos surveyed 2,469 Ameri-cans aged 18 and older onlinebetween March 9 and March17 and found that 24% ex-pressed an interest in pur-chasing the Apple Watch, in-cluding 10% of thosedescribing themselves as “ve-ry interested”. The data wasweighted to reflect the USpopulation and has a credibil-ity interval, a measure of ac-curacy, of plus or minus 2.2percentage points.
Among the iPhone owners,39% were interested in pur-chasing the Apple watch, in-cluding 17% describingthemselves as very interest-ed. There were 788 iPhoneowners in the survey with acredibility interval of plus orminus 4 percentage points.
40% iPhone Users Want Apple Watch
