The Economics of “Refill”

In all probability you must have seen this.  An Indian scientist is explaining to a group of Indian visitors what seems like a visitor’s gallery in NASA about the most ambitious project of NASA“JUNO” a spacecraft to discover Jupiter’s secrets.  At the end of his brief, he asks the group if there are any questions. Up goes a hand and the man asks nonchalantly “Kitna Deti Hai” (How much does it give – mileage?)  The scene cuts to the scientist who is flabbergasted by the question. The commercial closes with a voiceover which says “For a country obsessed with mileage Maruti Suzuki makes India’s most efficient cars”. This is one in the series of ads being aired by Maruti with the same theme to drive home the point concerning the obsession of Indians with mileage when they look to buy cars.  Here’s the link to that commercial.

The scientist who is shown as an Indian should not be so astounded after all. Because an average Indian consumer who apart from looking at the price of a product is programmed right from his childhood to also look at its running cost over a period of time while buying any product.   Hence this obsession with mileage as far as car is concerned and may be a space craft when he decides to buy one.   The importance of the “cost of using” a product (let’s call it ‘running cost’ to keep it simple) is not limited to cars alone.

Till I was in school, I was using a fountain pen in which the ink can be refilled and used for a long while.  I ‘graduated’ from using a fountain pen to a ball point pen ‘when I left college’. This can be used for eternity by just replacing the “Refill” once the ink is over.  Though the ball point pen as such costed few cents – we were told that it should NOT be ‘used and thrown” but refilled and re-used again and again.

Welcome to the “Economics of Refill”.  Welcome to India.

Between “Use & Throw” and “Refill & Use”, the vote of the Indian consumer is always for the 2nd one.   So you have refill solutions for almost all categories – In Fast moving consumer goods (FMCG) category  you get refill sachets for dishwashing liquids, mosquito repellants, room fresheners, cleaning liquids and the like.  In appliances – we are keen to know what the power consumption is because we are concerned that the electricity bill should not detonate in our face after we start using the product.  Moving from consumer to business category the story is not so different.

In my own long enough experience of selling printers in India, I’ve seen that the 1st question the trade asks when you talk of a printer is “Refill hota kya”? (Is this refillable?) And if your answer is negative, you can knock off one high potential emerging market from your pursuit list.  So you have the Dot Matrix printer ribbons being refilled with inked fabric, Inkjet cartridges of Inkjet printers being refilled with Inks and Toner cartridges of Laser products being refilled with Toner powder…  Akin to “Kitna Deti hai” in cars is the question – “Running cost kya hai” (What is the running cost?) in the printer industry.  . So much so, few years ago when we were planning to introduce a label printer which produces High quality labels which are long lasting – though the price of the printer itself was quite affordable we were continuously faced with the question of “Cost per label”!!!    Here we are talking of a label printer which can produce labels of such high quality that they are dust proof, impervious, chemical resistant, heat resilient so on and so forth and the 1st question which pops up is “All that is fine. What is the Cost per label”?  We had to change the narrative of the product from “Cost per label” to “labels for life” to be successful.  Succeeded we did, but it took a lot of sweat.  This question of “Cost per label” was not so commonly faced by the company in other markets it sold this product before.  Similarly in developed economies like US and Western Europe, I understand that the toner doesn’t get refilled by cheap refill vendors.  (There is an organized refurbished toner market though)

There is a common notion among foreign companies that consumers in India want cheap products (means products that cost as low as possible) and don’t care for anything else.  And this notion is continuously flagellated while arriving at product as well as pricing strategies. Well this view can be off the mark by the width of the Indian Ocean.  An Indian consumer while is certainly cost conscious also looks for lower running costs which includes recurring costs on usage like power consumption, consumables cost, maintenance costs, fuel costs, .. depending upon the type of product.

With this “refill psyche” in our DNA, look at the contribution we are making to a greener planet!!!  “Use & Throw” generates more plastic than “Refill and Use” isn’t it?

So companies looking to script a success story in India or an emerging market are well advised to introduce products which follow the “Economics of Refill” wherever applicable.

“While on this, don’t miss to read – “Characteristics of Emerging Markets and the Opportunities They Create” by Kamini Banga and Vijay Mahajan.

Post script : In villages, you can hear the phrase “Kitna Deti Hai?” actually in reference to “cows” when they are being sold in the market – meaning how much milk does it give in a day !!!  So the cow which gives a very high “milkeage” becomes a “Cash Cow”!!!

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The Politics of Reforms!!!

Gurcharan Das, the erstwhile head honcho of Procter & Gamble, India is not a politician.  If he was one, I wouldn’t have to struggle so much to come up with a name of one politician who has been steadfastly and consistently pro “economic reforms” in India.  The last few days, since the UPA government announced some bold economic decisions, the debating society is back and busy discussing ‘Reforms’.   We had the normally reticent Prime Minister Dr. Manmohan Singh addressing the nation with an aim to take the public into confidence on some of the tough decisions his Govt. finally took.    There he was, espousing the need for such decisions if economy has to get back to the high growth path of the recent past years.

The question is why it took so long for the Govt. to wake up when the writing was on the wall.   In India it is an ironical fact that our leaders were and are always reformers under duress.  And Governments pursue reform path only when push comes to shove.  Since 1991, the year in which liberalisation of the economy was flagged off, successive governments in the centre and the major political fronts have always flip-flopped on the question of reforms.   Switch ‘On’ the reforms when pushed to a crisis and Switch ‘Off’ if there is none – has been the approach.

During UPA-I, the economy was on a roll due to the global economic situation overheated by excessive liquidity which helped India as well.  So UPA-I was not under pressure to perform oops ‘reform’.  As the global slowdown and the effects of “no reform” hit the shores now, It is not surprising that the government (UPA-II) decided to unleash its ‘Animal spirits’ on reviving the economy.  And it is also not surprising that you have the opposition led by BJP, opposing initiatives like FDI in Multi Brand Retail or dragging its feet on GST implementation which it had championed when it was part of the ruling front.  And this seems to be the emerging pattern for any political formation – “Reform while in power when in trouble and Oppose Reform while in opposition!!!”

 Already there is a pervasive anti UPA mood in the country as depicted by surveys of late thanks to the corruption scams, high Inflation and the rudderless economy in the last 2 years.   The few decisions taken by the Govt. in the death overs ( not calling it reforms ) like diesel price hike and the opening up of Multi brand retail to foreign chains though welcome – may not yield immediate tangible results. The impact of such decisions is always felt long-term.  They will certainly help to talk up and lift the moods of the markets which are also important.  So come 2014, it is quite possible that UPA loses power and an alternate dispensation – most likely the NDA comes to power.

When that happens – we are most likely to see a ‘Deja vu’ of the UPA –II rule.  Picture this:

  • Under the false impression that UPA –II was rejected as it pursued tough economic decisions, the NDA train will chug along in the 1st 2-3 years with “no economic reform”.  The economy then goes through turmoil due to no growth impetus.  And in the 4th year the Govt. is shaken up from its dogmatic position on reforms and announces reluctantly a few reforms.
  • The Opposition – now the Congress smarting under the defeat opposes the very initiatives it took!

So the “Start – Stop” saga of economic reforms continue and we never get to experience the benefits of uninterrupted economic reforms.  A Start – Stop system may be helpful in automobile technology to save fuel but not in economic reforms.  This means that our economy will see growth in phases and then dipping into crisis for a while before picking up again. And this may potentially stop India from becoming a “Strong Developed” nation which we all aspire to see.

How do we come out of this?  Well, here is a Utopian 5 point programme:

  • Under the leadership and initiative of the President a 5 year/ 10 year/ 15 year/ 20 year milestone document for the country should be prepared.  The President should take all the major party and their leaders into confidence while arriving at these milestones. (This can be something like the formation of the constituent assembly which worked on drafting the Constitution of India post-Independence)  These milestones obviously will be related to ( preferably limit to Top 5 issues )
  1.     Poverty Alleviation
  2.     Infrastructure development
  3.     Job creation
  4.     Health
  5.     Sanitation
  6.     ,..
  7.     ,..

(I do hope that parties and their leaders will not have major disagreements in coming to a consensus on this – atleast in public)

  • Once the milestones are decided by consensus, the government of the day along with the major opposition leaders, key bureaucrats and civil society must arrive at a doable plan to achieve the milestones.   While arriving at the action plan debates and discussions can happen and a consensus must be arrived.  It is obvious that ‘for reaching’ certain milestones like infrastructure development, job creation,… ‘far-reaching’ economic reforms are essential.
  • And once a consensus is arrived on the action plan, the government of the day should be empowered to either take the legislative route or executive route to implement those decisions.
  • A regular review of the milestones and the action plans and their progress must be carried out by the incumbent President (My mantra – What gets reviewed gets done)
  • A regular and continuous report to the Aam admi by powerful communicators in the Government on the progress of the milestones.(Regular and forthright dialogue with people – a must to assuage any misconceptions)

 Important point: These milestones are by and large supposed to survive any change in the Government or even the President.  These action plans arrived at by consensus are also supposed to survive any change in the Government or the number equations in the parliament.

By this, the reforms will be given a longer rope and chances are that they will succeed without falling into the trap of the “Politics of Reforms”.    (The side benefit is that the President will no longer be playing just a ceremonial role)

For the “Politics of Reforms” to stop we need a major “Reform of Politics”.  Can this happen?

Also pls. read my earlier post : “Blame it on India Shining” on the subject of Reforms.

I look forward to hearing your comments and feedback.

“Likeaholics” Not Anonymous!!!

Oxford Dictionary by 2015 or earlier would have included another word to its vocabulary – “LIKEAHOLIC” and it would mean – A person who is addicted to “Social Media”.  A human being would be declared a “LIKEAHOLIC if he exhibits one or more of the following symptoms: ( I’ve chosen the male gender just for convenience. These attributes apply to both genders )

  • Except for the few hours of sleep, he is in one of the social media sites
  • Considers fashionable to communicate to his immediate family members through Facebook(FB)
  • On waking up in the morning instead of brushing his teeth, reaches out to his smart phone to check updates on FB/Twitter
  • Updates status on FB as if it was a diary. “Standing”,” Sitting”, “Shitting”,..
  • Enjoys traffic Jams while travelling so that he gets that time to check updates on FB/Twitter,..
  • Gets into serious withdrawal syndrome on long haul flights and the 1st thing he does when the plane lands is – you know what!
  • He is chatting on FB thro Whatsapp while tweeting to his LinkedIn contacts
  • And so on

That social media has changed the way we communicate is a no brainer.  As somebody said – “These days News no longer breaks, it tweets”!!!

In the pre-social media era, ‘like’ was just a simple word expressed when you want to appreciate something. These days in the FB era, the word “Like” has attained much larger overtones!!!

Like in the society, one can see different people types on social media like FB/Twitter,.. as well. There are the

  • Watchers: People who are members and regular visitors. But they don’t post. Just watch what’s happening.
  • Likers: They don’t post either. But make it a point to “Like” whatever they see.
  • Braggers: Updates are all about Me/Mine/Myself.  They don’t care a damn of what others are doing
  • Check-ers: Don’t do anything but keep “Checking in and out”. Idea is just to tell people that they are roaming
  • Show-ers: Uses FB/Twitter/LinkedIn to show off his talents – writing/sketching/singing/acting/photography,…
  • Sharers: Their posts are only “shares”.
  • Copiers : Posts are by and large of the “Copy/Paste” variety
  • Promoters: Posts are only about their products/company/programs/religion,…
  • App-ers: Who play around in the App center and keep ‘farming’/’harvesting’ or providing ‘lunch idea’,…

And there are people (like yours faithfully) who are a combination of some or many of the above!

By the way none of the above types is a problem – it’s the way people are.

The point is – which type are you comes second. The 1st issue is ‘are you there’? These days you are considered technologically challenged if you are not on the popular social media. “You are not on FB????”  – There you go – your market cap is down a few million dollars!!! Then the next question – “You are not ‘active‘ on FB ???” Another few million dollars gets scooped off.  (Fortunately I didn’t stretch that logic further and go for subscribing to the Facebook IPO.  For real, by now my market cap would have taken a posting oops pasting had I invested! Somehow post the IPO, the market is not hitting the  “Like” button on the FB share so much!)

Obsession of being ‘current’ on social media can be a time-consuming affair. Thank God for small mercies – “MySpace” did not get too much ‘space’ in this part of the globe and Orkut was rendered ‘kaput’ by Facebook. I rued the day Google got active in the social media by adding Google + to its repertoire.  Rued because then you have another site to ‘hangout’ and update your status.  Thankfully Google+ is turning out to be a dud!  Also must thank technology for the “linking” option. You tweet your status and the same gets updated in FB/LinkedIn,.. Or vice versa.

There’s a voyeuristic tendency in all of us and social media like FB has played to that tendency.  We are all interested in knowing what others are up to. And in that sense it has just replaced the gossip sessions of the yesteryear. Physical gossip has become Virtual – that’s all.

Having said that, I relish being a part of this circus!  Personally for me, since Sep 2008 when I first hopped on to the social media bandwagon like FB, Twitter,.. it has been a discovery.

  • Like connecting with my primary / secondary school mates with whom I had lost contacts since I left Class 12.
  • Re-establishing contact and memories with my engineering and B School mates.
  • Hi touch and exchanging notes with my erstwhile colleagues
  • Seeing the big smile on my mom’s face when her in-house vegetation pictures get a few likes from her granddaughters.
  • Getting an opportunity to show my appreciation to others
  • Being a great stress buster of sorts – going thro some ‘LOL’ posts and adding your 2 cents, taking potshots at celebrities, politicians the way you feel,..
  • And lastly has given me a forum for creative expression.  Today I’m attempting to do things which I really “Liked” and that happened because of the “like” button my friends hit liberally when I posted something interesting for which I’m ever thankful!

In that sense I’ve become a “Likeaholic” but I am not regretting yet!  As they say, for everything there’s limit beyond which it becomes overkill.  I hope this “likeaholism” stays the course.

And don’t forget to hit the “like” if you like this post!!!