Mantrana

C O N S U L T U I N D I A N I N S T I T U T E O F M A N A G E M E N T , U D A I P U R

Note from the Editing Panel

Hello All!!

ConsultU, the consulting club of IIMU, presents the first issue of Mantrana, a quarterly

magazine.

Mantrana was conceived because of the need to get a deeper understanding into the different

verticals of businesses. Mantrana aims to be the reference guide to understand the dynamics

of any industry, the different segments of the industry and the critical success factors for the

companies operating in those segments.

Mantrana strives to tap into first-hand knowledge gained in a business setting. As a result,

article writers are encouraged to write about sectors they spent their summer internship in or

sectors they have worked in before.

Mantrana‟s first issue deals with diverse sectors such as logistics, internet, and social media.

It delves deeper into functional areas of finance.

A special thanks to Mohod Raj and Pravin Pawar for helping us with the publishing. We

would also like to thank the consulting club members for their inputs and immense support.

Happy Reading!!

Shaurya Sahay, Aashima Priye and Hina Agarwal

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AN OVERVIEW ON FREIGHT FORWARDING INDUSTRY Freight forwarding is a service which deals

with international or multi-national import

and export. Movement of freight from one

international location to another involves

multitude of shippers, requirements and

legalities. Due to legalities, there is an

increasing need for specialized service

provider. Freight forwarder either acts as

an intermediary between the client and

various transportation services or actually

moves the freight on its own.

In order to understand freight forwarding

sector, it‟s worthwhile to focus on India‟s

merchandise trade. Export and import has

increased over four fold times from FY

2004 to FY 2012. In the last six years,

exports grew at 19.8% (CAGR) and

imports grew at 21.98% (CAGR). Graphs

below show the trends for both imports &

exports from year 2000 to year 2013.

MERCHANDISE TRADE AS PER CENT

OF GDP– INDIA & WORLD WIDE

Merchandizing Exports contributed 17.7%

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to the overall GDP of India in 2011- 2012

and 1.6% to the World‟s GDP as per WTO

statistics. India‟s merchandising trade as a

percentage of GDP rose from 25 to 30

during the period 2009-12. It was

following the same trend as world trade.

Graph below shows both the world‟s and

India‟s merchandise trade in the period

2003-2012.

FORECAST OF INDIAN EXPORTS AND

IMPORTS

Indian exports & imports are expected to

show an increase of 17% and 23.69%

respectively in terms of monetary value.

Table below shows forecasted figures of

exports and imports.

FREIGHT FORWARDING INDUSTRY

VALUE CHAIN

Air /

Ocean

Source: http://www.tradingeconomics.com/

Source: http://data.worldbank.org

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http://www.tradingeconomics.com/

http://data.worldbank.org/


MODES OF FREIGHT FORWARDING

FREIGHT FORWARDING MARKETS –

INDIA AND WORLDWIDE

World Trade has been very dynamic over

the past decade with underlying growth

being driven by strong growth of exports

and imports from economies like China,

India and other developing countries.

Graph below shows the rate at which

international freight outpaced global GDP

growth.

There was a slight dip in the imports and

exports traffic during early 2009 but the

underlying trend is still evident. The new

assembly locations in China and retail

markets in the west have resulted in

increasing air and sea volumes. Worldwide

markets are expected to grow at a rate of

7-8% annually, especially the intra-Asian

trade.

The growth prospects in the international

trade are creating a huge stimulus to the

increasing freight forwarding demand in

India. Moreover, the prediction on future

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growth of the intercontinental trade looks

bright over the next five years. A 100%

Foreign Direct Investment in logistics

shows a healthy outlook for the Indian

economy. This has an impact on the key

economic indicators of the economy. The

global slowdown has forced the freight

forwarding companies to turn their heads

towards the high-end logistics. Also, huge

investments in transportation sector would

benefit the logistics sector. The Indian

freight forwarding companies are also

becoming more competitive

(www.marketresearchreports.com, 2012).

44% of the total market is occupied by the

top 10 freight forwarding companies. The

crowding out effect of larger companies on

smaller ones has resulted in an increase of

the market share of the top 10 companies.

The European freight forwarders are 6 of

the world's top 10 freight forwarders,

dominating the world freight forwarding

(www.arabiansupplychain.com, 2011).

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FREIGHT FORWARDING INDUSTRY

GROWTH DRIVERS

With liberalization, India has opened up to

the world and this has resulted in increased

imports and exports. Growth drivers of the

Freight Forward industry are shown

below.

GROWTH CHALLENGES IN FREIGHT

FORWARDING INDUSTRY

Stiff competition from international

players

Complex operations and lack of skilled

manpower

Inadequate Indian infrastructure

Investment and ability of firms to raise

funds

Support from government to recognize

logistics as an industry

Standards and system

Technology

Indian government is yet to recognize

logistics as an industry. Fiscal reforms in

India have definitely helped this sector

indirectly but the absence of industry

status keeps the sector at a disadvantage.

There is a need for the government to

provide special incentives as the sector‟s

growth is directly related to GDP growth.

The Indian transportation and logistics

industry stands at an unmistakable

inflection today, buoyed by its growth

though limited by its inefficiencies. The

approaching decade, representing the other

side of this inflection, shall underline its

operational prowess as well as its returns

potential.

AUTHORS: SUDHIR MEDITHI, LOKESH KUMAR

DHAKER & SUNIL KUMAR GUNTI

Source: Uniworld Logistics Report

(www.fffai.org)

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http://www.fffai.org/


CRITICAL SUCCESS FACTORS OF INTERNET COMPANIES

INTRODUCTION

The Internet industry is a very exciting

industry to be in primarily because the

industry itself is expanding. It is expected

to grow at a rate of 44% between 2012 and

2017 (Business Standard)

. The present internet

population in India stands at 150 million

(Forbes) and is expected to reach 318 million

by 2017 (Economic Times). However, not all

internet companies are making money and

not all have the same strategy.

DIFFERENCE BETWEEN IT SERVICE

COMPANIES AND INTERNET

COMPANIES

The internet companies are not as linear as

the Indian service companies. A typical

Indian IT service company operates on a

time and material model. This implies that

these companies are linear in nature i.e.

unless they increase head count, they

cannot increase revenues. This is not the

case with internet companies whose

revenues are decoupled from headcount

growth.

The result of this is that internet companies

have much better margins and are much

better pay masters than regular service

based IT companies.

CATEGORIZATION OF INTERNET

COMPANIES

Broadly, internet companies can be

divided into the following categories

Websites Selling Data or Information:

Websites such as Naukri.com,

Jeevansathi.com belong to this category.

The strategy framework of a website such

as Naukri.com is a virtuous circle. Because

the number of good profiles on the website

is high, more recruiters subscribe to

Naukri‟s database. In turn, because more

recruiters subscribe to Naukri‟s database

and post jobs there, more job applicants

register with Naukri.

Such companies make profit in two ways.

The two ways are:

Advertisements: Advertisements are

directly proportional to the amount of

traffic the website receives. Whenever any

website gets registered at Google Adsense,

Google Adsense decides on the placement

of the advertisement and also which

advertisement to show when.

The revenue coming from Google Ads is a

bonus to any website as it directly adds to

a company‟s EBITDA. This can be

explained by the fact that no website

incurs any operational costs to generate

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revenues from advertisement sales. In

other words, there are no selling expenses

to earn this revenue.

Membership fee: Naukri.com charges two

kinds of fees to the corporates:

Subscription charge: Corporates buy

Naukri.com‟s database for which they

might have to shell out money as much as

several lakhs.

Job posting charge: Corporates pay for

every job listing that they do on Naukri‟s

website.

However, websites such as

Jeevansathi.com have a small membership

ranging from Rs. 3000 to Rs. 8000 for

time period ranging from three months to

unlimited (Jeevansathi.com)

.

Not all data providing companies have the

privilege of charging membership fee.

Membership fee depends on the

company‟s competitors. Let us take the

example of Jeevansathi.com. Most of

Jeevansathi.com‟s users register on

Shaadi.com as well as on

Bharatmatrimony.com. If Jeevansathi.com

charges a user fee and Shaadi.com and

Bharatmatrimony.com do not, all users

will gravitate away from Jeevansthi.com

towards the other two websites.

The critical success factors for this genre

of companies are:

Intelligent search algorithm: The better

the matching algorithm, the faster is the

matching process and higher the customer

delight. Searching is not as simple as

running a database query with the

parameters provided because:

1) The consumer does not herself know

what she wants

2) There is a lot of data, and users lack

patience

High quality and accurate information:

Unless the quality of information provided

is high and accurate, the website will not

attract much traffic. Fake profiles are a

major problem which matrimonial

websites generally face.

User friendliness of the website: A

simple intuitive user interface increases

customer engagement. No user wants to

think while using a website.

Websites Selling Services: This genre

includes companies such as

Makemytrip.com and Yatra.com. Such

companies make profit by sale of their

core services or value added services. E.g.

Flight tickets and commission on hotel

bookings for Makemytrip.com.

The critical success factors for such

companies are:

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More tie-ups with original service

providers: This ensures that the website

becomes the first website where users

throng for price comparisons or service

purchases.

More tie ups with Value Added service

providers

User friendliness of the website: This

generates repeat business as customers are

more likely to come back to the website

they have used previously and had a good

experience with.

E-Tailing Websites: This genre includes

companies such as Snapdeal.com,

Jabong.com and Flipkart.com. All these

companies have no other major source of

revenue than by actual sale of their

products.

These companies follow price leadership

strategy because of which all the e-tailing

companies are bleeding. The reason why

such companies cannot follow a product

differentiation strategy is that the end

branded product which they are selling has

actually become a commodity. If customer

buys from any of the websites, he gets the

same product. Customer experience is a

major source of competitive advantage in

this segment of internet companies. The

critical success factors for such companies

are:

Large product catalogue: The bigger the

product catalogue, the more the options the

user has.

High product availability: The higher

the product availability, the more the pull

factor the website has.

Good services: The return and refund

policy, and the delivery time also play

crucial role in determining purchase

decisions.

Efficient SEO: In the online business, it

is really important to be at the top of the

Google search results. This is because a lot

of traffic to the website comes from

google.com. There are two ways to get to

the top of the ranks:

1) Sponsored advertisements

2) Search Engine optimization (SEO)

Websites Selling Online Software

Products: This genre includes companies

such as Google and Salesforce. Their sales

comprise of user fees.

These companies follow a product

differentiation strategy. The critical

success factors for them are:

Comprehensive functionality: Most of

the products offer similar basic

functionalities. The actual differentiators

are the value added features the product

has. e.g. data analytics tools embedded in

packaged software

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High uptime and data security: The

software should be reliable, factoring in

for the outages.

Ease of use: The online software should

be easy to understand so that companies do

not incur training costs.

CONCLUSION

As the profit formula for all internet

companies is not the same, critical success

factors are not the same either. Therefore,

tangible differences can be seen in both

business level strategy as well as corporate

level strategy being deployed.

AUTHOR: SHAURYA SAHAY

FINANCIAL ANALYSIS AND ITS RELEVANCE TO

PERFORMANCE MEASUREMENT

OBJECTIVE

The aim of any business is to maximize

Shareholders‟ Value. This report,

therefore, attempts to explore the utility of

financial tools such as Du Pont analysis in

order to ascertain variables or metrics that

drive a company‟s performance. Through

such metrics the company drives growth

by breaking financial incentives of growth

further into tactical and operational level,

be it learning and growth or internal

operations. Business performance metrics

are important to keep the company going

on the right track and know exactly how

far it has reached in the pursuit.

DEFINING THE PREMISE

Once an organization has defined its goals

and identified the environment in which it

interacts, it must agree on metrics that

allow the measurement of progress

towards these set goals. For this purpose,

Balanced Scorecard serves as an

appropriate tool.

BALANCED SCORECARD

The balanced score card is a fairly recent

tool that aims to capture the performance

of a company. Apart from the financials, it

allows the management to focus on metrics

which are non-financial in nature. This

gives a broader picture because unlike

financial metrics, which are mostly lagging

indicators, the balanced score card also

incorporates leading indicators. Such

indicators signal the health of a company

in advance (of course, subject to the

quality of interpretation).

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There exist short-comings to the approach,

but companies have been able to customize

the tool to suit their needs. These range

from fundamental flaws in the structure to

the possibility of human error during

design.

Structural flaw: For instance, the

balanced scorecard fails to delve into the

supplier side issues.

Choice of metrics: Another problem

that may arise in this tool is the choice of

metrics for the non-financial measures.

Boiling down each objective to measurable

units is critical to the success of a balanced

scorecard.

Overload in measures: Some redundant

metrics may not appear so on a cursory

glance. They, therefore, need to be

validated using statistical tools.

Correlation tests can be applied to two

metrics and depending on the results, the

decision of including both the metrics in

the strategy map of the company can be

made.

Importance of tracking: There are many

instances where tracking the progress is

not done adequately. There must be a

careful study of initiatives and their

effect(s) on the planned target or on an

unplanned objective that is realized. The

improvements must be empirically

validated and any other by-product

(unplanned initially) must also be tracked.

Right targets: Beyond a point,

achievement of non-financial metrics does

not translate into profits. Targets have to

be set optimally instead of aiming for

something ambitious, or settling for

mediocre.

Alignment to Strategy: Of course the

prime thread holding it all together is the

alignment of the objectives to a clear and

well-outlined strategic mission.

ECONOMIC MEASURES VERSUS

ACCOUNTING-BASED MEASURES

It is important to note that economic

measures give a more holistic

understanding of the direction in which

projects are heading. Economic measures

are more effective in capturing such

elements because

- Trade-offs between short term and long

term can be understood easily with

economic measures

- Source of measure is easily perceived in

economic measures

- Empirically, it can be seen that stock

prices are not driven by accounting profit

Therefore, in our pursuit to find financial

metrics it is important to incorporate an

economic orientation as opposed to a

solely accounting based orientation. It is

for this reason that an economic measure

such as Economic Value Added is

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considered a better measure to evaluate a

business.

EVA is important from shareholders‟

perspective as it estimates the market value

of assets.

Where,

MV- Market Value

BV- Book Value

PV- Present Value

The measure includes cost of securing

capital resources:

( )

Or,

( )

It is beneficial compared to other measures

in the following ways:

- It captures time value of money

- It eliminates the effects of accounting

principles

FINANCIAL ANALYSIS- DUPONT

CHART

The DuPont chart allows the breaking up

of Return on Equity, ROE into several

other contributing ratios. In this manner it

allows us to study the effect(s) of each of

the subsets comprising of the ratio ROE.

Or,

Each of the components of Return on

Equity in the Du Pont Chart can be broken

down into components that allow scope of

control at a greater level. They are enlisted

below:

Return on Equity

Leverage

Debt

Equity

Return on Capital Employed

Profit Margin

Sales

Total costs

Asset Turnover

Total assets

Investments

Fixed Assets

Working Capital

(Inventory,

Debtors)

Sales

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The measure, Return on Equity, is dealt

with at length in the DuPont Analysis and

its driving forces are studied. The ones

with greater salience and controllability

are apt performance measures to be used

as metrics for the Balanced Scorecard.

PROFIT MARGIN

This ratio indicates how much of the sales

are converted into earnings.

For instance, a profit margin of 15 per cent

implies the PAT or net income of the

company is 0.15 rupees for every rupee

sales.

High margin indicates better control over

costs. It also indicates pricing strategy.

Companies with low profit margins tend to

have high asset turnover and vice versa.

(www.investopedia.com)

Net profit margin is the ratio of PAT to

Sales. However, there exist alternate

measures that give a lesser volatile

understanding of the business in this

context. The sensitivity of a ratio

comprising of PBT is lower than that

comprising of PAT. This is because it does

not incorporate tax deductions which in

any case are same in the same area of

jurisdiction. EBITDA further ignores the

effect of structuring and focuses only on

operational costs and hence operational

profitability. EBIT surpasses the above by

ignoring noncash costs as well.

Profit Margin can be further de-layered to

study the affecting factors of the ratio. The

driving forces are: Costs and Revenue.

The analysis can go unto the level of

studying whether the revenue was obtained

from volume increase or increase in net

sales revenue per case. This makes it more

robust.

Total Revenue:

Volume

Value

Similarly the cost can be broken up as

Cost of Sales, Selling and distribution, and

Overheads. Each element has a scope of

further decomposition.

Total Costs:

Cost of Sales

Selling and Distribution

- ATL

- BTL

Overheads

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ASSET TURNOVER

The ratio signifies the amount of revenue

generated for every rupee invested in

assets. It indicates whether the sales are

growing in tandem with the assets. It has a

direct relation with high volume

production and/or efficient asset

utilization.

In general, capital intensive industries

demand focus on efficiency in utilization

of assets. The driving forces of the asset

turnover ratio are: Fixed asset turnover,

working capital turnover, and debtor‟s

turnover.

There is a scope for improving asset

utilization if they are focused on

individually. Total assets comprise of

fixed assets, working capital and other

investments. Current assets are further

divided into: Raw material inventory,

Work in Progress, and Receivables.

Net assets:

Fixed assets

Working Capital

- Inventory

Raw material

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Work in progress

Finished Goods

- Debtors

- Creditors

EQUITY MULTIPLIER

Assets = FA+WC Worth = Debt+ Equity

This ratio indicates the amount of debt

used in proportion to equity employed. It

is dependent on sourcing of capital to fund

total assets. A high Equity Multiplier ratio

implies greater use of debt for financing

the assets.

The composition of debt and equity in

funding capital drives the ratio. A greater

use of debt will increase the ratio. In such

a case the company is said to be highly

levered. However an investor may also

want to check whether the company is

producing Return on Assets higher than

the cost of capital incurred to procure

those assets. Only in that scenario the

business will be truly profitable.

CONCLUSION

Based on the above analysis, either a

horizontal trend can be studied or the

ratios can be compared across comparable

companies in the same industries. A

parallel study of both can help ascertain

whether the company is growing and at the

same time track that growth against the

industry benchmark.

AUTHOR: AASHIMA PRIYE

SOCIAL MEDIA

INTRODUCTION

Facebook has more than a billion users.

Therefore, if we think of users as

population of a country, Facebook would

be the third most populated country in the

world after China and India. With

exploding communication channels and

markets being crowded with umpteen

brands in a single product/service

category, every brand has to spend

increasingly on its marketing and

advertising. And social media has many

arrows in its repertoire such as formation

of consumer perception, product launch,

active feedback and brand management in

one of the most interactive ways. Thus, no

company can afford to neglect the power

of social and digital media. With fast

paced developments in digital media,

companies cannot leave it as an

afterthought. Many big brands have

imbibed digital media in their marketing

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strategy. But many companies are still

trying to figure out how to measure digital

marketing success and to convert it into

sales figures.

SOCIAL MEDIA: THE NEW WORD OF

MOUTH

Even with millions spent on marketing,

word of mouth is still the most important

and the most effective form of marketing

because consumers trust the advice of their

family and friends far more than an

advertisement. Thus, harnessing the power

of WOM (Word of mouth) is of utmost

importance for any company. The problem

lies in the fact that it is largely

uncontrollable and difficult to monitor by

the company. It cannot be refuted that

social media is the new form of WOM

with a much larger reach and impact. Pre-

social media, the reach of WOM was

limited to a select few relatives and

friends. But post-social media, it has

increased to hundreds and thousands of

friends and followers. Though it is still not

easy to control the WOM on social media,

but it can definitely be monitored.

One of the most famous examples of

positive WOM is the „Best Job in the

World‟ campaign by Queensland Tourist

Board. The Board posted small ads in local

newspapers for recruitment and chose one

lucky winner to be the caretaker of

Hamilton Island in Australia‟s Great

Barrier Reef. This news spread through

social media and the campaign ended with

more than 34,000 applications for the post.

The campaign gave a 20% boost to an

otherwise struggling tourism in

Queensland, and Queensland featured in

the itinerary of more than half of the

Australian trips.

On the other hand, a twitter hash tag

campaign #SpreadTheCheer organized by

the coffee giant, Starbucks, backfired.

Consumers instead of sharing their holiday

cheers criticized Starbucks‟ labor policies

and low tax rates in U.K. To pacify the

backlash, Starbucks had to volunteer to

shell out £10 million per year for two years

in taxes.

CUSTOMER ENGAGEMENT

Communication leads to awareness,

awareness results in engagement,

engagement builds relationship,

relationship nurtures trust, trust develops

loyalty, and loyalty bolsters sales. With

traditional media, companies used to create

awareness with one-way communication

because of which the consumers never

engaged with the brand. Brand loyalty was

built partly because of the product and

partly because of few competing products.

Today, with a large variety of brands

available, brand loyalty has reduced and

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customer retentions is all the more

difficult. Therefore, companies are using

digital media to have two-way

communication, and integrating traditional

and digital marketing to develop a deeper

engagement with the consumer.

Any information related to companies and

their products is easily available on various

channels like blogs, websites, online

review platforms, social media etc. This

information has given more power to

consumers, making them ever more

demanding and critical. With these

multiple touch points, the relevance and

effectiveness of push marketing has

greatly decreased. Even the luxury brands

have shed their veil of exclusivity, and are

trying to find a balance between

accessibility and exclusivity using social &

digital media to be more relevant in the era

of pull marketing.

156 year old British luxury brand Burberry

takes the crown when it comes to digital

innovation. It has made a holistic and

integrated use of platform like Facebook,

Twitter, Pinterest and YouTube to reach its

customers in a seamless way while

building its brand identity. Giving a twist

to the fashion shows, it organized a

TweetWalk where it shared with its

Twitter followers the backstage photos of

the models just before their catwalk. Its

Art of the Trench website brings music

and photos of people together, and its

facebook page featured a video of actor

Emma Watson.

All the touch points are nothing less than a

gold mine for the companies as they

generate terabytes of data, without

conducting the expensive age old market

Source: McKinsey & Company

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research, analysing which companies get a

deep insight into consumer behavior.

These insights can help the companies

design more effective marketing plans as

well as better products.

EFFECT ON CONSUMER DECISION

JOURNEY

The foremost function of marketing is to

influence the purchase decision of a

consumer at various touch points. And

with its ability to do so at every stage of

the buying cycle, social media has become

an integral part of the business model.

Today, a user gets a heads-up on different

product serving a particular functionality

from social media platform such as

Facebook. He makes use of reviews posted

on platforms such as Facebook and

evaluates the brand against its competitors,

following which a purchase decision is

made.

This is where the opportunity for the brand

lies. If by some means, the brand can get

the user to post his good experience with

the product in form of videos, posts or

blogs, the brand will be in a position to

leverage the demand side benefits of scale.

We all have seen many brands that give

their products for free to influencers and

ask them to write about it online or tweet

about it. For example, eighteen months

before Ford re-entered the US

subcompact-car market with its Fiesta

model; it began a broad marketing

campaign called the Fiesta Movement. A

major element involved giving 100 social-

media influencers a European model of the

car, having them complete “missions,” and

asking them to document their experiences

on various social channels. Videos related

to the Fiesta campaign generated 6.5

million views on YouTube, and Ford

received 50,000 requests for information

about the vehicle, primarily from non-Ford

drivers. When it finally became available

to the public, in late 2010, some 10,000

cars sold in the first six days. (Insights &

Publications, 2012)

Social media provides a platform for the

companies to learn from user experiences.

For example, PepsiCo used social

networks to gather customer insights via

its DEWmocracy promotions, which have

led to the creation of new varieties of its

Mountain Dew brand. Since 2008, the

company has sold more than 36 million

cases of the same. (Insights &

Publications, 2012)

PRIMARY FUNCTIONS OF SOCIAL

MEDIA

Social Media is a boon for the marketers

whether it is about repositioning an

existing brand, amplifying the positives

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about the products or building a

relationship with customers. . If they can

understand what works at different stages

of consumer buying stages cycle and how

they respond to different stimulus, then

their job would become easy.

So, the main four dimensions to the

analysis are as follows:

1. Monitor: Organizations monitor the

perception of the consumers about the

products through different social media

platforms. They make their account/pages

where user write about their experience

which eventually will help the

organizations to gather user perception and

then they come up with campaigns or

contest in order to build their image. For

example, Coca-Cola‟s Crazy For

Happiness campaign established it as a

happy brand and people want to celebrate

their happy moments with Coca Cola.

2. Respond: Social Media is a platform

for organizations to respond to queries,

and that too timely and quickly especially

at the time of crisis. For example, a

photograph was circulated online which

claimed that McDonald‟s was charging

African-Americans an additional service

fee. It appeared initially on Twitter, where

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the image went viral rapidly and was re-

tweeted with the hashtag

#seriouslymcdonalds. McDonald‟s social

media director tweeted that the photograph

was a hoax and also urged key influencers

to spread the message. As the situation

arose just before the weekend, the

company continued the damage-control

throughout the weekend, even tweeting

personally to the concerned. By Sunday,

the message was spread and more people

believed the photograph to be a hoax. As a

result, McDonald‟s stock price rose by 5

percent the next day (Insights &

Publications, 2012).

3. Amplify: Amplification means

designing the marketing activities in a way

that involves the consumer and encourages

him to engage with them. The consumers

should feel involved with the brand and

ready to share their experiences with

others. This sharing creates WOM and

referrals which are great influences as well

as free marketing for the brand.

4. Lead: Marketers can use social media to

create brand awareness which will help the

brand to be a part of the initial

consideration phase of a consumer. This

can be done by creating a buzz around the

product, by promoting time-sensitive deals

or by providing offers to increase the

traffic as well as sales. For example,

Vogue used social media to launch its

eyewear in India. It created a microsite

where fans from Twitter and Facebook

were invited to generate a mosaic and

guess the celebrity. The campaign was

highly successful and resulted in world‟s

largest fan created mosaic with 20,000

entries.

MESSAGING MATRIX

Above is the framework which explains

about the purpose of messaging in the

corporate world. So, at macro level we

have four types of reasons why companies

have a presence on social networks.

There are companies which don‟t invest

too much in crystallizing their messages

and work too much to spread it on the

social media. E.g. Government Tourism

agencies do not spend too much on Digital

Media. They presence has no major

impacts.

20 | PageMANTRANA


Some other companies suffer from

negative customer perception due to bad

publicity in media. Hence, it is important

for them to stay connected to their

customers and do a make-over of their

brand image. E.g. Fortis Healthcare from

2011-2013 used the social media platforms

solely to resolve the customers complaint.

There are other brands such as Mamma

Mia, which is a healthcare brand. It was

launched in Feb 2013 and their objective is

to increase brand awareness. As a result,

they have presence on major social media

platforms. The focus is on the frequency of

posts than on the quality of posts.

Then, we have brands which use the real

power of social media i.e. for promotions.

There are number of social media

platforms that could make a video viral

within a day. It does wonders for a brand.

Some of the brands pay those who have

grand following on the social media

platforms. Technically, we call then

influencers. They help brands spread their

message. It takes a lot of effort to keep the

activity level high from people. This is

possible only when the message is of high

quality and frequency of posting is also

high.

CONCLUSION

Digital media is disrupting the marketing

practices of companies as well as

consumer behavior immensely. Any

company not utilizing this communication

channel to create multiple touch points

with its consumer is compromising its

future in a big way. For today‟s consumer,

brand communication is as important as

the product. Hence brands should

continuously innovate new ways of

building a relationship with its consumers.

AUTHORS: JASPAL SINGH

& HINA AGARWAL

21 | PageMANTRANA


Editing Team:

Shaurya Sahay

Aashima Priye

Hina Agarwal

Design Team:

Aashima Priye

Pravin Pawar

Raj Mohod

22 | PageMANTRANA

Date post:	13-Mar-2016
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