Chennai

Hot Wheels: The Magic School Bus

Since our learning expedition touched down in Chennai a couple of weeks ago, our primary source of transportation had been the minibus. It isn’t your average minibus. It is a rather spacious 23 seater. The minibus has a milky white paint job and even comes with beige curtains to shield its passengers from the blistering Indian sun. It has both a driver and his sidekick. This sidekick is responsible for opening/closing the door, dealing with security guards at our destinations, and making sure that all passengers are comfortable (this can also include distributing bottled water).

We relied extensively on the minibus to get us from point A to point B in Chennai, Agra, and Delhi and rarely made use of taxis, public buses, or rickshaws. Not only was it a comfortable and reliable form of transportation, but we were also able to take in some of the unique sights and sounds of India. Fortunately, we had Prasad and Mahesh (I-India educational trip organizers) in addition to Professor Sundaram to answer any questions that might have arisen as we peeked out the window.

Sights: As we ventured from one point to another, we endured large amounts of traffic on the road. Motorcycles with an entire family on it, large crowded buses, and midsize cars were all vying for a place on the narrow road. It would not be unusual for some 2-3 cars and multiple motorcycles to share a two lane road. Every now and then, you would also see a large cow roaming the side of the road or even simply ‘chilling’ in the divider between opposing sides of traffic. You would then pause and ask yourself, “How on Earth did these cows not get hit by any moving vehicle?” We quickly learned that cows are sacred in India and have a special role in the Hindu mythologies. Consequently, no one would dare kill a cow even if accidental. Could this be where the expression “holy cow” comes from?

Sounds: There was one pervasive sound that was continuously heard on the roads: the honking! And when I mean continuous, I really do mean non-stop. It seemed as though drivers would literally drive with one hand on the car horn. Given how densely populated the roads were and the amount of congestion, I guess it is only natural that you would continuously honk. Moreover, it was not unusual for many of us to go back to the hotel and continue to hear the honking!

Hot Wheels, our primary form of transportation

Hot Wheels, our primary form of transportation

The comfortable interior of our minibus

The comfortable interior of our minibus

A little traffic never really hurt anyone

A little traffic never really hurt anyone

Categories: Chennai, Delhi, Impressions of India | 2 Comments

Discussing Mobile Phones with Vodafone India

Our final day in Chennai started with a morning meeting with Kumar Ramanathan, the former Chief Marketing Officer of Vodafone India who now heads Vodafone’s Asian Data Analytics Group.  Mr. Ramanathan’s description of Vodafone’s strategy and its level of sophistication were quite remarkable and led to an interactive conversation of business issues and strategies resulting in us gaining a greater appreciation for the opportunities and challenges of doing business in India.  At a very high level, the nature of India’s mobile telecommunications market is drastically different to America in terms of industry dynamics, technology and marketing; but nevertheless, Vodafone has applied many skills from our MBA toolkit to successfully tackle the environment.

Industry Dynamics:   The most unique aspect of the Indian telecom market is the size and nature of its subscriber base.  Of India’s 900 million mobile subscribers (The 2nd largest in the world), 94% are pre-paid customers meaning they transfer money to an account and draw upon this balance based on usage.  The average Indian consumer spends just $2 USD per month on mobile phones (compared to ~$40 in the US) but yet recharges their balance approximately 10 times a month at one of India’s 4 million retail mobile outlets, of which Vodafone has a presence at 1.3 million outlets. The high rebalance rate has resulted in a price war as well as a high consumer churn rate as consumers simply seek the cheapest plan.  This has led to a fragmented carrier base as 10-15 operators having a “meaningful presence” in different parts of the country with no carrier achieving greater than 30% market share, resulting in one of the most competitive telecom markets in the world.

Technology:  As our group has observed quite often, India’s infrastructure is vastly underdeveloped and the same can be said for its telecom industry.  Due to both the political environment and feasibility challenges, India’s mobile network is deployed through satellites as opposed to laying cables in the ground.  With the highly probative capital costs associated with deploying satellites and with average revenue per user at just $2, launching new technologies is highly unprofitable and the country remains largely penetrated with just 2G wireless network technology (voice and texting, no internet).

Marketing:  Since telecom services are largely a commodity as operators are unable to differentiate on technology and services, Vodafone has focused its efforts on marketing.  With the bottom 55% of subscribers generating just 5% of Vodafone India’s revenue, Mr. Ramanathan’s marketing strategy focused primarily on high value customers through a data intensive approach.  Mr. Ramanathan and his team have stratified their high value consumers base through 180 different usage characteristics in order to offer customized usage plans.  The goal of such an approach is to profitably increase the rate of usage for existing high value customers as well as to gain customers away from other carriers.  Vodafone’s results have been quite impressive.

Thoughts on the Future:  Without the prevalence of credit cards, telecom operators are the single largest source of consumer transaction information.  This information base can be leveraged not just through customized data plans, but outside the telecom industry including delivering financial services such as banking.  This approach has been successful in other developing countries, most notably in Kenya by telecom operator Safaricom (A Vodafone subsidiary).

Additionally, it is not hard to imagine a consolidation wave amongst operators similar to those previously observed in developed countries.  Consolidation would allow operators to scale both new technology costs across a larger consumer base and combine the operators’ large retail channels.  Vodafone India has been acquisitive in the past and will likely be a leader in the future.

Overall, the visit was tremendously rich as Mr. Ramanathan’s business insights and marketing strategy were quite impressive and well-articulated.  While the problems faced by India’s wireless telecom operators are quite different from operators in America and the rest of the developed approach, it was both interesting and refreshing to hear how Vodafone has applied many of the same strategies and business acumen which we have studied at Tuck to their business in India.

Categories: Chennai, Company Visits | 1 Comment

Hello! From Hello 106.4 FM in Chennai!

One of our final activities in Chennai was a visit with Ramesh, Executive Vice President and Head of Content at a radio station in Chennai called Hello 106.4 FM.  Ramesh focused his discussion on the evolution of media in India and how media is addresses the issue of targeting the extremely diverse population of the country.  In India there are 500+ languages that are recorded and spoken with 15-20 different dialects.  The challenge for Ramesh and HelloFM is to attract these highly diverse listeners and advertisers to HelloFM and keep them tuned in.  It was wonderful to see the passion Ramesh has for the station and the power radio has to reflect emotions and feelings of individuals of many diverse backgrounds.

The most popular and common media source in India is newspapers.  Currently, there are 80,000 different newspapers in India, the most of any country in the world.  100 million people read the newspaper per day in India.  TV is also popular and there are over 800 TV stations available to Indian viewers.  Radio stations began in India about 70-80 years ago.  In the early days of radio, it was exclusively run and controlled by the government.  The government felt it was too difficult to monitor radio stations and the content can be consumed by any citizen whereas newspapers are geared only towards the25% of Indian citizens who are literate.

Private radio came into existence in India only ten years ago.  Phase one of private radio in India consisted of 35 stations.  Ramesh states that today India is in Phase two of private radio and there are now over 400 stations across the country.  In Chennai, there are nine competing stations and HelloFM holds one of the top spots in terms of popularity.  Most Indians listen to radio over their mobile phones.

The most significant detriment to private Indian radio is that the government continues to outlaw the reporting of news and current events.  However, visitors and callers are allowed to comment on their views and hold a discussion about news and current events.

As for the content, Ramesh focuses on “reflecting the mood-map of the city”.  This means that the content on the air minute-by-minute matches what goes on in the city minute-by-minute.  For example, in the morning many people pray and perform spiritual rituals so the station plays Tamil spiritual songs and in the late morning, the station targets working class executives by playing peppy fast-paced music to prepare them for the busy day ahead.

It will be interesting to follow the media industry in India and how it evolves as digital media becomes more prevalent.  If you are in Chennai, please tune in to Hello 106.4FM!!

Categories: Chennai, Company Visits | 1 Comment

TI CYCLES | From Cycles to Cycling

From fashion we moved on to bicycles, investigating the journey from cycles to cycling at TI Cycles of India (a division of Tube Investments of India, Ltd.). 

Ironically, our trip to TI’s headquarters was the bumpiest ride in Chennai.  Pavement gave way to mud roads, where pot holes the size of small cars dotted the street filled with muddy water from Monday evening’s monsoon.  Our bus (“Wheels”) felt more like a roller coaster than a vehicle.  Not exactly the place I’d like to venture with my road bike.  Once on the grounds of TI, the scene was completely different.  There were groves of trees, orderly parking for bicycles, and no trash.  After a delicious home cooked lunch, we were escorted to a presentation with Mr. Rajesh Mani, GM of Marketing and Retail.  After his presentation, we toured two factories – one producing bikes for export to France and the other domestic cycles. 

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A bumpy road for a bike ride.

My observations fell into three categories.

1. Structured marketing and segmentation efforts

Having trained at Coca-Cola before TI, Rajesh spoke in marketing language familiar to all of us from our core class last Winter.  TI has consistently outperformed market growth across all categories of bicycles by using smart marketing tactics: market and customer segmentation, astute distribution management, and product innovation. 

TI made a conscious choice to focus on the middle to upper end of the bicycle market, with units generally priced >$100.  TI markets their own brands (Hercules and BSA) as well as is the exclusive distributor in India of high end brands like Cannondale and Schwinn.  Retail outlets range from exclusive stores in larger urban areas to third party distributors who help cover rural towns.  They have even started a “bike café” where cyclists can meet for brunch or coffee after an early morning ride. 

To get customers into stores and thinking of TI, the past few years included a campaign to move from “cycles to cycling” – including bike rides, partnerships with cricket players, and granting bicycles to top students.   And finally, TI is building on its heritage of innovation – and this year launched the Montra line, the first carbon fiber bikes designed and manufactured in India for Indian consumers.  Priced at ~$250+, these bikes are a first step toward the higher end of the bicycle market.

2. Not your average factory tour

Having a background in financial services, I have been keen on any opportunity to walk around a factory or warehouse during my time at Tuck.  But nothing I have seen yet can compare to the access we were granted at TI.  Unfortunately, we were not allowed to bring cameras but it was a true glimpse into manufacturing outside the developed world.  Guided by members of the Operations team, we first witnessed the construction of bikes for export to France before seeing the assembly of bikes for domestic consumption.   We saw women lacing spokes into prefabricated rims and workers placing stickers on competed bikes by hand.  But the really interesting part was deep in the first factory. Since TI fabricates the frames on site for the exports and higher end bikes, we witnessed welding mere inches from where we were walking, workers cutting tubes to size spraying shavings onto our path, and men hand painting frames. 

We were all struck by the mixture of automation and manual labor, though it appeared that TI was moving toward more automation as labor costs increase.   We were able to see new automated welding machines on the floor as a sign of what is to come.

3. Women in the workplace

From our conversations to date, and observations – the formal workforce in India is still largely dominated by men.  However, it was striking to see the large number of women employed at TI.  Speaking with Rajesh after our tour, we learned that this is not an accident.  A few years ago, the company decided to set a goal of hiring 30% women in all roles – from marketing to the factory floor. 

This corporate diversity initiative yielded unexpected results – they have seen a reduction in turnover and absenteeism and an increase in productivity from these new workers.  Especially in skilled factory roles, like welding, this drastically reduces costs since it is so expensive to train a new worker in the craft. 

I asked about how these women are able to manage child care, since in India women are still predominately the primary caregivers and often do not work outside the home after marriage.  Rajesh informed us that TI provides child care and school facilities on campus to help their workers manage family responsibilities without threatening attendance.

TI certainly has challenges ahead, in particular working to encourage infrastructure development (a common theme in our company visits).  But we all walked away with a new appreciation for how targeted product development and creative marketing campaigns can drive growth.

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Tuck India LE 2012 visiting TI Cycles

Categories: Chennai, Company Visits | 2 Comments

Food and Dance in Chennai

Food

As my classmates have described, the past few days have been a whirlwind tour of Chennai. Between the sightseeing, company visits and overcoming jet lag, we have been extremely busy, yet I get the sense that we have barely scratched the surface. One thing that we have had a chance to enjoy in abundance is the delicious South Indian cuisine. At every meal, our hosts are extremely gracious and there are new sumptuous dishes to sample- a real food lover’s paradise! Each day starts with an extravagant buffet at our hotel. Of course, since they cater to business travelers, you can find all of your western favorites like eggs and bacon, pancakes. But they also serve a host of Indian delicacies from dosas to stuffed pratha, paruppu vada, potato bajji, lemon rice and curry with mint chutney, all of which are a colorful balance of flavors and spiciness.

Breakfast in Chennai

Breakfast in Chennai

At every restaurant we’ve been too, the thing I notice the most is the freshness of those flavors. Being this much closer to the source for the spices brings nuance and power to even the most mundane dishes found in any Indian restaurant in America, like chicken tikka masala and palak paneer. My personal favorite thing I’ve had so far is the vegetarian tali from lunch the on the first day of the learning expedition. A tali is a common offering that comes with a number of different dishes in small bowls that line the edge of your plate and can focus on cuisine from any region of India. You get a generous helping of rice in the middle of your plate to complement the various curries, pickled vegetables and chutneys.

Dance

While we have spent a lot of time eating, we have also had a chance to gain some insight into other aspects of Indian culture. Yesterday we visited Kalakshetra, a school for traditional dance and music. Kalakshetra literally translates to a holy place of arts and was founded to revive the cultural traditions that were slowly fading under the British rule. Unfortunately, while we arrived too late to catch the dance rehearsal for the school’s upcoming performance, we were given a tour of the grounds and explanation of their education philosophy and were able to peek into some of the classroom cottages as students finished up their morning dance, drumming and singing lessons. We were asked not to take any photos on the peaceful, serene grounds, which were a strong contrast to the crowded, noisy, bustling streets of Chennai. While we stood under a beautiful old banyan tree, one of the masters explained Kalakshetra’s holistic teaching philosophy of providing students with instruction in every facet of their art. Dancers don’t just take dance class, but are taught music and singing to understand the harmony of their performance and language classes to understand the words of the songs they will dance to. All students also participate in daily yoga, chanting and meditation sessions to provide them with the strong mind and strong body they need to be at the top of their craft. The students range in age from 18 to 30 and many live on the campus while at the prestigious school.

Categories: Chennai, Cuisine | 2 Comments

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