Tata Tion : Why Let Go

Brand : Tata Tion
Company : Tata Tea

Brand Analysis Count # 454

Tata Tion is Tata Tea's foray into the non-carbonated beverages market. Tion which was soft launched in 2009 has been launched nationally. The brand was initially launched in TamilNadu and has been in the market for more than a year.

Tion is a fruit based drink which has extracts of tea, ginseng and fruit. The brand is a challenger in the Rs 2500 crore non-carbonated beverage market in India.

Tion is positioned as an energy drink . The brand although fruit flavored is positioned as a tea-based cool drink. The major differentiators for Tion are its ingredients. The brand has tea extracts and Ginseng which makes the brand stand out from the rest. The presence of these ingredient also makes this brand look more healthy compared to other drinks.

Tion has the tagline : Why Let Go. The launch campaign is does not have much to talk about.The brand is essentially giving a message that it has so much in it that you cannot let it go.

Consumers have different take on the taste of Tion. The taste may not be universally appealing and that can restrict this brand to a niche. Tion will appeal to those consumers who are looking for a healthy cool drink and something different from the fruit juices. Compared to the existing fruit drinks, Tion gives certain kind of refreshment thanks to its ingredients.

Tion was initially launched in 400 ml packs priced at Rs 22. But now the brand is available at 200 ml packs priced at Rs 13. The packing is novel and can generate lot of trials.
But the 200ml drink seems to be too little to quench thirst and can create a perception of too little for that price. That was the typical reaction of a consumer after having the drink on a hot day.
Tion is a different product from the rest and along with the endorsement of Tata, the brand can get lot of trials. In the city where I live, Tatas have managed to make the brand available at key locations. The proposed JV with Pepsi will also help the brand get into more store shelves.

The challenge for Tion is to convince the customers to regularly consume the brand. The brand is banking on its ingredients to convince the consumers to patronize it. I feel rather than the ingredients, the brand will hold the key. With the kind of communication strategy, Tion may not be able to build a strong equity. It may need a heavy dose of celebrities especially those in the athletics/sports which can reinforce the message of a healthy energy drink. With global brands like Gatorade, Burn etc upping their ante, Tion should invest more on the brand rather than banking on its ingredients.

What did Friday's report do for the price out look for grains?

What did Friday's USDA report do for the price outlook for the grains?

My opinion is that we really opened some doors to possibly much higher prices in the future; but before one gets too bullish we still need to have a couple things happen.

First off we can't see a bearish report on Oct 11th; perhaps something that explains the bullish report we seen on Friday when the USDA came in well below trade estimates for both corn and wheat stocks.  From what I have read the most ever below a trade estimate.

So I think our first risk will be some weird Oct Supply and Demand report that explains a little what happened in the last quarter.  Perhaps there will be no explanation and in that case we still have some risk.  The risk being yields come in much bigger then expected or demand is cut more then expected.  I could see a little bounce in yields just from human nature of over reacting and the fact that it seems like yields are slightly better then expected; but are they better or worse then what the USDA expected?

If we can get by the Oct 11th USDA hurdle; or next or perhaps day to day hurdle will be the outside markets and global economic picture that can have just a huge influence on what is probably the biggest fundamental factor out there.  Money flow via the funds; we don't need to give them a reason to step aside and put money under a mattress so to speak.

Next and probably what most important is going to be demand.  Stages are set for a very tight starting spot for corn and the wheat feeding the last quarter was just huge and we all know the soybean demand situation that has us just a few short weeks into the current marketing year at nearly 80% of goal.

So if demand isn't curbed, and if it can stay strong and pick up some speed (especially needed for wheat) then the upside potential was really opened back up on Friday.

Where could we go?  Hard to say as I mention above there are some hurdles that need to be jumped first; but if we can get past them the area we could go is that area where demand slips or ECON 101 jumps in and fixes our problem.

As for marketing we need to realize that the market will fix it self and the stuff I am referring too isn't new news; it's old and potentially built into the present price.  So as always use a game plan that leaves you comfortable and spreads out and protects your risk should one of the unknown black swans come up at any time.  Bottom line is I would be playing things from the long side but at the end of the day using risk management that is taking risk off the table at good profitable levels is just what a person is suppose to do; with the present outlook should one be a little slower in making sales.......probably..........but don't do nothing either; be pro-active and manage risk.  Keep in mind that many that buy corn as example can't buy it and make money; don't still have nothing sold or protected should we see producers - end users profit roles reverse.

market comments 10-12-12

Day after the report markets are consolidating and trading a little weaker around 9:00.

Presently corn is off a nickel, KC wheat is down 7, MPLS wheat is off 5, CBOT wheat is off 8, and beans are down a dime.  Outside markets have a weak US Dollar, equities are up with the DOW up 65 points, and crude is up 50 cents.

The story yesterday was the friendly USDA report.  The story today is a little consolidation and demand talk.  Corn demand really is soft and some of the commentary I listen to think that any rally won’t be lead by corn despite yesterdays friendly report.  They think that if we have a rally it will have to be lead by bean demand in the short term; perhaps a South America weather story; or if we can eventually see some demand from the smaller wheat crops around the world it could be lead by wheat.  I tend to agree; I don’ think corn can go super cheap any time soon just based on the tight balance sheet; but I think the market is comfortable too and if corn is going to rally it could be several months and that only happens if we see nice solid profitability from those that buy corn or see some sort of solid demand. 

Bottom line is I think for our markets to take another leg up some demand will be needed or a headline story like weather that the funds can jump on board.  I am not saying I want to get bearish here by any means; but I think we need to realize that if demand doesn’t stay solid and we don’t give funds a reason to buy in but give them a reason or headline to sell that there is some (plenty) of downside risk.

One of the reason for the demand comments this a.m. is because of the once again horrible corn exports.  Under 1 million bushels of corn; which is just horrible.  Beans continue to be good; but not nearly as good as they have been coming in at 18.4 million bushels; well above what we need on a per week basis but less then ½ of what we did a week ago.  Wheat came in at 10.3 also much less than needed and a decline from last week.

Recap from yesterday is corn carryout at 619 million bushels………very bullish; but we still need to see solid demand.  World corn carryout at 117.27 mmt; also very bullish and tight well below trade estimates and probably biggest positive from yesterday.

Bean carryout at 130 million bushels; bullish but an increase from last month and bottom line here is production increased big time; that was met with demand.  The bigger supply says we don’t need to ration off as much demand; so some think the bean number isn’t super bullish but yet bearish just from the 200 million bushel production increase.  World numbers at 57.56 well above last month and above trade estimates. 

Wheat at 654 million bushel carryout; above estimates but below last months.  Says we do have plenty of wheat in US but tighter then past years.  World wheat in line with trade estimates at 173 mmt; but a decrease from last months 176.

Overall a good report; a little disappointing on the wheat and bean price action and even more disappointing today as now around 10 our markets have took another big let down.  The report gives us plenty of upside POTENTIAL but we need solid demand and a reason to get money flow or the funds involved; without demand or money flow most grains are more than fair priced.  Bottom line don’t be afraid to make some sales here and there on bounces as with all the above mentioned unknowns and other black swans practicing good risk management is all one can really do.  Keep in mind there is nothing wrong with making sales that make sense.

Please give us a call if there is anything we can do for you.

Jeremey Frost

Grain Merchandiser

Brand Update : Tata Indica Brand Portfolio

Indica is a brand that is an epitome of persistence. Tata Motors through Indica has demonstrated how to manage product lifecycle effectively. The brand which was launched in 1998 has passed through many hurdles. The brand successfully transcended the initial flaws, bad customer /expert reviews and brickbats to become one of the largest selling cars in the Indian auto industry.

The brand survived and thrived because of the constant focus of Tata Motors to improve the product continuously. More than the product innovation, it was the value proposition that forced customers to choose Indica despite all those nagging troubles. You can see lot of Indica customers cribbing about the bad service and constant trip to the service centers but sticking to the brand because of the value proposition. You cannot get a diesel car with that much space at the price at which Indica is selling ( so far).

Tata Motors has been continuously tweaking the brand over these years sometimes making quantum leap in the quality and refinement of the product. A snapshot of the brand's evolution is given below

1998 - Indica announced
2001 - Indica V2
2004 - Rejuvenated Indica V2
2005- Indica V2 Turbo Diesel
2006- Indica Xeta
2008 - Indica Vista

The brand made a quantum leap in 2008 with the launch of Indica Vista. The entire brand personality changed with the launch of Vista. The product's looks and feel had changed completely and it was a rebirth for Indica.
The changes in the product was not limited to exteriors. Indica began sporting different types of engines from Fiat which gave a new perception of quality to the brand.

At the pricing also, Tata Motors consciously raised the Vista brand to a higher level . The Vista is pricier than the original V2 thus reducing the attractiveness of the brand to the Taxi segment. At a price range of Rs 4 - Rs 5 Lakh, Indica Vista is not a cheap diesel car. It was an upward stretch by the brand.

The Indica Brand portfolio is given below.

















The Indica brand portfolio consists now of three sub-brands V2, Vista and Xeta.

V2 is the most economical of the lot and is the original Indica. This product is retained because there is still huge demand for V2 at that price point. Within the V2 range, there are three variants which includes the Indicab which is for the Taxi segment. Price of this sub-brand ranges from Rs 3,50,000 - Rs 3,95,000

Next sub-brand is the Vista. Vista is the new generation Indica and Tata Motors would like this brand to take over the leadership position from V2 in future. The brand is targeting the discerning Indian consumer with its value proposition and good looks.Vista has lot of variants satisfying the various needs of the customer. The Indica Vista Aura is the premium range that sports many goodies that premium brands claim like ABS, Airbags etc. Vista also comes in Petrol version sporting the Saphire engine. Prices range from Rs 3,90,000 - Rs 4,90,000 ( apprx). Within the Vista range, customers are given lot of engine option including engines from Fiat.

Xeta is the petrol variant of Indica V2. I am not sure about the future of Xeta since the petrol segment is heavily competitive and compared to Maruti and Hyundai, Indica Xeta's value proposition is not that attractive as the diesel option. Prices range from Rs 2,72,000- Rs 3,00,000).

The positioning across the brand portfolio remains the same. All the brands focus on the value proposition. But these sub- brands sports different taglines

Indica V2- More car per car
Indica Vista- Changes Everything ( Surprise Yourself is the new tagline)
Indica Xeta - Makes much more car sense.

Vista recently relaunched itself with Drivetech 4 technology and is now sporting a new tagline Surprise Yourself .

Indica in a way is an example of good marketing practice. The brand continues to evolve and is a pleasure to watch.

Market Statistics : FMCG Market Shares

Today's ( 26/05/10) Economic Times carries interesting market share figurers of FMCG players across various categories in the Indian market. Thought of sharing.

Hindustan Unilever Ltd

April 2009( %) April 2010 ( %)

Soaps 47 43.8

Detergents 37.4 36.8

Shampoo 45.3 46.9

Toothpaste 27.9 25.7

Skincare 46.5 45.4

Tea 22.4 21

Proctor & Gamble

April 2009( %) April 2010 ( %)

Detergents 13.9 14.6

Shampoo 24.1 22.6

Godrej Consumer Products

April 2009( %) April 2010 ( %)

Soaps 9.8 10.5

Dabur

April 2009( %) April 2010 ( %)

Toothpaste 9.6 10.6

Shampoo 6.1 5.5

Chawanprash 59.6 60.9

Nestle

April 2009( %) April 2010 ( %)

Coffee 41.1 41.8

Chocolates 25.2 25.2

Noodles 63.1 62.2

Colgate

April 2009( %) April 2010 ( %)

Toothpaste 49.8 51.2

Toothpowder 43.6 43.5

Tata Tea

April 2009( %) April 2010 ( %)

Tea 21.7 20.2

Overnight Highlights from County Hedging's Tregg Cronin 10-12-12

Outside Markets: Dollar Index down 0.179 at 79.596; NYMEX-WTI up $0.27 at $92.34; Brent Crude down $0.54 at $115.17; Heating Oil down $0.0181 at $3.2393; Livestock markets are firmer on the front-end; Gold down $0.50 at $1768.30; Copper down $0.0190 at $3.7400; The Yen and Aussie Dollar are weaker but the other majors are firmer; Most soft commodities are firmer; S&P’s are up 4.25 at 1432.75, Dow futures are up 33.00 at 13,298.00 and Treasuries are softer.  

Things are mostly quiet across the pond this morning, but the EU should have cause for celebration after they were awarded the Nobel Peace Prize for the solidarity and cooperation during the current EU fiscal crisis.  Whatever it takes I guess.  Also making headlines was JP Morgan beating analyst estimates with $1.40/share during the third quarter vs. $1.02 last year and the $1.24 estimated by analysts.  They cited a surge in the mortgage business and improved capital markets.  Also interesting overnight was Wal-Mart reporting its lay-away program has already brought in $400 million to date, over half of the entire 2011 total.  Better living through lower prices.  Eco data today in the US includes the PPI (+0.8%), PPI-ex energy & food (+0.2%), PPI y/y +1.8% and U of Mich consumer sentiment (78.0).

Not much for rain around overnight with some scattered precip in the Great Lakes, while another system impacted MO/AR/KY with scattered amounts, but localized up to 1.0”.  The next 1-2 days should see rain in the southern plains with the highest concentration in OK at 2.93”.  The precip chain extends all the way to WI, but the precip has shifted East and MN looks to be largely missed now.  E-IA/S-WI could see totals as high as 2.0+”.  The 5-day forecasted precip map is below.  NOAA’s extended look has moderated a bit with more normal temps in the 6-10 to below normal in the 8-14 for the upper-Plains.  Precip should be normal/above, but nobody is holding their breath.  No significant changes to S.A. with below normal precip in the 1-5, but more normal/above in the extended.  

Export sales will be released today at 7:30 CDT due to the Columbus Day Holiday Monday.

Grains are giving back a bit of yesterday’s gains this morning, possibly a sign that corn’s inability to hit limit up, or lock there, meant a straight shot over $8.00 wasn’t needed or likely.  Overnight wires are quick to say soybeans losses overnight are tied to the fact supplies are rising in the US while demand has yet to be fully realized.  I continue to view soybeans with a great deal of fundamental value at current price levels, and apparently the crush plants and exporters of the US tend to agree as evidenced by recent basis moves.  Farmer marketing has slowed appreciably below $16.00 and that is likely to continue.  As noted in yesterday’s recap, lows were likely made in late-Sept/early Oct for the foreseeable future, but that doesn’t mean steady and even range bound trade can’t develop.

Overnight headlines included South Korea’s NOFI canceling a tender to buy 210,000MT of corn and 70,000MT of wheat, citing high prices in an email.  Japan issued a tender for 66,000MT of feed wheat and barley due by October 26^th in an SBS tender.  Saudi Arabia said cereal imports in 12/13 are forecast at 12.8MMT, with wheat imports consisting of 2.3MMT to maintain demand levels for milling and conserve water needs domestically.  Saudi Arabia is expected to produce around 1MMT of wheat this year, and wants to stop growing wheat entirely by 2016.  Argentina’s wheat crop is forecast at 10.12MMT this year, down 28% from last year according to the BA Grains Exchange.  Farmers choosing to plant soybeans and corn as well as a struggle to drain flooded fields contributed.  As noted yesterday, Bloomberg made mention overnight soy crushers in China may increase imports after the government finished selling the cheap reserves and increased auction prices.  One investment bank is calling for a “twin peak” in commodity prices during Q1 of 2013.

Open interest changes yesterday included wheat up 14,030, corn up 50,120, beans up 3,250, meal up 1,370 and soy oil up 1,010 contracts.  The jump in wheat, and especially corn, were quite large.  Certainly fits with the moves we saw yesterday, but large nonetheless.  Interesting to note a lack of O/I jump in beans and meal, considering their moves yesterday, signaling the buying could have been short-covering.  Soy oil calendar spreads hit new lows for the move again last night.  Chinese markets didn’t react much to our news yesterday with their beans up just 1.75c, meal down $3.30, soy oil down 42c, corn up 0.25c and wheat unchanged.  Paris Milling wheat is down 0.76%, Rapeseed down 0.10%, corn down 0.31%, UK feed wheat down 0.50% and Canola is down 1.00%.

Call things weaker to get going today as markets seem to be saying the lows are in, but the highs aren’t in jeopardy just yet.  The focus has shifted back to demand now that the supply concerns are behind us, so a great deal of attention will need to be paid towards the SX/SF, CZ/CH, MWZ/MWH, KWZ/KWH and the WZ/WH spreads as well as interior and export basis levels.  Farmer movement is likely tapers off as harvest wraps up the next 10-14 days.  Then we have to determine where he sells grain again?  Still a lot of piles, however.

Trade as of 7:10

Corn down 3-5

Soy down 15-16

Wheat down 4-7

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

Overnight highlight's from Country Hedging's Tregg Cronin 10-9-12

Outside Markets: Dollar Index up 0.112 at 79.652; NYMEX-WTI up $0.74 at $90.05; Brent Crude up $0.99 at $112.80; Heating Oil up $0.0241 at $3.1684; Cattle firmer, hogs a bit weaker; Gold up $1.70 at $1776.20; Copper up $0.0135 at $3.7405; The Loonie and Aussie Dollar are firmer while the other major currencies are weaker; The softs are all trading better; S&P’s are up 1.25 at 1451.00, Dow futures are up 10.00 at 13,511.00 and Treasuries are mixed/weaker.

Protesting in Athens upon the arrival of German officials, including PM Angela Merkel, seem to be grabbing the most headlines this morning.  Updated forecasts by the IMF also have some unnerved as they said the world economy will grow 3.3% this year, the slowest pace since the 2009 recession, and down from 3.5% in July.  Their 2013 forecast calls for growth of 3.6%, down from 3.9% previously.  The third quarter earning’s season begins today with Alcoa, and today is also the fifth anniversary of the S&P’s 1565.15 record close.  Economic data in Europe overnight included Finland’s economy expanding at 0.3% in July y/y.  In the US we are again light on the economic data front.  The NFIB Small Business Optimism Index came in at 92.8 vs. expectations for 93.5.

Light, scattered precip in the upper-Midwest overnight, but nothing measureable outside of MT.  There are some scattered systems moving across C-ND/S-SD/S-MN this morning.  2-day totals are expected to be rather light with the most accumulation in WI/MI/N-MN to the tune of 0.40”.  The 5-day forecasted precip map shows better chances towards the weekend for IA/MN/WI and then a separate system in OK/N-TX/MO.  Much of these areas look to see 0.50-1.00” amounts.  SD/ND should be mainly dry.  No change to NOAA’s latest 6-15 with above normal temps for the central plains and below normal precip.  The ECB has the potential for some above normal precip, which should keep harvest efforts labored after a wet week last week.  Maps for South America keep Argentina in good shape and the majority of Brazil.  Only trouble spot is far northern-Brazil, but it is early.  See the Vegetative Health Index vs. last year below.  Western Australia should be dry the next 10-days.  In the East rains of 0.20-0.60” should fall later tomorrow and into Thursday.

Grains are showing a slight bounce overnight, clawing back some of what we lost to begin the week as the choppy trade continues.  Encouragingly, November soybeans did take out Friday’s high at 15.69 ½, turning the short-term trend up.  Bulls would like to see trade above $16.13 ¾ from September 28^th before getting too overly excited, however.  There wasn’t a great deal of overnight news, so expect more of the same until Thursday.  Last night’s FOB  comparative still has South American corn well under US corn as vessels unload in Wilmington full of Brazilian maize.  FOB offers for Brazilian and Argy maize were reported at $264.56-268.49/MT vs. the US Gulf at $318.88 and PNW at $329.12.  The freight spread to get it from Brazil to the feedlot in NC is roughly $35-40/MT for reference sake.

Overnight headlines included China setting import quotas for 2013 which were unchanged for major grain’s and cotton and have been unchanged since 2004.  Wheat imports are limited to 9.636MMT, corn at 7.2MMT, rice at 5.32MMT and cotton at 894,000MT.  State-owned companies are entitled to 90% of the wheat quota and 50% of the corn quota.  In other words, the majority of the grain is destined for state-reserves.  Russia’s cereal stocks at the end of the marketing year on June 30 are forecast at 6.9MMT vs. 12.4MMT this past year, but officials claim the country has enough supply to meet demand.  Price usually takes care of that for you.  Overnight, South Korea’s Feed Leaders Committee bought 70,000MT of S.A. corn at $314.30/MT C&F for April arrival from CJ International.  Japan will be tendering for 152,647MT of milling wheat this week from the US, Canada and Australia.  Conab also released 12/13 production forecasts this AM, pegging the Brazilian soybean crop at 80.1-82.8MMT, up 21-25% y/y, and the corn at 71.9-73.2MMT, up around 7%.

Open interest changes yesterday included corn down 3,160, wheat up 2,490, beans down 800, meal down 820 and soy oil up 2,100.  Soy oil is up 18,823 contracts, or 6.4%, since September 28^th while prices have declined 0.88c/lb.  The lack of open interest change yesterday despite decent moves on the board suggest more ownership changing hands from the specs to the commercials as evidenced on the recent COT report.  Chinese markets were mostly lower again with beans down 13.75c, meal down $0.70, soyoil up 45c, corn down 5.75c and wheat up 5.25c.  Malaysian Palm Oil was up 70 at 2,438 ringgit, Paris Milling Wheat is up 0.58%, Rapeseed up 0.62%, Corn up 0.95%, UK feed wheat up 0.42% and Canola is up 0.72% today and 6.2% since the lows last Wednesday.

Call things a bit better today as we bounce from yesterday’s sell off, but the trade is still concerned about a shocking supply increase on soybeans and corn Thursday.  The trade seems convinced world wheat production is going to be cut, just to what extent.  Keep in mind corn is still being rationed on the export front, and ethanol production has yet to come back online in a big way.  Soybean demand remains robust and should be reflected as so Thursday regardless of how large the national soybean yield is.

Trade as of 7:15

Corn up 2-3

Soy up 16-17

Wheat up 6-7

Tregg Cronin
Market Analyst
800-328-6530
651-355-6538
651-355-3723 fax
www.countryhedging.com
Country Hedging, Inc.
The Right Decisions for the Right Reasons

morning comments 10-9-12

Markets are trading firmer on Tuesday Oct 9^th.

Around 8:15 we have KC wheat up 7-8 cents, MPLS wheat up 7, CBOT wheat up 9, beans are up 14, and corn is up 4-5 cents.  Outside markets have a firmer US dollar, equity futures up slightly, and crude is up 90 cents a barrel.

Not lots of new news lately; more position squaring ahead of the USDA Supply and Demand report which is out Thursday morning.  Yesterday’s holiday delayed export shipments and the crop condition progress reports until today.

The other news out there seems to be more of the same; firming wheat basis, bigger than expected yields (mixed by some but bigger than expected is leading when it comes to headlines along with more and bigger grain piles then expected), fund still holding rather big positions in corn and beans, concerns over world wheat situation as crops get smaller in Australia.

As for the report estimates for corn yield are 122.8 which is basically unchanged from USDA.  I have seen production number all over the board with some thinking less harvested acres and others thinking bigger yields.  But overall not much expected change for corn production; the last overall estimate I seen was 10.6 billion bushels versus the 10.727 that the USDA has in Sept. 

Probably as big if not bigger than production will be where ending stocks are projected and what the USDA does with demand; exports have been lacking yet the stocks report at the end of Sept showed a smaller starting spot than what was expected; average estimate for ending stocks is 656 million bushels for the 2012-2013 marketing year versus 733 in Sept.  Keep in mind that the USDA was already projecting over a billion bushel of demand cut from last year. 

As for beans production ideas are 2.76 billion bushels versus the USDA at 2.634; with yields at 36.9 versus 35.3 last month.  Lots of debate of yield here but some estimates are closer to 40 bushels per acre.  Once again as big as production will be were the USDA pegs carryout at and what they do with demand.  We are well ahead of the needed export pace so there is potential that we see any increases in production are offset by demand increases.  Carryout estimates are at 135 versus 115 last month; I should mention that the September stocks report showed more than expected as well; which should lead to a bigger starting spot.

Wheat is pegged at 627 million bushels versus last month’s 698 million bushel carryout.  We had a bullish stocks report that indicates good feed demand; while production didn’t have major changes.  Lots of eye’s will be on the world numbers here and spillover to our exports.  We are currently running behind the needed exports yet we have our competitors getting less available to export.  Year over year world wheat numbers are getting friendly; but enough for another leg up?  In my opinion not until we actually see some of that demand hit our markets.

Going into the report we have to realize that even though there is plenty of upside potential should things go good there is also plenty of risk.  Who know what type of curve ball or change up the USDA has up their sleeve this time? 

Bottom line with the extreme volatility we have seen the past several months and all of the unknown in our markets as well as the world economies make sure you are comfortable no matter what the USDA says come Thursday.  For those that where pro-active making sales early it might mean catching up a little bit and working on getting your average a little higher; for others it might be doing nothing as everyone situation is different; bottom line is heading into a report that could move us tremendously either direction one needs to be a little pro-active when it comes to risk management.  One can be bullish and have tons of great reasons to be bullish but the market is the market and it tends to follow what the USDA says right or wrong.  If you need help with a marketing plan or want to look at some strategies to help protect one heading into the report please give us a call.

The birdseed market is still showing little interest in sunflowers; but the good news is the crush market should put a min price we see as right now those two markets are near par.  With beans firming and looking like they have maybe made a seasonal low perhaps sunflowers are close to one also.  The birdseed market really needs to have a good wet snowy winter along with a good economies if we want to see a huge rally later.  The thing that is a little scary is way too many are putting all there sunflowers in the bins thinking that 30-40 cent sunflowers is a given; we can’t get things too out of balance or we will simply have some many sellers on a small bounce that a big bounce just might not be in the cards.  One positive I see is the flowers flowing to the crush and the birdseed end users not buying at what could be the seasonal low; their lack of coverage gives huge potential; but the huge amount of unsold product with bigger yields is also going to be a risk.  At the end of the day it could really end up being a weather market; good wet weather that leads to good demand we go higher; otherwise perhaps we see long tail effect?

Bottom line for sunflowers is risk management is recommended; many didn’t sell many the past 2-3 months because of the unknown in yield; I don’t really want to make tons of sales at what could be the bottom yet if one isn’t any were sold near the percentage they should be there is still nothing wrong with making a profitable sale.

Please give us a call if there is anything we can do for you.

Thanks

Marketing Strategy :Do You Know Your Customers ?

What Marketers Should Know About Customers

Originally published here in Adclubbombay.com

The dictum “Understand your consumers “has often become a cliché. It is not a new idea but it is the most forgotten idea. When sales are growing at tremendous pace and when the production is struggling to meet the demand from the market, consumer is pushed to the backyard. During periods of economic boom companies focus is on expansion, diversification, new offices, mergers and acquisitions. But then suddenly out of the blue, everything comes to a grinding halt. Growth stopped, inventory piled up and consumers stopped crowding the stores. Now is the time to bring back the consumer to the centre of your business strategy.

It is said that the seeds of disaster is sowed during the time of growth and optimism. Take the case of realty sector. This is the sector which was most affected by the current slowdown. When the industry was growing at a scorching pace, every one forgot the consumer. Prices were skyrocketing not because of real consumer demand but because of speculation. Many players cared little to understand whether the consumer is actually buying or is it a mere speculation that is driving the price. When the realisation came that real consumers are not buying, everything came to a standstill.

This current slowdown in the economy is a lesson for all marketers to go back to common sense. The common sense that consumer is the centre of business. The purpose of business is to create consumers. And to do that one should know the consumers.

Who is your customer?

Although this question sounds too basic and simplistic, it is surprising to know that many businesses do not have a basic definition of their customers. The era of mass marketing where the marketer treats the entire market as a homogeneous group is over. The market has moved drastically into different segments.

Consumer’s knowledge about offerings has also changed. This new set of empowered knowledgeable consumer has warranted that companies be more empathetic to the needs and wants of the consumers.

Marketers should have a thorough understanding about the consumer. The first step is to clearly define the consumer. The definition of consumer should be exhaustive and not be limited to a mere demographic picture. The mental, physical, emotional and social dimension of the consumer should be clearly stated by the marketer.

What does the consumer need?

Once the customer definition is clear, the next task is to map the needs of the consumer. This is not a static process because consumer needs and priorities keep changing. Hence there has to be a continuous mechanism through which these changes are absorbed into the learning systems of the company. In an advertising agency perspective, increasingly companies are cutting their media expenses. That does not mean that the need for promotions has died. When advertisers look for new cheaper methods for promotions, agencies should be in a position to help them. This can happen only if the agencies have a better understanding of the consumer’s changing needs.

Understand Customer’s customer

In the remarkable book “What the customer wants you to know “, management guru Ram Charan says “The most important thing to understand about your customer is her customers”.

The customer’s customer principle has wide application in business marketing. For an advertising agency, the customer’s customer is the consumer. For a business firm, it will be the customer of the client. If a marketer wants to clearly understand the customer needs, he has to first identify the customer’s customer and customer’s competitor. While many consumer firms clearly map their customers and competitors, business markets fail to understand the significance of this understanding. Because if the customer’s customer stops buying products, then your customer will stop buying from you.

From market driven to market-driving

Consumers will not be able to tell you exactly what they want. But a deep understanding about their life and their behaviour will give valuable inputs about new product ideas. Market –driving strategy is the strategy where the company shapes the consumer needs and wants through break through products and technologies. Hence it is important for marketers to go beyond what the consumer is saying.

Market Driven strategies are the conventional reactive strategies. Companies react to the changing marketing conditions using various marketing mix elements. The focus is on satisfying the obvious stated needs of the consumers. Market Driving strategies are aimed at creating original products and shaping consumer needs. The needs may be hidden and marketers should have the guts to tap those hidden needs.

Steve Jobs is quoted to have said that he does not believe in market research. He famously said that “We just want to make great products “. Here the focus is more on shaping the consumer needs and wants rather than reacting to existing needs. In a market driving strategy, the focus is to create new customers rather than satisfying existing customers. But for that one has to understand the hidden and latent needs of the consumers.

Constant consumer conversation and engagement will help marketers to understand those needs and find means to satisfy those needs profitably.

Brand Update : Gems Does a Kinder Joy

Gems recently launched a new variant Gems Surprise. The product is a new pack of Gems that comes with a surprise toy inside. The new variant is in the shape of a ball attractively packaged. Right now Gems Surprise will contain Ben 10 toys. The new variant is priced at Rs 30.

Gems Surprise is inspired ( copy ?) by the Kinder Surprise . Kinder Surprise has met with success in the Indian market. I do not have the figures but as a consumer, I have been a regular buyer of this product so are my friends.
The consumer acceptance of the Kinder Joy may have been the reason for the launch of Gems Surprise.

Kinder Surprise was never a competition for Gems. Kinder Surprise has created different niche where Cadbury does not have a presence. Cadbury does not want any product to rule any part of the chocolate market that easily. Through Gems Surprise, Cadbury is addressing the industry competition.

There is no product in Cadbury's brand portfolio that is similar to Kinder Surprise. Gems was chosen because it is a unique brand with lot of equity among the consumers. The form factor of Gems also made the brand worthy of being a competitor for Kinder Surprise.

Gems Surprise is going to create holes in the Parent's pockets. Gems was always affordable and right product to buy for the Kids. Gems Surprise priced at Rs 30 is an upward stretch for the brand.
The question is whether the consumer will buy Gems for Rs 30 because there is a gift free with it ? For all those customers who has been buying SKUs of Gems for Rs 5 and Rs 10 may find it difficult to justify the purchase of Gem's Surprise at Rs 30.

What I understand is that the product ( chocolate ) will be the same in Gems Surprise. What you pay more is for the toy.In the case of Kinder Surprise, consumers did not have a benchmark about the price so Rs 30 for Kinder Joy was accepted by the consumer.

Gems will definitely get lot of consumer trials and purchases .Whether the purchases will be sustainable will depend a lot on the variety of the gifts that is inside the pack. Kinder Surprise is the master in this game. Will Gems beat the master will be a fun ( expensive though) to watch.

Related Brand
Kinder Surprise

Marketing Strategy : How to Engage Customers to Create Brand Equity

Engage Customers to Create Brand Equity

Originally Published here at adclubbombay.com

Engagement means creating involvement. Customer engagement means the effort taken by the brand to develop an involvement between customers and the brand beyond regular purchase and use.

Traditional marketing practices seldom encourage active involvement of customers. The marketers often are satisfied with the regular purchase of the product by the customers and the level of engagement with the customers is limited to handling queries, handling complaints and loyalty programs.

The new economy has necessitated marketers to think beyond the typical purchase/sales orientation to a more pro-active customer engagement orientation. The web 2.0 and the rising popularity of social media have created a new cost effective platform for marketers to build and maintain customer engagement programs.

Take the example of ZooZoo- the characters created by Vodafone to promote its Value Added Services. With in a short span of time, ZooZoo was all over the social media and the Facebook fan count reached 2, 75000 at the time this article is being written. Using ZooZoo, Vodafone has created a new way of connecting and engaging with the target audience.

Create a culture of engagement.

It is not easy to create effective customer engagement. The first and foremost requirement for effective customer engagement is to orient the company culture towards a customer orientation. Customers can be demanding and more so when the company takes an initiative to reach out. Hence marketers should venture into creating active engagement only after the entire firm develops an orientation towards customers.

Make it easier for customers to connect.

An important requisite for active customer engagement is to make the process easier for consumers to reach the company. Active consumer engagement cannot work effectively in an outsourced environment. Hence the marketing department should be able to create and sustain a robust mechanism to respond to the consumers.

The web has made it easier for marketers to keep tab on consumers’ demands. But in a country like India, one should account for millions of consumers who cannot access such a channel. While creating such engagement channels, the brand has to create a robust process to ensure that it responds to the consumer immediately. An unanswered query or a complaint can create negativity and can be detrimental to the brand’s equity.

Have a vision

Brand managers should have a clear vision about the outcome and purpose of customer engagement. The critical question is “what is the expected outcome of this engagement?”

The outcomes of a customer engagement program need not be based on purchase or sales. There can be qualitative objectives also for such an engagement. How ever brands will reap the benefits of loyalty and repeat purchases from the consumers who are actively engaged with it.

When the consumers are actively engaged with the brand, one need not search too far for new product ideas. Highly involved consumers will be a vital information source for obtaining feedback and product improvement ideas.

Move to a higher ladder.

Once the platform is identified and target audience chosen, the brand should have something to say to the consumer. The brand can engage the customer in many ways. Typically during engagement, brands will assume the role of an expert offering advice to consumers on problems. The task for the marketer is to find the areas in which the brand should engage with its consumers. For example, through Gang of Girls website, Sunsilk is providing tips and advice on hair care which is the subject where the brand is an expert. The advantage of such an engagement is that the brand has more control over the conversation.

While identifying the area of engagement, the brand should be able to ladder up to a more abstract need rather than restricting itself into a category need. This will appeal to a larger audience and thus take the brand’s reach farther. Tata Tea created a highly successful engagement based on the theme “ Jagore “ inspiring many youths to register themselves as voters in the recent general elections. But the challenge for the brand is to take this engagement further since the elections are over.

Another way of engagement is where the brand provides a platform through which the consumers engage with each other. The brand acts as a facilitator rather than the expert. Consumer driven brand communities are the results of such an engagement. These engagements are more powerful than the brand driven engagements because the underlying cause for such engagements arises out of passion rather than profit.

It is all about action

Successful engagement arises out of action. Brands venturing into creating customer engagement must devise ways to create and maintain a higher energy level among the consumers. The engagement plan should have activities, contests, debates, meet ups, webinars, sharing, exchanges, tweets etc to keep up the energy level. This means that there is going to be a substantial investment on the part of the brand to keep the momentum going. The investment is more on the human side rather than monetary investment. Technology has enabled companies to keep these engagement costs minimal. But there has to be a dedicated team who will keep the activity levels high so that there is never a dull moment.

Marketing Strategy : Four Pillars Of Customer Focus

The Four Pillars of Customer Focus

Originally Published Here at Adclubbombay.com

Customer focus is one of the most used jargons in the marketing lexicon. Despite being accepted as an important strategy, many firms have not yet been capable of delivering exceptional customer service and focus in their operations.

Customer focus is a choice and the choice has to be made at the highest management level. Being customer focused is an expensive proposition. It is resource intensive and needs hands-on management from senior leadership of the company. More than money, customer focused strategy depend on human resource. The investment needed for maintaining customer focus is the time and dedication of all management levels towards the goal of service excellence. Most of the firms which aspire to be customer focused fail because of the lack of involvement of top management in customer-related activities.

Most companies invest their resources in creating processes and automating customer touch points. After this investment, the management leaves the customer management to these insensitive machines and algorithms. The entire process will be a waste unless there is a human element in it.

For any organisation who aspire to be customer-centric should start by building a strong foundation .Without a strong foundation, customer centric activities will lack in their effectiveness.

Customer knowledge, Culture, Human Resources and Conflict resolution are the four pillars of a customer focused organisational strategy.

Customer Knowledge

Customer profiling is the first step towards building customer focus. This is one of the most difficult phases in the quest towards customer focus. The depth of customer focus in a company is directly proportional to the depth of the customer information collected. The effectiveness of all customer-related promotions will depend on the extent to which the collected information is being used at the customer touch points.

For example in a business to business environment, firms are sitting on a huge pile of customer information. The information from the past interactions with the customer, the information from the past sales data are all available with the company. How well this information is available to the sales force will determine the effectiveness of any customer related campaign run by the company. While most firms collect customer information, this information are seldom updated or distributed to the concerned personnel.

Another important task for the managers is to identify the customer group that the organisation should focus on. It is near impossible for organisations to satisfy every customer. Some customers may be unprofitable for the company to serve. The management should be able to take informed decision on the customer groups which it will have to focus on. Once these groups are identified, firms must orient its organisation to deliver exceptional service to these customers.

Customer-Centric Organisational Culture

The second most important pillar of customer focused organisational strategy is the culture. Customer-centric organisational culture is where the entire organization is tuned to deliver exceptional service to the customer. Customers become the centre around which the organization is built.

The Chief Executive becomes the Chief Customer Officer. Every process and actions of the firm is prepared with customer in mind. Although this proposition may sound theoretical, companies like Marriott, P&G and FedEx have built their business around a customer focused strategy.

Human Resource

People form the third pillar of a customer focused organisation. The employees are the vital interface between the customer and the company. Customer focused organisations invest huge resources in developing a team of highly trained customer- care executives.

It is critical for organisation to understand the importance of front-line employees who deal directly with the customers. These employees represent the face of the organisation. There has to be clear role clarity for employees who interact with the customers. Customers always prefer a single contact point with the selling organisations. Customer focused organisations thrive because their entire organisation is created to optimize customer touch points. The customer –care executives are given enough authority and responsibilities to deal with customer requirements. Cases which are beyond their authority are escalated to higher levels.

Conflict Resolution.

Handling customer conflicts is the litmus test of the effectiveness of any customer-centric organisation. When there are no conflicts or complaints, customer management is not a daunting task.

The real depth of customer focus is revealed when there is a complaint or a conflict. As customers, we all have faced situations where our complaints go unresolved. A recent survey conducted on mobile phone users revealed that unresolved complaint was one of the major reasons for customer churning in Post-paid customer segment.

Customer focused organisations have a robust complaint handling mechanism backed by strong process and also sufficient budgets. These organisations have a system where complaints or conflicts are addressed within a stipulated time frame. The unresolved complaints are escalated to higher levels of management and necessary actions are taken at each levels of management for proper remedial actions.