Transcript Slide 1

BUSINESS
24×7
Insight to the world of business
MATINEE BIZZ
Real Estate at a glance
US Real Estate the genesis of Global
Meltdown
Indian Real Estate Overview
 Real Estate industry currently estimated to be US$ 48bn
 CAGR of 30%
 Total Economic Value of US$ 40-45bn accounting for 4-5% of
the GDP
 Factors contributing to the growth in real estate
 Segmentation
 Market structure
Effects of recession on Real Estate
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Credit crunch
Stalling of existing WIP projects
Drop in demand
Decrease in property rates only in Tier II and Tier III cities
Tier I cities experienced fluctuating prices due to cartelisation
Marketing Strategies adopted to tackle
recession
 Innovations to cut costs
 Aggressive future launch plans with “right product & price
combinations”
 Renewed focus on the middle income housing segment
 Increase in advertising budgets
 Use of tactical promotional strategies create high recall value
Lessons to be learnt
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Focus on middle income consumers
Low cost housing
More concentration on Tier II & small towns
Dynamic shift in product mix
Innovation in promotional strategies
Do not underestimate the uncertainty factor
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INDUSTRY BACKGROUND
• Yields will decline by 3%
• Industry revenues are expected to decline to
US$501 billion
• Cargo traffic is expected to decline by 5 %,
following a drop of 1.5 % in 2008
INDUSTRY BACKGROUND
PARTICULARS
AMOUNT
North America
3.9Bn$ loss
Europe
1Bn $ Loss
Latin America
200Mn$ Loss
India
1.25Bn$ Loss
Africa
300Mn$ Loss
China
613Mn$ Loss
Middle East
200Mn$ Loss
IMPACT OF RECESSION
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Dilution of Yield
Uncertain increase in Fuel prices
Huge Debt Burden
High taxation policies
Poor Infrastructure
Sticky price point syndrome
Acquisition of new airplanes – pilling inventory
CURRENT SCENARIO
PARTICULARS
AMOUNT (loss)
British Airways
245Mn $
Singapore Airlines
213Mn $
Air china
9.3bn Yuan
Kingfisher
408.9 Cr
Jet airways
253 Cr
Kingfisher Red
798.3 Cr
Jetlite
441.5 Cr
Strategies adopted
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Target Pricing
Aggressive promotional strategies
Co-branding
Government Initiatives
• Tax breaks and loans given in China
• Alternative fuel emission attributes, eg: Qatar Airways flies first
commercial passenger flight powered by a fuel on Natural Gas
Liquid Blend
• Smaller airports in India need to be developed
• Alliances
• Cartelization
• Leasing out their aircrafts
Lessons to be learnt
• More concentration on emerging countries like
India, China and Africa
• Product differentiation
• Ethnic Marketing
• Different incentives to promote high end travel in bad
times
IT Sector
Brief Overview of Global IT Sector
• The global software market grew by 6.5% in 2008
to reach a value of $303.8 billion
• In 2013, the global software market is forecast to
have a value of $457 billion, an increase of 50.5%
since 2008.
• General business productivity and home use
applications segment accounts for 22.7% of the
global software market's value.
• Americas accounts for 42.6% of the global
software market's value.
• IBM Corporation, Microsoft Corporation, Oracle
Corporation, SAP AG
Revenues:
($ million)
2007-08
2008-09
Microsoft
60,420
58,437
-3 June
Oracle
22,430
23,252
4 May
SAP
14,957
16,097
8 December
Capegemini
Change (per cent) Year ending
12,689
11,635
-8 December
Computer
Associates
4,277
4,271
0 March
BMC
1,732
1,872
8 March
Brief Overview of Indian IT Sector
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TCS, Infosys, Wipro and IBM
$39.52billion 2009, $32.12billion 2008
5.8% of India’s GDP
Growth rate dipped to 16-17 percent from about
30 percent in 2004-2008
• Expected to grow at 15% annually till 2010-2011
Impact of recession
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Slowdown in US economy
Slump in financial sector
Reduction in IT expenditure
Microsoft reported quarterly loses in April
2009
• Sun Microsystems posted loses of $210 mn
for the quarter ending Mar 29
Possible marketing strategies
• Product
• Price
• People
• Promotion
Lessons to be learnt
• Counter cyclical approach
• Mitigation of risk- Geographic and industry
wise
• Lowering dependence on American market
Retail sector
Slowdown impacts retailers
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Current economic uncertainty
Operating costs remain high
Consumer spending is low
Low sales in metros
Business down by 15-20 %
Declined profit margin
Actions to be taken
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Minimize losses
Retain customers
Exploit potential untapped areas
Tackle real estate pressure
1. Minimize losses
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Reduce Operating costs (e-tailing)
Maintain marketing and advertising budgets
Explore alternate advertising media
Hold on the expansion plans in metros
Retain customers
 Fully integrated VMS
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Total control over strategy
Self sufficient
Direct contact with consumers
Higher retail markups without raising prices
3. Exploit potential untapped areas
 Migrate towards Tier II and Tier III cities
 Rural areas
Tackle real estate problem
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Pressure on real estate
High rentals
Right location for retail
Franchise system
Quick Global presence with lower investments
Lessons to be learnt
 Be selective in expansion plans
 Revenue from rural retailing will grow by 60% till
2012
 Consumer and household products
 Less resistance as compared to metros
 Creating employment to rural people
FMCG Industry
Industry background
• FMCG industry deals with the production,
distribution and marketing of consumer packaged
goods.
• Provides a wide range of consumables and the
absolute profit made on FMCG products is relatively
small but they generally sell in large quantities
• Generally replaced or fully used up over a short
period of days, weeks, or months, and within one year
Major Players in FMCG Sector
Company
Sales ($ bil)
Profit ($ bil)
Nestlé
103.01
16.91
Procter & Gamble
83.68
14.08
Unilever
56.44
7.00
PepsiCo
43.25
5.14
Kraft Foods
42.20
2.90
Coca-Cola
31.94
5.81
Henkel Group
19.68
1.70
Colgate-Palmolive
15.33
1.96
Reckitt Benckiser Group
9.58
1.64
Source: The Global 2000- Forbes.com, 04-08-09
Impact of Recession
Percentage change in sales (October 2008-09 over October 2007-08)
Consumer Non-durables
Change (%)
Chocolate and Sugar Confectionery
2.7
Hair Oil / Ayurvedic Hair Oil
5.5
Tea
11.0
Toothpaste
12.1
Soap
13.5
Beer
16.6
Soft Drinks and Soda
16.9
Coffee
23.5
Biscuits
25.8
Groudnut Oil
27.1
Sugar
30.1
Source: The Economic Times, 18-12-2008
Is the FMCG Industry In
Recession?
• FMCG has shown positive sales regardless of a
slowdown in the Economy
• Some companies in Q3 (Oct-Dec 2008) like HUL,
Godrej Consumer Products, Emami showed decline
in Profits
• Whereas ITC, Dabur, Marico, Colgate-Palmolive,
P&G, Britannia reported y-o-y profit growth
Current Scenario
• The number of rural households using FMCG
products has grown in the past years
• Urban population cutbacks on eating out thus
affecting full service restaurants and café/bars
• Tea has become the cuppa that cheers in the times of
recession
Challenges of FMCG Industry
• To boost the urban consumer demand which
has slowed down due to recession
• Meeting rural demand considering the poor
infrastructure
• Increasing Price sensitivity among consumers
Road to Recovery
• Intensified measures to cut costs,
Eg: HUL: Consolidated R&D
• Focusing more on basic products like soaps,
detergents, packaged foods
• Sustaining the advertising expenditure
HIGH
Brand Investment during recession
(1)
(2)
(3)
(4)
SURVIVAL GAME
DOUBLE OR NOTHING
LOW
Brand Equity
HIGH LOSS POTENTIAL
RECESSION
IS
OPPORTUNITY
LOW
Brand Investment
HIGH
Summary
Research the customer
Maintain marketing spending
Adjust product portfolios
Stress market share
Designed by TheTemplateMart.com
Adjust and don’t cut the prices
Spend smarter, make the buck longer
Instant gratification
Deliver value, create delight
Touch the customer at unexpected moments
Designed by TheTemplateMart.com
Poorva Adkar
as
TV Reporter
Varun Dighe
As
Real Estate Consultant
Prachie Agrawal
As
Aviation Consultant
Viraj Chavan
As
Retail consultant
Kartik Baranga
As
IT consultant
Saidas Naik
As
FMCG consultant
Suppported by
 Tejashree Raje
 Pradnya Patil
 Smita Pavaskar
 Amol Dhiwari
Our Sincere Thanks
To
Mrs. Seema Agrawal
Mrs. Sonal Dabke