Case study: Reliance Jio and Facebook deal: A death bell to competitors?

 

Reliance Jio  and Facebook deal: A death bell to competitors? 

 On April 17 2020, Reliance head office is in a celebration mood when Mr. Mukesh Ambani announced the plan of Facebook buying 9.96% largest minority stake in Jio for Rs 43, s74 crores. This was the largest investment in the It sector in India. The entire deal is cash based. 

Jio Platforms

Jio platforms is the part of Indian conglomerate reliance industry. It started offering services in 2019. During this time $15 billion debt of Jio Platform to the reliance industry to have control over the Jio Platform.  In march 2020 Silver like and Mubadala invested money in the jio platforms. In june 2020 PIF and Intel also acquired a minority stake in the Reliance Jio platforms. Google acquired 7.7% of stake in teh Jio Platforms. 

Jio platform is the parent body of Jio phones, jio mart, Jio Cinema, and  Jio saavn. The deal will give an observer role  and Board seat on Jio  platform to Facebook. Jio Mobiles is having reach of 38 crore people in India

Jio apps included MyJio, JioTV, live TV streaming app, launched on 5 September 2016,  JioCinema, video-on-demand app, JioSaavn, an online music streaming service, JioChat, messaging app, JioMeet, video-conferencing platform, JioBrowser, web browser, JioSwitch, file sharing app, JioNews, newspaper and magazine app, JioHome, mobile remote control for Jio set-top box, JioGate, apartment security app, JioCloud, cloud storage services, JioSecurity, security app, JioHealthHub, health companion, JioPOS Lite, Jio recharge commission earning app, JioGameslite, online gaming, JioMoney, digital currency and payments services and JioMart, online grocery delivery services. Jio valuation has touched 5.5 trillion dollars in May 2020 making it the largest business houses of reliance industries. 

( Source: Company annual reports)

Reliance retail

Reliance  retail is the sixth largest retailer in the world. The retail company added 10 stores every day in the last two years and it has 10000 stores. The company has more stores than any other competitor in india. The company has seen 5 crore Indians visiting its stores in 2019 and registered a mind blowing 44% growth. The reliance retail physical presence is now expanded to 6700 cities in india. This resulted in a huge employment generation. In 2020 the company employed 1,13,000 employees. Further the company revenue touched 1,30,566 crores in 2018-19 fiscal year. 

(Source: Reliance annual reports)

The reliance retail company revenue comes from five different categories. The connectivity(33%) is the largest contributor to the revenue followed by consumer electronics(30%), Grocery(17%), Petro retail(10%) and fashion (8%)

Facebook and WhatsApp

Facebook idea generated when Mark Zukerberg was studying at Harvard University in 2003. The earlier name of Facebook was facemash. This site attracted 450 visitors  and 22000 photoviews in the first 4 hours of the launch. Harvard University expelled Mark zukerberg for the violation of privacy data breach.   After finishing the expulsion, Zukerberg convinced Harvard university to come out with a digital version of student directory and launched The facebook site.

In 2004 the company moved its headquarters to california.  Further, in May 2006 facebook was open for public view. The year 2007 gave impetus for the growth of facebook where Microsoft invested in facebook and facebook developer platform started. Facebook saw exponential growth and could achieve 500 million visitors by 2010. The year 2013 turned facebook into the search world. It launched facebook graph search. Unlike earlier versions wherein a customer used to get search links, The facebook graph search gave precise answers.The growth of facebook also led to false message proliferation. In 2015 the company came out with a Facebook algorithm that detects Fake messages. Facebook faced the backlash when major advertising companies like Adidas, Coca-cola , Ford etc.. backed out of Facebook advertisements for not acting hatred messages. 

WhatsApp started by Brian Action, former employee of Yahoo in 2019. The app became a buzzword on the Apple store and the same vibes continued on Google Play store. By 2010 the company crossed the 200 million subscriber mark. In 2014 facebook acquired WhatsApp for a whopping US $19 billion. The year 2016 made WhatsApp absolutely free for the consumption from changing $1 subscription mode. 

Facebook is having 33 crore Indian subscribers making this as the largest market for the company. Similarly WhatsApp is having 400 million customers in India. 

Indian telecom Sector:

The Indian telecom industry is the second largest telecom sector in the world. India today has 117 crore telecom subscribers and 67 crore internet users. Teledensity in India grew to 87%. India’s data usage over the period grew exponentially. Today, every indian consumes 9GB of data per month. This made India as the country of largest data users in the world. 

(Source: IBEF.org)

The Indian rural consumers using telephone service grew exponentially. In 2011 the rural contribution was at 33% and it grew up to 44% in 2020. 

(Source: IBEF)

This sector is expected to grow further with the IoT industry emerging faster. The 5G technology may increase data usage and companies will get better revenue in the future.  The Indian telecom competitive landscape is given below: 

(Source; IBEF India)

Indian Retail sector

India’s retail market is one of the fastest growing retail markets in the world. It is expected to touch $1200 billion market size by 2021. 

(Source: IBEF)

The fast moving consumer goods and online consumer market in India witnessing a healthy growth

FMCG business is expected to reach US$ 103 billion  by 2020 and Online retail business is expected to reach US$ 60 billion in the same year.  However,India’s organized retail market is in a nascent stage. The organized retail contributes to 9% of the total market. 88% of the market is in the unorganized sector that reliance group and Facebook both are eyeing for their pie. 

Cross leveraging

Jio Mart and Whatsapp will cross leverage their ecommerce platform to grow their businesses. 

The deal will help many small businesses to sell their merchandise on JioMart using WhatsApp.The deal is having the target of reaching 6 crore SMEs, 12 crore farmers, 3 crore small retailers. Online grocery demand was 1% of 80000 crore rupees market before the lockdown and during the covid-19 lockdown it surged to 50%. JioMart competitors' Bigbasket business has seen tremendous demand in the lockdown but they lacked agricultural resources to supply.  This facebook and Jio deal is expected to provide technology platform for small kirana stores. Further , initially the deal was thought to have obstacles from the competition commission of India. However, the commission  allowed Jio platforms and Facebook to run their businesses on June 24th 2020.  Apart from this, the deal will help Facebook  aggressively push their WhatsApp pay through Jio platforms.  In addition to this, the agreement will open the way for cryptocurrency and block chain technology of Facebook in the Indian market. The government of India allowed block chain technology. It will strengthen the facebook global business. Another plus point of this consensus between Jio and facebook is use of Augmented reality. Facebook augmented reality division Oculus will leverage its technology to Jio Ar. This is expected to redefine marketing communications. One more unnoticed thing in this agreement is advertisement sharing. Facebook ad space can be leveraged by Jio Mobile. This will redefine mobile advertising and marketing in india. The new friendship will open the doors for developing a super app like ‘we chat’ where the customer starts the day with newspaper , meetings , payments,and sports. Finally, this deal will open new vistas for indian gaming industry. Facebook can come out with games like farmville to the indian market. 

Jio Mart and whatsapp  business Model

The business model of WhatsApp and Jio Mart is simple and enriching. The Jio Mart provides training to Unorganized kirana store managers. They will register their Kirana store with JioMart . These Kirana store owners should use jip platform and WhatsApp to conduct the business. Now, A customer uses his Jio Mart link on the WhatsApp or Jio App directly to book orders. The message is passed to  Nearby Local stores whatsApp account. The local store accepts the order. here , customers can track the order. Products are delivered to the customer location by nearest grocers. The products can be bought by Kirana store or reliance Jio Mart wholesale outlet will transport goods to Kirana stores. Payments will be made to kirana stores according to product margins. 

Conflicting interests.

Managing business independently:  Jio and Whatsapp will be different entities and run their businesses on existing revenue models.

Data Privacy: Customer data at both JioMart and WhatsApp can be leaked or misused. The US government has strict rules for customer data privacy. However, Indian government does not have a concrete plan for the same. Thus, Indian data can move to the USA and USA data will not come to india. This may lead to India china app issues like situation in future. 

Net Neutrality: Facebook and WhatsApp and Jio can leverage each other. This may create the most discussed topic i.e Net Neutrality. Free basics may come back to India from the backdoor. 

Advertisements will consume data packs of customers: Facebook ads appearing on Reliance Jio platform may result in excess consumption of data packs of customers. This is how facebook can increase their revenues. 

Facebook denial of data localization: The whatsApp pay dismal performance in India and government restriction on data localization has hit a roadblock. There is no clarity on how indian consumer data can be held together. Contrary to this Reliance has agreed to share customer data of theirOver the top (OTT) market to the central government.

Supreme Court and whatsApp litigations: Though the central government gave nod for the whatsApp pay, Supreme court has stopped its commercialization as cases already pending in front of them.

Restrict data to competitors: Facebook and Jio can restrict their used data to the market . This will ring a death bell for Google and Microsoft. The minute details of customers help facebook to narrow its targeting. 

New product proliferation: Both Jio and Facebook launch new products of both companies as well as their associates. Customers may find it difficult to digest. 

References:

1. Facebook buys 9.99% stake in Reliance Jio for Rs 43,574 crore. (2020). Retrieved 9 September 2020, from https://economictimes.indiatimes.com/tech/internet/facebook-buys-9-99-stake-in-reliance-jio-for-5-7-billion/articleshow/75283735.cms#:~:text=Facebook%20will%20invest%20Rs%2043%2C574%20crore%20in%20Jio%20Platforms%2C%20a,especially%20for%20its%20WhatsApp%20unit.

2. TechCrunch is now a part of Verizon Media. (2020). Retrieved 9 September 2020, from https://techcrunch.com/2020/06/24/india-approves-facebooks-5-7-billion-deal-with-reliance-jio-platforms/

3. Explained: What the Jio deal means for Reliance and Facebook. (2020). Retrieved 9 September 2020, from https://indianexpress.com/article/explained/what-the-jio-deal-means-for-reliance-facebook-6374686/

4. Four Reasons Why Reliance Jio-Facebook Deal is Commercially Sensible and Good for India, Writes Subramanian Swamy. (2020). Retrieved 9 September 2020, from https://www.news18.com/news/opinion/why-reliance-jio-facebook-deal-is-commercially-sensible-and-good-for-india-subramanian-swamy-writes-2595979.html

5. John, C. (2020). Facebook-Jio Deal: How Is It Going to Shake Up The Indian Market?. Retrieved 9 September 2020, from https://www.thequint.com/tech-and-auto/tech-news/facebook-reliance-jio-deal-explained-how-does-it-benefit-users

6. Diplomat, T. (2020). The Realpolitik of the Reliance Jio-Facebook Deal. Retrieved 9 September 2020, from https://thediplomat.com/2020/04/the-realpolitik-of-the-reliance-jio-facebook-deal/

7. Facebook-Jio Deal: What India’s Competition Regulator Will Have to Consider. (2020). Retrieved 9 September 2020, from https://thewire.in/business/facebook-jio-deal-what-indias-competition-regulator-will-have-to-consider

22 Challenges of Digital marketing in 2023.

 22 Challenges of Digital marketing in 2023.

1. Customer profiling: Understanding customers personally, lifestyle values, peer group and purchasing from various social networks is a challenging task for marketers. This profiling helps organizations to make a proper audience segmentation and hyper target the content.

2. Responsive sites: Devices used by customers are changing rapidly. Indian consumers are purchasing different sizes of smartphones. The lock down due to corona virus increased the work from home and online education. To suit this unexpected need. Customers purchased laptops of different sizes. Therefore, companies must develop websites attractive, user friendly and adjust screen sizes.

3. Content marketing: The sudden rush to digital marketing due to pandemic created a clutter. It is not just images and videos but scribes and animations also putting their strong feet in the digital space.Content has to be creative and should be marketed in an innovative way.

4. Trend identification: Digital marketing domain is buzz with new activities. A new content is viral every second. Thus, marketers has to use tool like Google trends to identify trendy topics and include Google trends to identify trendy topics and include them in their campaign. 

5. Customer experience and engagement : Artificial intelligence and natural language processing developments are providing rich experience to customers. Chat bots are used to develop deep customer engagement.

6. Promotional budget: Bidding for a keyword in digital auction space is heating up. It is skyrocketing the promotion budget allotted. Further, emergence of niche social networks complicated the resource allocation.

7. Consumer Privacy: Facebook data leaks brought consumer privacy issues into the center stage. Another company Google Plus closed due to customers data leaks. Across the world countries are formulating data protection laws. In this connection, Indian has banned 57 Chinese apps that are intruding on national security issues.

8. Search engines are becoming destinations: Google began its journey by providing search results on search query. Today, the company is involved in local listing, shopping, job opportunities, travel tickets, books and videos. The objective of this move is  a customer who puts a query on the google search engines given above information and customers should not land on external web pages. Google wishes to provide all service under one roof. 

9. Hypertargeting: Digital marketers should segment audiences carefully and personalize the content to the selected audience. For this purpose a company should use AI extensively. Later the company has to target each individual according to their profile.

10. Omni channel marketing:  Digital marketing faced the hurdle of integrating online and offline marketing communications. This is true in telecom handouts and retail markets in India. Companies able to synchronise both channel communications are wrong. 

11. Demographic shift in social media: 41% of Facebook users are above 65 years. Instagram’s main users today belong to a kids group. YouTube had to face stiff competition from Share chat due to the local content that attracted the rural Indian market. 

12. Augmented reality and 360 degree videos. Customer experience enriched by using augmented reality and degree videos. The main objective is to provide a rich experience and feel to consumers. 

13. Pragmatic advertising: Artificial intelligence made it possible for automotive market promotion, ad buying and notifying consumers.

14. Micro Influencer marketing; The general public who is having 500 to 5000 followers and an expert in the particular subject. There is a demand for the content produced by the influences among his followers. marketers are recruiting such people to promote their company products.

15. Visual search: Customers can upload image on Google lens, pinterest lens, comfed, and bing visual search to get detailed information

16. Micro moments.: A small moments appealing on customers device to act on particular need

17. Social commerce: selling and buying goods and services on social media ids called Social commerce. Reliance Jio and Whatsapp will enable social media base commerce in india.

18. Geo fencing: Restricting the messages to be delivered to customers travel locations or stay and work locations.

19. Social Co-creation: Developing concept and putting those concept into new service are called as Social co-creation, 

20. Block chain technology. Managing ledger of all stakeholders of digital marketing to have safety and transparency. It will help companies promote services the supply chain wide.

21. I oT advertising : The Internet brought down the barriers of geographies. The Internet of Things products use smart  technologies in appliances. These products produce huge data that can be used for persona communications also. 

22. Neuro=marketing and brain computer interface: The connection between brain and computer is now experimented. A few of them could read human thoughts and convey messages that they would like to tell to their brains. 

Case Study: Asian Paints developing and marketing green products.

 

Case Study:  Asian Paints: Going green

Asian paint is the leading paint manufacturer in the world. It is a household name in India for its durability and services. The company is known for its social responsibility by contributing to education, healthcare and sanitation. Further, Asian paint decided to show environmental sustainability. It identified water replacement, reduction in fresh water usage, use of renewable energy, and reduction of hazardous waste as concern areas and the company would like to invest in eradication of these environmental issues. Further,  the company began self certification for their products taking US green seal GS-11 as standard. As part of this initiative, Asian paints reduced lead in paints below
90 ppm. The company’s carbon emission reduced by 31%. Apart from this Asian Paints reduced volatile organic compounds in manufacturing.

Green Products: Royale and Ezycolour are chosen for green initiative by the company. Royale health shield offers infection free home paints. This is the first in India, a paint recommended by Indian Medical Association (IMA).

Launch and promotion of Ezycolour:

 

Asian paints launched Ezycolour home solution in 2015. This is a green painting service initially targeted for the rich class. However, the company had seen the aspiration of the upper middle class for environmental friendly products and extended it to that category too. To create awareness about the product Asian paints had run two different campaigns. In the first one, the company ran an offline campaign wherein it selected Mumbai city. In the Mumbai city, Shivaji park, HP petrol pump and Hindu mills compounds are taken to paint vandevi using Asian paints. These Natural murals were different ideas all together. The company wanted to show the positive and negative side of vandevi environment issues. However, experts felt that locations selected for murals
were not attractive and had suggested using an art gallery. This will suffice the goal of Asian paint to reach a niche market. On the online campaign side, Asian paint ran storytelling by artists , why they selected the art profession. These stories were marketed on Facebook and YouTube. Contrary to the expectation of Asian paints, the Facebook campaign did not have mass comments. It gathered only 86000 views in a month. In the YouTube channel too the company had less than 2000 views. Both campaigns lacked the sales orientation.

Questions:

1.    What went wrong for Asian paints green products?

2.    Suggest a plan to promote green products for Indian households particularly in Metros. 

 

Grey Marketing-Reasons, illustrations and How to reduce Grey Products Marketing

 

Grey Marketing

Definition:

Parallel markets using unauthorized channels to sell a company's products are called ‘Grey marketing’ 

Reasons for Grey markets

• Grey marketing exists due to inefficiencies in the supply chain
• The price of the product is cheaper in one country than the other and leads to parallel imports. For example: Indian consumers buy TV sets in Singapore due to price differences.
• Refurbished products are sold at cheaper prices in developing countries.
• Importing products are unavailable in a local market.
• Intermediaries ran out of stock genuinely and artificially so that a customer purchased the product in the grey market for a higher price.

Grey market illustrations:

1.     Japanese cars are sold in Russia and Australia.

2.     Range rovers were imported by US consumers before 1987.

3.     Indian consumers find websites to watch IPL on mobile by passing hotstar requirements.

4.     Purchasing products on online portals like eBay meant for some other countries.

5.     The UK government put a restriction on milk powder purchased by their consumers as a few of them purchase heavily and supplied it to Chinese markets.

6. Books published in developing countries are cheaper compared to developed countries. Therefore customers carry books in Airlines to other countries.

How to reduce Grey Products Marketing

• Take a legal action on unauthorized distribution. For example Levis stopped TESCO in the UK from selling their products by taking a legal route.
• Ask marketplace like eBay to remove products not meant for a particular country.
• Stop supplying to intermediaries who are creating scarcity.
• Reject warranties and Guarantees.
• Provide different names for the product. This will help the company to detect the grey market.
• Make alliance with other companies to stop grey markets.

Advantages of Grey marketing

1.     Grey marketing is beneficial to consumers due to reduced prices.

2.     Grey market increases product availability to retailers.

3.     Grey market brings down channel costs.

Disadvantages of Grey marketing.

• It affects big brands.
• The resources put on brand development are wasted and profit is taken by a grey marketer who has not invested in the brand.
• Brand equity will be suffered heavily as the post sales service is not given by the grey marketers.
• Grey marketers do not provide warranties and guarantees on products sold.
• Grey market leads to channel conflict and trust erosion between manufacturers and intermediaries.