Strategy Digest Volume 2

Amul Model to be applied to diamonds

After having worked wonders for the nation’s milk industry, the Amul co-operative model, will now be applied in the diamond industry. Around 1,500 small, medium and large diamond merchants have decided to float a company, Surat Diamond Sourcing (India) Ltd (SDSL), which will directly source roughs from mining companies across the world and sell it to its members — all equal stakeholders — through a tender system. The company will have an initial capital of Rs 1,000 crore. For membership, large manufacturers and rough dealers will contribute Rs 1.08 crore each and small and medium manufacturers will contribute Rs 54 lakh each. This move will help raise India’s market share and reduce costs due to direct supplies.

Tata DOCOMO launches pay per site tariff plan for browsing

Tata DOCOMO has launched a new 'pay per site' tariff plan which will allow subscribers to pay only for the websites they surf. There are two packs being offered – the ones interested in a single website need to pay Rs.10 per site which will be valid for 30 days and those with multiple site browsing needs can opt for a combo pack at Rs.25 per month. Customers can accordingly bundle different options together like social networking sites (Facebook, Twitter etc.), mail options (Gmail, Yahoo etc.) and chat messengers (GTalk, Yahoo Messenger etc.). After having launched “pay per second” last year, this is another example of Docomo’s disruptive marketing techniques. This could hit the other telecom firms badly as VAS is the only place where decent margins still exist. We can probably expect some reactions from competitors in the near future.

Mahindra to acquire Ssyangyong

Mahindra & Mahindra has been selected as the preferred bidder for the acquisition of a majority stake in the South Korean SUV maker, Ssangyong Motor Company. While M&M is the market leader in India with a share of nearly 60 per cent in the utility vehicle (UV) segment, its presence abroad in the same segment is limited. It does not have a manufacturing base abroad for UVs and has to depend on exports. On the other hand, Ssangyong sells its products, primarily SUVs, through more than 1,300 dealers outside South Korea. This acquisition will give M&M a global hold, and help M&M ramp up their capability for selling on a global basis. M&M intends to keep the Ssangyong brand separate from itself. Also, since the operations of M&M and Ssyangyong are very different, M&M has decided that it will try and keep a Korean CEO to head Ssyangyong, who understands the Korean market well.

Marico unit buys South African health brand 'Ingwe'

The South African unit of Marico Ltd, personal care products maker, has acquired over-the-counter health care brand 'Ingwe' from Guideline Trading CC, South Africa, for an undisclosed sum. Marico had entered the South African market in October 2007 and has hair care brands Caivil, Black Chic and healthcare brand Hercules in that market. Ingwe is supposed to complement the Hercules range and will help expand Marico’s distribution network in South Africa. This is yet another example of Indian consumer firms moving to the untapped African markets where demands are rising with the growth in economy, and where the competition faced is less as compared to the more mature market of India.

PepsiCo launches PepsiMax

PepsiCo has launched Pepsi Max, its zero-calorie, no-sugar cola, in India. Pepsi Max was first introduced in the UK and Italy in 1993 and globally competes with Coke Zero, Coca-Cola’s no-sugar variant. Even though, the diet cola category in India is merely one per cent of the total sparkling beverages sales of 650 million cases a year, PepsiCo has launched Pepsi Max to have an edge over Coke Zero in the market as and when it arrives. Pepsi Max is targeting the urban consumers, especially men, in the 25-plus age group who are switching to healthier juices and non-carbonated drinks. The promotion campaign of Pepsi Max will center around, “Maximum kick. No sugar” and the advertising will be disruptive in nature. To get good trial rates, the prices of Pepsi Max have been kept low.