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Navigating Challenging Times
A simple guidebook from Titan’s experience
Bhaskar BhatTitan Industries Limited
30th May, 2009
The worst of times….
• For the first time after the great depression of 1930s, global growth is likely to turn negative this year.
• Consumers in many countries have lost significant wealth – housing, stock markets. Consumers also perceive a more uncertain future. This impacts their confidence to spend.
• Banks are risk-averse and unwilling to lend freely. This impacts liquidity.
The best of times…
• Yet these challenging times hold many opportunities…
• To woo and retain our customers…
• To make ourselves leaner…
• To engage our people far more deeply…
ManagingTurbulentTimes
Consumers-reevaluate their
needs
Cash-conserve
Costs-ruthlessly prune
People-engage positively
C
C
C
P
Consumers• Consumers will seek value
– offer value in interesting ways– eg. a meal to take home each time you eat with us – During these periods, consumers seek more information to make choices. Provide more information.– But if you are thinking of value engineering your product, remember Nestle and Kit-Kat
• Consumers will seek to feel good & celebrate– the “lipstick” effect – make your product a partner in celebration– eg. a Titan for every happy moment in 2009 !
Consumers
• Consumers will seek to escape difficult times– “leave it all behind” even for a day or two– affordable escapes will be irresistible– movies, holidays, spas, bars, restaurants– Perception v/s reality
• Consumers will seek brands they can trust– lower capability to spend will imply far more selective
choice of brands– we must make our brands “trustworthy”
Consumers
• Some consumer groups continue to have strong capability to spend– urban and rural super-rich– kids, youth and women– pharmaceutical, telecom, insurance, PSUs,
banking sectors– countries such as Saudi Arabia, Russia,
Canada, Brazil– Sharp choice of consumer segments more
important this year
Cities
• Consumers across India are not equally affected– Pursue smaller towns– Invest in Rural India– Analyse geographies carefully
Changing Face of Communication
• Point-of-Sale communication – Increase in BTL activities
• Tactical flexibility will be exercised • Communication focus moving towards rational
benefits than pure image– Airtel DTH & Aircel
Cash
• Singh was King last year. Cash is King this year
• Conserve cash in every way. Liquidity is the key
• Prioritise cash generation over sales volumes or profit margins alone– Even if this means packaging excess inventory and
offering it at very good value
Cash is King
• Reduce cash guzzlers everywhere – inventories– idle assets– irrelevant innovation– non-value adding cash outflows
• Secure lines of credit when they’re available– don’t wait until they are required
Costs
• A natural opportunity to prune costs– launch a systematic war on waste– 20% always a feasible target
• Our teams know where waste languishes– give them the opportunity– eg. “My Titan” program, Jan to March 09
• Make cost-saving fashionable– We like engaging in fashionable and positive activities– How will you make costs a fashionable, cutting-edge
subject ?
People
• Our people need to feel reassured– uncertainty has no place– need to see the business strong & capable– need to feel valued in these challenging times
Titan
People
• Our people have to think positive and stay focused on business goals– wide ownership of business plans and targets– challenge of coming up with refreshing new
ideas– focus on the right actions, rather than results-
driven anxiety– celebration of every success, however small or
insignificant
People
• We have to engage the minds and hearts of our people– engagement enhances emotional commitment,
particularly in challenging times– communicate, communicate, communicate…
spend all the time and energy necessary – hand over ownership of critical initiatives to our
people at large, not to management alone
Some can dos…
• Increase quality and frequency of communication with key stakeholders
• Raise the level of top management ownership of problems
• Be transparent• Empower • Be agile• Spread ownership of critical issues to be
resolved
Don’t…
• Stop investing
• Go back on promises and commitments
• Create a sense of gloom and despondency
• Cut back on Community Initiatives
• Trivialise
Results
• YOY topline growth 26.5%
• Bottom line growth 30%
• Employee and ad. spend up 20%
• Capital employed has remained at same level
H1 v/s H2
Item H1 H2 Total
Income 1924 1924 3848
Employee cost 108 126 234
Ad.spend 95 86 181
Outlets 79 56 135
New brands 1 1 2
ManagingTurbulentTimes
Consumers-reevaluate their
needs
Cash-conserve
Costs-ruthlessly prune
People-engage positively
C
C
C
P