During the last year, as we beleaguered our way through the GFC (Global Financial Crisis), the rise of private label has been apparent. As people look to cut costs, private label looks very attractive, providing a quality product at a budget or, in some cases, a bargain price.
While the retail industry has been known for private label for a fair while, we are beginning to see private label creep up into larger value items. With Aldi selling computers, treadmills and LCD TVs under their own brands, it shows that consumers are more accepting of an ‘unbranded’ or ‘store branded’ products as opposed to their branded equivalents.
But how far will this acceptance stretch? Can this be extended to high value items. Take a car, for instance. Would a family be willing to purchase a ‘store branded’ car rather than a branded one. In my view, the simple answer is YES, and when that happens, it will be the biggest paradigm shift that will occur in the auto market place.
Badge Engineering
I’m actually surprised no one has ventured into it seriously before. We have seen the same car being sold under several badges, in what is called badge engineering. The Ford Laser and the Mazda 323 were essentially the same car, apart from the badge. You can find a full list of ‘badge engineered’ cars here http://en.wikipedia.org/wiki/List_of_badge_engineered_vehicles
Typically, badge engineering is used in different markets where the same car is sold, although due to the concentrated ownership of car companies, it is cheaper to use multiple badges on what is essentially the same car. To the consumer, it looks like they have a wider choice in the market, and they pay different brand premiums for the same car.
Why does it make sense?
There is only so far that car companies can push their sales. There is a brand image that often stands in the way of increasing market shares. You could never try to sell a BMW at a budget price, or a Hyundai for the price of a BMW, even if theoretically they were identical cars. You would do your brand image permanent damage if you tried that. So, if a large carmaker has invested billions of dollars in a car making facilities, and volumes were dropping, in order to recoup their fixed costs, it would be a good idea to fill up spare capacity with a differently branded car.
In fact, it would appear that some private labels are trusted by customers more than regular brands. I would not be surprised, if in Australia, Bob Jane, which has it’s own range of private label tyres ranked higher in trust than a number of international brands such as Dunlop or Goodrich. It would appear that by capitalising on this section of the market, a viable long term brand could be built.
For the manufacturer, it also means not having to spend much on marketing and advertising. It also gives them economies of scale in manufacture and distribution.
What are the pitfalls?
The private label market is not all rosy from a manufacturer’s perspective. Firstly, there are lower margins in private label products, cars included. Secondly, if it looks too similar to a current brand, it could devalue the manufacturer’s own brands. Thirdly, there is a very high risk of cannibalisation of the manufacturer’s own market share from sale of private label cars.
From a retailer’s perspective, the key issue is capital required. To set up a distribution, and potentially a service network independently could be quite expensive. Also, the retailer has to rely on the manufacturer for warranty and service related issues.
Who would be the most likely candidate to enter the market?
Enough said, who do I think has the best chance of creating a viable private label product in the auto industry? Obviously, a current player in the auto industry with a wide distribution network would be ideal. It could be a tyre chain like Goodyear or Michelin, or a service network like Ultratune or K Mart Tyre and Auto. Or it could be an after market retailer like Repco or Supercheap auto. Even an auto services player like NRMA or an insurance company like AAMI could jump into the fray.
All things considered, my money would be on K Mart Tyre & Auto to be the most successful in this space. They already have a large network of service outlets. They have deep pockets through Wesfarmers that owns them (along with Bunnings, Target and Coles). They have a brand name that is well recognised in the market and in the racing industry. In my view, all the planets are aligned for K Mart to get into the private label game.
Who would be the manufacturer? Now, that is more difficult. Most of the obvious choices, such as Toyota and Honda) would not want to be associated to prevent brand damage and cannibalisation. However, I believe an offshore manufacturer that is not yet strong in the country would be the best bet. I believe the market is right for Tata Motors to enter the market. Now that they own Land Rover and Jaguar, and also manufacture significant number of vehicles under the BMW and Mercedes badges, they would be ideally positioned to take advantage of this. They could very easily take a car from a different market and rebadge it for the Australian market.
To top it off, it provides them an entry into a market that they may one day want to get in on their own.
But anyway, that’s my view. And it’s all speculation. But I sure would like to see the day K Mart begins to sell Tata Indicas or Sumos under their brand name.
Monday, December 21, 2009
Wednesday, August 05, 2009
The Morons that run Paypal
If you thought government bureaucrats were the leaders when it came to nonsensical and inflexible rules and for moving the goalpost whenever you came within striking distance of one, do not despair. There is someone else who beats them hands down – the morons that run Paypal customer service.
How naïve of me to assume Paypal was a global company, and that I could operate my account from anywhere in the world. Never mind the fact that I can access my bank accounts, check my e-mail, pay my taxes, book a ticket, pay my kid’s school fees, all of these over the internet, and from a different country. The trolls at Paypal believe that if you were to ever travel to a different country and try to access your account from there, they have the right to freeze it.
Surely, they are trying to reduce fraud. So the trolls lock up my account, unilaterally reverse the transaction I had made, and even represent to the other party that it was at my request.
Here comes the good part – In order to unlock the account, the only documentation they will accept is a faxed copy of a utilities bill with my name and address on it. How in the world do they expect me to access a document safely sitting at home 10,000km away, then access a fax to send it to a UK fax number. Who uses a fax these days anyway? And if I walked into an internet café to fax sensitive information, can I even be sure of who gets a copy of my documents?
And then there is a question of who pays for all this. All I wanted to do was transfer a measly $7, and to do this I need to access a document 10,000km away to fax it to a place 20,000 km away. I think I would rather stick to cheques and bureaucrats.
And I shouldn’t bother complaining. Paypal’s parent – eBay – is even worse on customer service. I could write 10 whole blogs on my experiences with them. Maybe, I’ll do that tomorrow….
How naïve of me to assume Paypal was a global company, and that I could operate my account from anywhere in the world. Never mind the fact that I can access my bank accounts, check my e-mail, pay my taxes, book a ticket, pay my kid’s school fees, all of these over the internet, and from a different country. The trolls at Paypal believe that if you were to ever travel to a different country and try to access your account from there, they have the right to freeze it.
Surely, they are trying to reduce fraud. So the trolls lock up my account, unilaterally reverse the transaction I had made, and even represent to the other party that it was at my request.
Here comes the good part – In order to unlock the account, the only documentation they will accept is a faxed copy of a utilities bill with my name and address on it. How in the world do they expect me to access a document safely sitting at home 10,000km away, then access a fax to send it to a UK fax number. Who uses a fax these days anyway? And if I walked into an internet café to fax sensitive information, can I even be sure of who gets a copy of my documents?
And then there is a question of who pays for all this. All I wanted to do was transfer a measly $7, and to do this I need to access a document 10,000km away to fax it to a place 20,000 km away. I think I would rather stick to cheques and bureaucrats.
And I shouldn’t bother complaining. Paypal’s parent – eBay – is even worse on customer service. I could write 10 whole blogs on my experiences with them. Maybe, I’ll do that tomorrow….
Sunday, July 26, 2009
Ride & Wrong
Today, I tried something very adventurous. It got me all pumped up, set my adrenaline running, and left me feeling high. Did I, you may ask, go bungee jumping? No. Maybe it was something else like rock climbing or stomach rappelling. Wrong. It was something far more adventurous than that. Something that would put underwater caving or base jumping to shame. Hold your breath. I went… driving through Chennai.
Balderdash, I hear you say! I sense that tone of disbelief, disappointment and outrage in your thoughts, as if in a Bollywood movie you were watching, the bad guys were all killed by malaria rather than by a hail of bullets. Driving through Chennai is no big deal, you might think. Many of you do it everyday. But for me, as a NRI returning to my janmabhoomi after a hiatus of several years of driving overseas, it was a big deal. It boosted my confidence to realize that I had not lost my touch. That I could still blare a mean horn. That I could still duck and weave through a labyrinth of people and vehicles. And most importantly, that I could travel a full 20 kilometres and stay alive. Indeed, I am proud of what I have achieved.
And so, on this sultry afternoon, I have decided to sit down and pen my thoughts, so the uninitiated and future generations can truly understand the intricacies of the art that is driving in Chennai, to rival the masterpiece that is Zen and the art of Motorcycle Maintenance or even Das Kapital.
A dear friend of mine used to say “The first rule is that there are no rules”. Since he was run over by truck before he could give me the rest of the rules, I have suitable paraphrased it to “Everyone driving on the roads of Chennai is entitled to their own inalienable personalized set of rules”. After all, we live in the world’s largest democracy.
So, imagine you were at a traffic light at an intersection and wanted to turn right. If you were an obsessively organized person, you would move to the rightmost lane and turn on your indicator. However, in Chennai, this is not necessary. You have the power of choice. You can choose to turn right from any lane of your liking, even the left most one. All it needs is a bit of blaring the horn and pretending that you own the land on which the intersection is built. Using your indicator is optional. You might as well save the battery power to operate the horn or air conditioner rather than the indicator. Come on, if people around you cannot read your mind, it is their fault.
The most important rule you need to learn deals with right of way. As a general rule, smaller vehicles give way to larger vehicles. Cars give way to buses and trucks (or lorries, as they are called). Scooters and motor bikes give way to cars. Bicycles give way to any motorized vehicles. And the hapless pedestrian gives way to everyone else, including potholes on the road. There is one exception to this great pyramid of giving way. Cows do not give way to anyone. They are the supreme masters of the human race on Chennai roads. They have a ticket to move anywhere without fear of being run over – be it the median on the centre of the road, the dustbin on the side, or even at a bus stop. All traffic must slow down and weave around to accommodate the vagaries of the cow.
Once you have learnt the right ‘right of way’, the next lesson is a quick one in becoming an accomplished three dimensional terrain driver. If you enjoy driving over sand dunes or dirt trails, or participating in the Dakar rally in your spare time, you will master this in no time. It’s quite simple really. Just keep an eye on the terrain, so you can avoid potholes on the road. Some of them may look like large craters left when the Martians last invaded Earth, but do not worry, they are perfectly drivable. Keep another eye out for traffic on your left and right, and front and back. No doubt, when you reach your destination, you will have exercised your eyes so much they could give Arnold Schwarzenegger a run for his money for the Mr Universe title. Just be sure to give the cars around you 6 full inches of space to maneuver.
Chennai drivers have a lot of lane discipline. They ensure that all lanes are used up in an optimal manner. Even if this means that someone has to go driving down the wrong side of the road so that the lane is used up. The interpretation of a lane is that you can fit a minimum of one car in a lane. It is quite normal to fit 6 cars side by side into a 4 lane road, so there is not an inch of empty space left over. The cops know this, and they try to outsmart them by setting up so called road blocks that block off two of the best lanes on a 4 lane road. The hapless drivers then have to squeeze the six cars into the remaining two lanes. They manage this with dexterity from years of practice and by playing the game ‘Is my horn louder then yours?’
Parking is a breeze as well. If you are in a hurry, you can park anywhere – in driveways, under a flyover, parallel to another parked car or if on a motorbike, in the 12 inches of space between the bumpers of two parked cars. Too many choices! As long as your vehicle plays loud music while reversing into a spot, you should be fine. You are even allowed to make a three point turn at a busy intersection to ensure you don’t miss that elusive spot. Don’t worry about getting a parking ticket – at the speed at which most traffic moves, the cops are never sure if you are illegally parked or just stuck in traffic.
If everything fails, and you still cannot bring yourself to drive in Chennai, I have a surefire remedy. Just get the word ‘PRESS’ tattooed in big bold letters on your vehicle. It gives you the right to continuously sound the horn while driving at breakneck speeds, drive on any side of the road, and park anywhere you want. To complete the transformation add the words ‘SOUND HORN’ and ‘Ferrari’ to the back of the vehicle. Then people tailing you will know who they are up against and realize that resistance is futile.
In short, driving in Chennai is like meditation. It is chicken soup for the soul. It brings one a strange sense of calm, almost like you are about to enter the next world. How can you feel road rage when you aren’t even sure if you will get to your destination horizontally or vertically?
In the second part of this article, we will cover more advanced topics, such as how to avoid freshly broken coconuts and melon on roads, how to make your number plates unreadable by getting them written in Tamil, and most importantly, what expletives to use when you come across an elderly pedestrian who wants to cross the road at a zebra crossing. We also provide 101 legitimate excuses for when a cop pulls you over going down the wrong way in a one-way street. I will start working on that once I get out of this traffic jam in 2012.
Balderdash, I hear you say! I sense that tone of disbelief, disappointment and outrage in your thoughts, as if in a Bollywood movie you were watching, the bad guys were all killed by malaria rather than by a hail of bullets. Driving through Chennai is no big deal, you might think. Many of you do it everyday. But for me, as a NRI returning to my janmabhoomi after a hiatus of several years of driving overseas, it was a big deal. It boosted my confidence to realize that I had not lost my touch. That I could still blare a mean horn. That I could still duck and weave through a labyrinth of people and vehicles. And most importantly, that I could travel a full 20 kilometres and stay alive. Indeed, I am proud of what I have achieved.
And so, on this sultry afternoon, I have decided to sit down and pen my thoughts, so the uninitiated and future generations can truly understand the intricacies of the art that is driving in Chennai, to rival the masterpiece that is Zen and the art of Motorcycle Maintenance or even Das Kapital.
A dear friend of mine used to say “The first rule is that there are no rules”. Since he was run over by truck before he could give me the rest of the rules, I have suitable paraphrased it to “Everyone driving on the roads of Chennai is entitled to their own inalienable personalized set of rules”. After all, we live in the world’s largest democracy.
So, imagine you were at a traffic light at an intersection and wanted to turn right. If you were an obsessively organized person, you would move to the rightmost lane and turn on your indicator. However, in Chennai, this is not necessary. You have the power of choice. You can choose to turn right from any lane of your liking, even the left most one. All it needs is a bit of blaring the horn and pretending that you own the land on which the intersection is built. Using your indicator is optional. You might as well save the battery power to operate the horn or air conditioner rather than the indicator. Come on, if people around you cannot read your mind, it is their fault.
The most important rule you need to learn deals with right of way. As a general rule, smaller vehicles give way to larger vehicles. Cars give way to buses and trucks (or lorries, as they are called). Scooters and motor bikes give way to cars. Bicycles give way to any motorized vehicles. And the hapless pedestrian gives way to everyone else, including potholes on the road. There is one exception to this great pyramid of giving way. Cows do not give way to anyone. They are the supreme masters of the human race on Chennai roads. They have a ticket to move anywhere without fear of being run over – be it the median on the centre of the road, the dustbin on the side, or even at a bus stop. All traffic must slow down and weave around to accommodate the vagaries of the cow.
Once you have learnt the right ‘right of way’, the next lesson is a quick one in becoming an accomplished three dimensional terrain driver. If you enjoy driving over sand dunes or dirt trails, or participating in the Dakar rally in your spare time, you will master this in no time. It’s quite simple really. Just keep an eye on the terrain, so you can avoid potholes on the road. Some of them may look like large craters left when the Martians last invaded Earth, but do not worry, they are perfectly drivable. Keep another eye out for traffic on your left and right, and front and back. No doubt, when you reach your destination, you will have exercised your eyes so much they could give Arnold Schwarzenegger a run for his money for the Mr Universe title. Just be sure to give the cars around you 6 full inches of space to maneuver.
Chennai drivers have a lot of lane discipline. They ensure that all lanes are used up in an optimal manner. Even if this means that someone has to go driving down the wrong side of the road so that the lane is used up. The interpretation of a lane is that you can fit a minimum of one car in a lane. It is quite normal to fit 6 cars side by side into a 4 lane road, so there is not an inch of empty space left over. The cops know this, and they try to outsmart them by setting up so called road blocks that block off two of the best lanes on a 4 lane road. The hapless drivers then have to squeeze the six cars into the remaining two lanes. They manage this with dexterity from years of practice and by playing the game ‘Is my horn louder then yours?’
Parking is a breeze as well. If you are in a hurry, you can park anywhere – in driveways, under a flyover, parallel to another parked car or if on a motorbike, in the 12 inches of space between the bumpers of two parked cars. Too many choices! As long as your vehicle plays loud music while reversing into a spot, you should be fine. You are even allowed to make a three point turn at a busy intersection to ensure you don’t miss that elusive spot. Don’t worry about getting a parking ticket – at the speed at which most traffic moves, the cops are never sure if you are illegally parked or just stuck in traffic.
If everything fails, and you still cannot bring yourself to drive in Chennai, I have a surefire remedy. Just get the word ‘PRESS’ tattooed in big bold letters on your vehicle. It gives you the right to continuously sound the horn while driving at breakneck speeds, drive on any side of the road, and park anywhere you want. To complete the transformation add the words ‘SOUND HORN’ and ‘Ferrari’ to the back of the vehicle. Then people tailing you will know who they are up against and realize that resistance is futile.
In short, driving in Chennai is like meditation. It is chicken soup for the soul. It brings one a strange sense of calm, almost like you are about to enter the next world. How can you feel road rage when you aren’t even sure if you will get to your destination horizontally or vertically?
In the second part of this article, we will cover more advanced topics, such as how to avoid freshly broken coconuts and melon on roads, how to make your number plates unreadable by getting them written in Tamil, and most importantly, what expletives to use when you come across an elderly pedestrian who wants to cross the road at a zebra crossing. We also provide 101 legitimate excuses for when a cop pulls you over going down the wrong way in a one-way street. I will start working on that once I get out of this traffic jam in 2012.
Subscribe to:
Posts (Atom)