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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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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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.
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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
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Editing Team:
Shaurya Sahay
Aashima Priye
Hina Agarwal
Design Team:
Aashima Priye
Pravin Pawar
Raj Mohod
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