Sunday, 27 December 2015

Can one sell more if he is able to associate a feeling with his brand?

The examples cited below and concept is developed and extracted from the book, The Art of Choosing by Sheena Iyengar. We hope to present these to you with our interpretation to give you some insight into branding. It is not an exact excerpt from the book Hope you enjoy it :)

Story of water bottle industry:

In bottled water industry, the manufacturers use the terms like Himalaya, pure, tasty, natural, etc. However there is no major difference in the water as such. A study was conducted where people were offered tap water ( from municipal corporation ) in a bottle telling it was 'X' brand of water directly from the Himalayas and they were also offered the water of brand 'X' in a glass and were told that this was tap water. People tasted both and concluded that the water in the bottle of brand 'X' was actually tastier than the water in the glass. So the they indirectly concluded that tap water was tastier:) 

Also, the municipal corporation's norms for supplying water from the tap are more stringent than what bottled manufacturers may follow.

In another case, a waiter in a restaurant was asked to offer two different brands of mineral water to the customers. One was said to be directly from a fresh spring and tasted much better than the normal mineral water brand. The one from fresh Spring (supposedly) was priced at 50 and the normal mineral water brand was priced at 30. In reality both had the same water. However, people who purchased the spring water felt that they had consumed a better product.

Story of Coke's brand awareness:

Coca Cola is known for its innovative advertisements and marketing campaign right from 1885. They were one of the first companies that understood, name and people's association with the brand sells more. Pepsi is sweeter when compared to Coke, otherwise the composition is almost similar. Then too some people just like Coke, because coca comes out of coca leaves (after cocaine had been eliminated from them). People associate in a way to that feeling of being high. People say Coke is Christmas, Coke is happiness. 

In a controlled experiment, people were told that they would be offered a drink which might or might not be Coke (in reality everyone was offered Coke itself). Each would be offered say 6 sips in different glasses. Half of the sips that were offered was preceded by a Coke image and the rest were preceded by a flash light. 75% of the people said that they preferred the sip which was preceded by an image of Coke. Even though they were drinking the same thing.

In fact even the Santa Claus that we see today was created by Coca Cola (the red and black colours in Santa Claus's attire is same as that of Coke) that's how they associate the brand with happiness and Christmas!!!! That red colour of Santa is the same colour which Coca Cola has patented.

Story of Fashion Industry:

There are companies which do fashion forecast for the next 2 years. These guys talk about it everywhere. Designers, apparel manufacturing companies buy these studies and commissions them to their factories to bring them out during the next two years. Almost all the brands would keep it that way even though they are competitors. All of them would scratch each other's backs in this matter. The design and trend for the next two years becomes a self fulfilling prophecy. The ones who predict the trend talk about it every where, sell it to the designers and apparel manufacturers. So, everyone is talking about it, manufacturing it and people are buying it. If a design is exposed largely and it has no negative feeling, people automatically buy.

The cosmetic companies like Loreal would sell the same matte foundation at 2 different prices. The one with Loreal brand would fetch 4 times the price of what maybelline brand would sell for ( this one is also owned by Loreal !!!!)


Puffery: those subjective claims that ordinary customers do not take seriously. It's a hyperbole.

Companies use puffery and people associate their feelings to that brand. 

Whenever people see the brand, those parts of the brain get activated which bring the previous experiences and feelings into consciousness.

Thoughts for you to think about:

1) Can you associate your brand with the feelings of your customer. 

2) Can you have 2 brands, one that sells at a higher price and one that sells at a lower price but the product is more or less same.

Tuesday, 13 October 2015

The whole world is talking about business analytics....

To put it simply, being able to extract data from various possible sources of a business process and presenting it or arranging the data in a way that enables management/executives to take better decisions and foster growth of the organisation.

For example, when one buys a book on Amazon, what amazon does is it studies and records the pattern of a buyer. Using this record, Amazon suggests the other buyers' what are the other books that readers bought along-with this particular book. What are the books which sell most with the key words we use in Amazon's search engine. By doing so, it is boosting its sales :)

So we think the best analytics is one which helps you decide what works and what doesn't work for your organisation and makes your organisation adapt more of what works :)

Small businesses should measure atleast following three metrics:

1) Revenue. What campaign is working, which products are being well received by the customers, which salesman's method are working and replicate the same amongst all rest. But it needs to be dynamic. If something better is identified, then everything needs to move towards the better

2) Profitability. This number shows a businessman how well the operations of his business are performing. Are there huge inventories of finished goods or to do work in case of service organisation. Are there regular breakdowns, what are the costs of operations to achieve a particular level of sales

3) Bank balance. Even if the sales numbers are growing and profitability statement shows a great picture, if your bank balance is not healthy, then you are not realising your debtors. You are not negotiating a good credit period with your vendors. You are incurring higher finance costs.

Thank you for a patient reading.

Pozitiv Partners is a fast growing consulting firm based out of Bangalore. Pozitiv aims to work with visionary businesses and provide smart and practical solutions.

Saturday, 31 January 2015

“Price for a Civilized Society”

We all generally wonder and ponder as to how many taxes we pay and contribute towards nation building, but what do we get back from the nation?

We also generally hear people complain how public money is misused.

Well, we tried to find an answer to these questions to a certain extent. Let’s see as to what we concluded.

We know this is a difficult assumption, but let’s start with this assumption to get some perspective, “keeping all things equal and contribution +benefit from each citizen is same”
“For simplicity, we shall only analyse contribution to and spending from the Union Government and ignore the state government spending”

? How much does Union of India spend on each of its citizen on an average?
A  Rs. 12,805/- per annum

? How much does an Indian citizen contribute in terms of taxes (direct and indirect) on an average to Union of India (excluding only Corporate Tax but including Individual Income Tax, Excise and Customs Duty)?
A  Rs.7,377/- per annum

? How much does the federal government of United States of America spend on each of its citizen on an average?
A Rs.6,81,659/- (!!!!! Phew!!!!!!)

? How much does an American citizen contribute in terms of taxes (direct and indirect) on an average to his Federal Government?
A Rs.4,52,199/- per annum (!!!!!!!!!!!!!!! a bigger Phew!!!!!!!!!!!)

Well this single observation puts a thought in our minds that we produce less > we contribute lesser to our union in terms of taxes > we get back lesser compared to what a citizen in a developed country would get back. But the gap is too high which we need to bridge almost 50 to 60 times!!!

At this juncture we would like to bring in a famous quote from Oliver Wendell Holmes, Jr of United States, “Taxes are what we pay for civilized society …”

Well to elaborate, we pay taxes to stay in a democracy, to be able to exercise our franchise, to carry out any business we wish to, to be protected by an army against external enemies, to get educated in the field of our choice, to be protected by a court of law against any fraud, to be protected against extortions, to practice the religion of our choice, to have freedom of speech, to speak in the language of our choice and many more. Well it certainly is a great gift to live in a democracy and the price we pay for it looks certainly reasonable (of course with the above assumption that on an average everyone contributes equally)

Even though we have the gift of democracy, we still deserve to get much better facilities like our developed counterparts. But as of today, India is tied up with loans and subsidies.

? How much loan has Indian Government taken on an average against a single citizen?
A Rs.45,920 till September 2014

? How much Interest does Indian Government pay in a year?
A Rs.3,486 (average per citizen). Well about 24% of the total spending goes into paying interest!!!!

? How much does Indian Government spend on defense department in a year?
A Rs.1,870 (average per citizen). So, about 13% of the total spending goes in to protect you!!!

? How much does Indian Government spend on subsidies in a year?
A Rs.2,128 (average per citizen). 14.52% of the total spending goes in to subsidies (from fertilizer, food security, to diesel, kerosene, natural gas)!!! Government pays about Rs.518/- per person on diesel, kerosene and natural gas subsidy.

In conclusion, we would like to state that ideally price payable for a civilized society is really difficult to value, but objectively, Indian government could do much better in terms of spending its limited resources effectively. For example, the person intended to benefit from subsidy complains that he doesn’t get his right and the others complain that their tax money is going to benefit someone else.

We wish that the government comes up with more prudent spending policies which build a nation. Education, scientific research, innovation, entrepreneurship, women empowerment and health are the areas we request the elected government to spend most of its resources.
We also wish that the government follows a simple Asian father’s teaching that do not spend more than your means. Thereby, the huge loans and interest burden gets lessened.

This is the budget time. Do let us know your thoughts and wishes.

Thanks for a patient reading.
Team – Pozitiv Partners

(Disclaimer: All the data points are taken from Government Websites. This article is for a general reading and our opinion. The reader is requested to reach any decision or conclusion after verifying and satisfying herself)