Alibaba forays into Online Banking Network Transform China financial industry

By Chi S Siu  & Yan Ping Chau

“China’s finance industry, especially the banking industry, only serves 20 per cent of clients. I see the 80 per cent of businesses that have not been served,” Mr Ma, Alibaba’s outspoken founder and chairman, wrote in the People’s Daily on Aug 2013. “The financial industry needs disruption. It needs outsiders to come in and transform it.”

Mr Ma’s ecommerce group Alibaba, with its more than 500m registered users, has already reshaped the landscape in China’s retail industry. With its first foray into banking – a micro-loan business – growing quickly. Alibaba has encroached on banks’ deposit franchises with a new fund management service called Yu’e Bao, meaning “extra treasure” in Chinese, which allows Alibaba users to directly invest online cash in money market products. It is an attractive alternative to traditional bank accounts. The annualised interest is about 4.5 per cent, more than 10 times the 0.35 per cent rate on current deposits in banks but just as liquid: funds can be withdrawn at any time. Yu’e Bao notched up 2.5m users with Rmb5.7bn ($931m) of investments by the end of its first month.

On September, 2014, The China Banking Regulatory Commission finally gave approval to start a bank to a financial affiliate of Alibaba Group – Ant Financial that also is the parent company of Alipay, which processes e-commerce payments and is crucial to Alibaba’s operations. Setting up a bank would allow Alibaba’s financial affiliate to collect deposits and give it greater freedom to offer other bank-like services.

On the 29th of April, Yuan Leiming, Ant Financial’s finance division’s general manager, said that Ant’s new online bank, called MYbank, is scheduled to launch in June of 2015. The launch follows Alibaba’s rival Tencent Holdings own setting up its own internet bank, WeBank, which began initial operations earlier this year. Ant Financial’s and Tencent’s new online banks are just two of several recently approved private banks, as the Chinese government looks to upgrade and modernize its largely state-owned finance industry.

The launch of MYbank is a major step in the creation of a full-fledged internet finance platform for etailer Alibaba. Moreover, this new financial platform is expected to open up services such as banking, loans and credit, insurance, payment systems and investment to hundreds of millions of Chinese who previously had limited access to financial services.

What is Alibaba? 

Alibaba is China’s — and by some measures, the world’s — biggest online commerce company. Its three main sites — Taobao, Tmall and Alibaba.com — have hundreds of millions of users, and host millions of merchants and businesses. Alibaba handles more business than any other e-commerce company.

MARKET CAPITALIZATION

Alibaba became one of the most valuable tech companies in the world after raising $25 billion from its U.S. IPO. It is also one of the most valuable Chinese public companies, ranking among some of the country’s state-owned enterprises.

E-COMMERCE

Alibaba is the most popular destination for online shopping, in the world’s fastest growing e-commerce market. Transactions on its online sites totaled $248 billion last year, more than those of eBay and Amazon.com combined.

Alibaba’s IPO is the largest in the world. 

Banking Distribution 2015

As per the McKinsey report – Retail Distribution 2015, it expect the typical retail bank by 2015 to have undergone a radical change in its distribution mix and to have the following key characteristics:

Fewer branches, fully digital with a personal touch: ‘One click’ processes will allow clients to get key information, order key products and pay for them with their smartphone multifunction card and on iPad.

More tailored to individual needs: The banks’s product and service offering will be tailored, providing multiple value-added services to clients with targeted market- ing campaigns based on rich CRM data.

Increasingly complex processes: Growing numbers of channels and different plat- forms for digital delivery (for example, Apple and Android) will create enormous process complexities, especially given the way customers increasingly use mul- tiple channels while expecting the process to be seamless.

Enhanced profitability (for those that get it right): the bank’s financial ratios will be much more attractive than they are today. Based on our assessment, it should be possible to reduce costs structurally by 20-40%, mainly due to lower distribution costs and changes in the distribution mix that drive down opera- tions and indirect costs. Higher investments will be needed in new technology, the costs of which can be offset by savings on legacy systems.

Reference:

Journal, WS 2015, What is Alibaba?, March 15, 2015, http://projects.wsj.com/alibaba/%3E.

 RUWITCH, PCAJ 2015, Alibaba steps up China online finance network push with new index, bank, Reuters, retrieved March 14 2015, http://www.reuters.com/article/2015/04/09/us-china-alibaba-mybank-idUSKBN0N005N20150409%3E.

 Victor Matarranz, ES, and Radboud Vlaar 2012, Retail bank distribution 2015—Full digitalisation with a human touch, McKinsey & Co, retrieved May 15 2015, http://www.mckinseyonmarketingandsales.com/retail-bank-distribution-2015-full-digitalisation-with-a-human-touch%3E.

Zhu, G 2014, Alibaba Affiliate Wins Approval to Start Private Bank 

Alipay Parent Company Wins China Regulatory Approval, The Wall Street Journal, retrieved March 13 2015 http://www.wsj.com/articles/alibaba-affiliate-wins-approval-to-start-private-bank-1411970203%3E.

Lego goes 360

Jason Chuck & Nathan Cahill

Once upon a time in the pre-internet world, advertising was a (relatively) simple concept. Decide on a budget, split it up between newspaper, magazine, a choice of two television channels and radio, and hope that some of it worked. Marketers would try and measure the success by looking at sales figures, customer attitude surveys and brand recall, but the saying ‘I know half of my advertising spend is wasted, I just don’t know which half’ arose for a reason.

The rise of the internet, pay television, mobile computing, sponsorship and social media has dramatically increased the opportunities marketers have to reach consumers, but also creating a more fractured and cloudy environment. In this splintered landscape, the concept of integrated marketing communication (IMC) has evolved to provide clarity, consistency and a seamless message across multiple and diverse communication channels.

360 degree marketing from mbaskool.com

Integrated marketing has taken a leap forward with the advent of Web 2.0, evolving into ‘synchronised’ or ‘360-degree marketing’. Unlike the original concept of integrated marketing, where the focus was on consistency of message across mediums, synchronised marketing take this approach further by advocating consistency of brand voice across all product touch points.

This has implications for not only advertising media selection and creative strategy, but far wider reaching consequences right across the marketing mix. From product design to distribution strategies and pricing, 360-degree marketing take companies from producing and selling products to creating experiences.

Lego – building blocks to success

Perhaps nowhere is this philosophy more apparent than in the toy industry. Over the last 10 years, Lego has been leading the way, rising to become the biggest toy manufacturer in the world.

This was achieved on the back of their first flirt with financial ruin in the 1990s. Following their first net loss, the company reinvented itself from a focus on engineering, to a customer focus. According to their vice-president of marketing and consumer experiences, Conny Kalcher, “If you want to be a premium brand you have to keep demonstrating that you are listening.”

360 Degree marketing lesson 1: Laser focus on the customer

In order to focus on the consumer, it is vital to give them an opportunity to engage with the brand across as many touch points as possible. In the world of social media and Web 2.0, this could mean blogs, Facebook, Pinterest, and Instagram, but for brands such as Lego they have been able to take this a step further. Lego has branched into movies, computer games and theme parks to engage further with their client base and spread the message of their product.

360 degree marketing lesson 2: evolve from being a media consumer to a media creator

As well as creating their own content, Lego facilitate their fan base to create and distribute content. Remember when Felix Baumgartner sky dived from the edge of space as a promotion for Red Bull? Not 24 hours later a lego version of the same event appeared on YouTube. The best advertising is the kind you don’t even need to pay to create. As Kalcher explains, “It’s not push marketing – we think differently about social media. The consumers facilitate dialogue and sharing and that’s where you can really accelerate your marketing. It’s about stimulating that relationship with them.”

360 degree marketing lesson 3: encourage and facilitate customer communities

The beauty of this approach is that addresses one of the biggest shortcomings of IMC – an ability to react quickly and adapt to consumer sentiment. By its nature, IMC requires high levels of planning to coordinate messages across media channels, making it very rigid and inflexible. 360 degree marketing, facilitated by social media and real-time feedback from clients, allows the company to evolve its message quickly in response to consumer reaction.

360 degree marketing lesson 4: Respond and evolve the message in response to feedback

As the example of Lego illustrates, synchronised marketing has the opportunity to not only boost sales and strengthen a brand, but build a community of brand advocates who will create content, initiate dialogue and drive sales on your behalf.

• Have you ever been inspired to advocate a brand to this level?
• Are there any brands to whom you feel enough connection to create a video in their honour?
• What content could your company create to engage and open dialogue with your customers?

References

http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/10739-360-degree-branding.html

http://www.marketingprofs.com/4/syrett2.asp

http://www.thedrum.com/news/2015/04/15/well-played-how-lego-rebuilt-its-brand-brick-brick

http://www.thedrum.com/news/2015/03/18/were-turning-media-company-lego-vp-marketing-and-consumer-experiences

http://www.mandmglobal.com/news/18-03-15/lego-marketing-boss-conny-kalcher-to-be-a-pre.aspx

https://www.marketingweek.com/2015/03/23/legos-vp-of-marketing-on-movies-listening-to-customers-and-360-marketing/

http://www.liquidcatalyst.com.au/index.php/blog/item/12-what-is-syncronised-marketing

http://www.desantisbreindel.com/integrated-marketing-is-no-longer-enough/

Increase Price Increase Profits ! – We are Louis Vuitton

 

For high end market with greater disposable income purchase decisions aren’t just about the functional requirements from the product but also its perceived market value or Brand equity.The luxury item adds to the buyer’s image based on the perceived value.

An assessment of what the customer gets compared with what the customer gives up – Value (Dr. Ho, Deakin)

Purchasing a product of higher cost (sometimes crazy ones) has two reasons

1. Higher costs are associated with better quality
2. A status symbol that signifies your ability to afford costly products which psychologically boosts self-confidence & ego adding to higher self-esteem.

This has been an accepted social norm since royalties and the basis for pricing strategies of luxury brands.

Way to create a luxury brand is very difficult. It requires huge investments in communications, excellent product / service quality and always being fashionable. However to maintain these elements at a high level is not easy. Gucci, Louis Vuitton and Chanel are considered three successful luxury brands in the fashion sector, which hit premium class customers.

Compared with other competitors, LVMH was founded early in 1854 with focus mainly on trunks and handbags. The turning point in the history of Louis Vuitton which made them become a luxury brand is the appearance of Monogram Canvas product line.  To face high competitive environment, famous brands need to adopt innovative marketing strategies to create the appeal. The traditional marketing mix strategies gradually transitions into experiential marketing to create emotional factors for customer. The luxury brands seem to focus heavily on creating for their customers a memorable experience when they are using the product, creating linkages in the emotions of users. These factors would help build customer loyalty to the brand. Like the group of luxury brands, Louis Vuitton focuses on providing this experience through product quality, the brand’s history, quality of service, pricing and their distinct packaging. There are many factors that are needed to ensure the success of the brand, however in the scope of this article we will only focus on Louis Vuitton pricing strategy which makes their success.

 About Louis Vuitton products, the high price of their products creates a high quality image and has be seen as a confirmation of product quality. These different strategies in pricing have helped Louis Vuitton attract high-end market. In the history of Louis Vuitton, sale prices were never offered. No one can see LV bag in reduced price, there are no sale periods! Same prices for all group which is considered as confirmation of Louis Vuitton.

Louis Vuitton products are extensively tested to ensure that our quality is always at the highest level and has no flaws. Their products are produced by a combination of manual and mechanized, retains the beauty of handmade products while maintaining high levels of product quality. Therefore, Louis Vuitton has overcome many peers to become one of the most luxurious brands in the world.

Figure 1: Matrix describing luxury brand positioning

In fact, Louis Vuitton has become a popular brand in recent years. Their target group is not only limited to high-end client; many other groups have also become customers of this fashion brand. However, the question is how to LVHM can sell more products without becoming a mass-selling brand instead of a luxury label. One of the solution to handle this issue is price increasing strategy. Brands want to keep high-end customers and eliminate low-end platforms to enhance their brand image and hope can gain new customers on the top end. They are willing to reduce their profits from low-income group to maintain an image of luxury brand.

So far, Louis Vuitton is apparently following in the footsteps of Hermes on the way to become the most luxury brand. However whether these products having leather Monogram Canvas are worthwhile as the product of Hermes and could they attract loyal customers of other luxury brands to buy them?

Are premium customers going to spend few hundred dollars extra to buy high-grade leather products such as Hermes or buy the more expensive products of Louis Vuitton?

The loyal customer group of other brands would pay more attention to products as they continue price increasing campaign?

 

• Iacobucci, D 2013, Marketing Management, 4th edition, Cengage Learning, Mason, OH, USA.
• Shin’ya Nagasawa, 2009, Luxury Brand Strategy of Louis Vuitton – Details of Marketing Principles, WASEDA BUSINESS & ECONOMIC STUDIES 2009 NO.45, p28-29 https://dspace.wul.waseda.ac.jp/dspace/bitstream/2065/33717/1/WasedaBusiness%26EconomicStudies_45_Nagasawa1.pdf

• Nagasawa, Shin’ya (2009b), Luxury Brand Strategy of Louis Vuitton – Details of Marketing Principles – , Proceedings of the International Conference of IASDR (International Association of Societies of Design Research) 2009, Branding 1, pp.1-10.
• Additional Video & Readings
  • https://www.youtube.com/watch?v=UfyOpfSRLdE
  • https://www.youtube.com/watch?v=3QDGsavlTus

Written by Saurabh Pandit and Jacky

Tesla Motor: Model S Electric vehicle

In April 21, 2015, Tesla Motors proudly to announce that all Model S variants had received a maximum possible 5-star rating in the Australasian New Car Assessment Program (ANCAP). With the score of 35.45 out of 37, Model S of tesla new electric car has been received the highest rating of any electric vehicle in Australia. It is recognized around the world that Model S is already holds with a five-star rating electric vehicle car from the Euro NCAP and the U.S. National Highway Traffic Safety Administration (NHTSA).

 

Tesla had produced a very efficient car that is Model S with a Tesla super charger battery on it. Comparing with other electric vehicles, most of them charge with the battery duration time count by hours, but only BMW i3 and Model S are charged by minutes. Comparing the size of BMW i3 and Model S, Model S with fully charged battery is only used 40 minute as for BMW i3 with a fully charged battery used up to 30minutes. Which that Tesla Motor is being successful working on their battery charged in a normal size car. However, BMW i3 charged with 30minute full power but only can travel with the range of 80-100mi, as for Tesla Motor it can travel up to 208mi which is more superiority compare to BMWi3.

Although Tesla Model S is very efficient and high rating in electric vehicle, but the price isn’t cheap at all. With the market price that they are selling now is $69,999, which is quite expensive for normal car consumer spender to buy, and the price aren’t coming down just yet. Do you think that consumer will buy such expensive car? Tesla Motor is targeting customers that are successful business executives and entrepreneurs who are tech savvy and green friendly.

Even though Model S is doing great as a luxury car, what if Tesla Motor drop the price of the car and selling it for the normal consumer that are affordable to buy rather than just aiming for wealthy business customer. Giving a great opportunity to increase the business, Tesla must make the correct decision to move towards to be the best five star rating electric vehicles continuously.

Do you think that Tesla should drop the price for Model S? If they decrease the price would it affect the quality and reputation for the car brand? Early Nissan Leaf (and other electric car) models are starting to show up on used car lots. Should you buy one? It might be a good decision for staying that price for certain time and in the future there will be more even higher tech car might be greater and cheaper. No one will know power of technology can go till how far in the future.

Integrated Marketing : GoPro

Integrated Marketing is a marketing communications that are combine all the different kinds of methods together to present a message to the consumers.

Nowdays people using GoPro for any kind of situation, there is a theme I found on web that is “Be a HERO” which is to attract and try to connect with the target audience in a quite meaningful way. The theme that they had named is by using the brand-related sponsorships and endorsements, social media, outdoor ads and web, this is the way that GoPro integrates all their marketing efforts with a tons of user consistently generate their personal content of the day. Furthermore, GoPro users can submit their video to win the event such like Video of the week or day on the GoPro’s Channels. By doing several event, GoPro brand was able to climb to the top of the leader board because there were a fire-fighter submitted an original video using GoPro, and it is also represented that when there is a strong brand message, it also can be a successful campaign even is the brand is a user-generated content.

This Fire-fighter GoPro Video is providing quite inspiration of “Never Give Up” and “Be a Hero” message to people even though the kitten looks to be dead but when you never try, you will never know the result. In the end, the fireman had saved the unconscious kitten.

Some of the user- generated provided an inspiring motivational message to people. Such as Team GoPro’s Quest for Glory, this would inspire and attract a lot of viewer to start pump up and do what they dream of and GoPro for it.

These video would inspire younger generation to do what they dream of and never easily give up or scare on failure.

In your opinion, after watching these GoPro’s original video do you think these motivates you? Do you think these would have an impact on the market? Please feel free to share your thoughts and comments!

Started with Integrated Marketing

Integrated Marketing is an approach to marketing communications that synthesizes different methods together to present a consistent message. By leveraging an integrated marketing approach, a marketer can reach more prospects by enabling their brand to resonate on multiple different channels.

There are some key areas to focus on:

1. Collect customer data to gauge what content or messaging speaks to them and what channel is most effective. Initiate conversations directly with customers, coordinate with your internal teams, and test different combinations of content and channels to determine what works are the best.

2. Break down barriers between organizational groups to discover more about what really resonates with your customers. Schedule a brainstorming session with your team to identify key touch points and the right message.

3. Invest in integrated toolsets with cross channel campaign management. Make sure you have a solid presence across your top channels (social media, email and mobile). And remember, all of these channels should be highly coordinated with unified messaging.

4. Create cohesive messaging and promote the right content at the right time. Understand where your buyers are in the process and make sure you are delivering content that speaks to their points.

How to started with integrated marketing:

1. Create a road map for cross-channel relevance by identifying the right message and method for each stage in the buying process.

2. Remember to tell the story with your content. Buyers will respond to the emotional connections and personalization that good content can create.

3. Always coordinate with internal teams to have a holistic view of what will resonate with the customer.

Reference

Luxton, S, Reid, M, & Mavondo, F 2015, ‘Integrated Marketing Communication Capability and Brand Performance’, Journal Of Advertising, 44, 1, pp. 37-46, Business Source Complete, viewed 28 May 2015, EBSCOhost

Melovic, B, Mitrovic, S, Djokaj, A, Nesic, A, & Lekovic, M 2014, ‘Integrated marketing communications as a function of brand development’, Construction of Unique Buildings & Structures, vol. 27, no. 12, pp. 24-31.

Retargeting campaign and attracting new consumers

Retarget

A retargeting campaign is the best solution for adding new customers. Retargeting is a sort of automatic guestbook for your website. When a new visitor shows up, a tiny pixel loads on their browser, and later it helps by giving you an idea of what they’ve been up to while on your site.

Firstly, you’ll be able to find out pretty quickly which parts of your site are dead ends for visitors. Correcting those areas will create a smoother experience, resulting in guest that stay on your site longer.

Secondly, you’ll have an opportunity to advertise your brand to guests even after they’ve left your site. The obvious benefits of this include increased brand awareness and recognition, both of which are tremendously important to the success of a fledgling business.

Segment your visitors

While a single segment is great, just imagine the results of separating your visitors into smaller, more specific groups with similar advertising needs. For example, users who have already visited your site and signed up for your service don’t want to be asked to sign up again. This will make your company seem pushy and less caring, both of which are bad for business.

Creating a separate pixel for your signup confirmation page can help you avoid that mistake and will keep your converted customers happy with your company.

Using calls to action

For your advertisements, calls to action are instructions for potential leads to follow in order to get them to your site, and they will provoke a more timely response. They are most effective when combined with landing pages that give your guests more information on the topic they just clicked. By using landing pages, visitors avoid long, difficult to comprehend, pages, instead they see a compact explanation of your product or offer. That’s not the only benefit of landing pages; they also provide an easy way to segment visitors who arrive by advertisement, which allows you to identify the effectiveness of your advertising.

References

Corrigan, H, Craciun, G, & Powell, A 2014, ‘How Does Target Know So Much About Its Customers? Utilizing Customer Analytics to Make Marketing Decisions’, Marketing Education Review, 24, 2, pp. 159-166, Business Source Complete, viewed 27 May 2015, EBSCOhost

Ma, J, Yang, Y, Li, F, & Xie, J 2013, ‘An Approach to Determine Importance Degree of Targets in Customer Collaborative Products Innovation’, China Mechanical Engineering, 24, 16, pp. 2223-2230, Inspec, viewed 27 May 2015, EBSCOhost

Measuring consumer behavior and brand

Brands are failing their potential by measuring marketing, sales, reputation, customer experience and support, as thinking defined by these terms drives a wedge between consumers and brands. Once upon a time that may have been acceptable, when brands could force themselves on customers.

Today it’s the consumer who is forcing. And wedges force customers elsewhere. Marketing treats the consumer in every possible way to create an intention to buy. The objective is to pass the prospect into the sales funnel as quickly as possible.

Sales will work the consumer over in every way to convert a transaction. The focus is to process the prospect fast, to reduce the lead time and lock down the sale. Reputation looks at protecting how the brand is perceived by the masses. It doesn’t care if people want to buy, or have bought – as long as, in general, the public relates well to the brand, and the brand to the public. Customer experience will work with customers to prevent them from becoming disgruntled. It’s usually all about eliminating pain points and resetting expectations.

Service focuses on rectifying issues where the customer is hurting, before customers share their pain with others. And it will try and deliver on what was promised in the first place, where possible. The harsh reality from all this rather expensive effort is that brands, in general, suffer unacceptable customer churn.

Plenty of dashboards, charts and numbers quantify the handling of the consumer. It is good, because “If you can’t measure it, you can’t manage it,” Peter Drucker is one of the modern era’s great thinkers on management.

The only thing that matters to the consumer is his or her relationship with the brand. There’s no measuring of the emotion and depth that exists between consumer and brand, or the lack thereof.

References 

Voorveld, H, Bronner, F, Neijens, P, & Smit, E 2013, ‘Developing an Instrument to Measure Consumers’ Multimedia Usage in the Purchase Process’, JMM: The International Journal On Media Management, 15, 1, pp. 43-65, Communication & Mass Media Complete, viewed 27 May 2015, EBSCOhost

Friese, M, Hofmann, W, & Wänke, M 2009, ‘The impulsive consumer: Predicting consumer behavior with implicit reaction time measures’, Social psychology of consumer behavior pp. 335-364 New York, NY, US: Psychology Press PsycINFO

DHL….Moving the Global Markets forward…

Distribution channels are a set of intermediaries which are a part of manufacturing a product and making it available in the market for the use. These distribution channels are more efficient in manufacturing the products and making them available in the market. The intermediaries which nothing but the interdependent organizations helps in improving the contacts, specialization, experience and scale of operation. Coming to the point of Logistics, it involves the entire supply chain. Now-a-days, the importance of logistics is increasing which is the important aspect in winning the customers and keeping them. It ensures the availability of goods or services with respect to their place which are in good condition and making them available at economical price. Logistics concept is used even before Christ and by many Greek invaders like Alexander the Great and Leon Wise which helped them in describing the methods for finding food, clothing and ammunition. Logistics used to play an important role in the wars by many kingdoms and their generals and they won who practiced the logistics concept. Even in World War II, due to the perfect practice of logistics, it was recognized as the important factor for winning the war.

In the year 1994, according to the survey conducted by Boeing Company, the international express industry occupied a total share of 5% in international air cargo market. This share of the air cargo market gradually continued to increase to 31% by the year 2014 and this largest share belongs to no.1 international express carrier DHL. The foundation stone is laid in the year 1969 by Adrian Dalsey, Larry Hillblom and Robert Lynn (founders initials termed as company name) which later remained as undoubtedly world leader in the industry of air express distribution. The main success secret of DHL is understanding the need of the customers, both international and local and this made the company to launch in 223 countries. By the end of the year 1960, the companies mainly relied on three sources of transportation for transporting the documents and parcels. They used the Post office or equivalent service which mainly targeted the private users, they relied on on-board couriers but are subjected to weight limit and they also used the standard air freight which mainly used to have the delay at the customs department.

These three alternatives formed a big gap in the market for fast, cheap and reliable distribution of goods and services and this led to the foundation of the company. In the initial days, DHL concentrated on emergency document delivery. Later on, after a tight stand in the industry, they started to distribute all the consignments which consisted of all sizes. In the year 1970, most of the banking organizations and many financial institutions started to use the service to reach their targets. This later on spread to other sectors like manufacturing and service, world trading and many other multinational companies. In the beginning of 1982, the use of air express industry was half a billion dollars and which later reached to $4.5 billion by the end of the decade. Due to the increase in the demand, air express companies started to supplement their own fleet of aircraft and their own deports for sorting which helped them in gaining the faith of the customers. In the year 1980, DHL international Ltd., created a hub in Heathrow Airport and it is followed by East Midlands Airport and now this is the third largest air cargo airport. In the year 1981, DHL completely computerized with the significant investment which in return foreshadowed the beginning of total logistic services.

There are many factors that influenced the air express industry and they are

1. Due to the change in the manufacturing process and trade globalization, it shortened the customer expectations. Especially in Europe, due to the beginning of developing markets and trade conditions relaxations increased the standard of services reliability.

2. To sustain the competition and to withstand in the market, efficiency in distribution is regarded as the important factor. Besides the express delivery service, DHL played an important role in fulfilling the needs of the customer through inventory management, mailroom management services and direct distribution services.

3. Technology played an important role in improving the reliability of the company which made a large scale investment on the air express industry. Due to the advancement in the technology, it allowed many multinational companies to depend on a single company who can fulfill their needs. Due to the improvement in technology, it became easier to administrate, reduce the errors and cut down the related costs.

4. Due to the change in shipping trends, it lead to increase in the usage of heavier parcel weights in the air express industry.

Brussels super hub is regarded as the DHL’s gateway to Europe and is biggest advanced in Europe. Its size got doubled in the year 1993 after acquiring the Federal Express sorting center. The super hub capacity at present is 80,000 packages per hour with 100,000 employees working round the clock handling over 400 tons.

DHL expanded the company in West Europe as well, in Dublin, Copenhagen and in joining hands with Lufthansa DHL shifted to new cargo center built in Frankfurt. The urgent parcels collected at 4.45 am, arrives in Frankfurt and delivered by the same business day. DHL is the first company to acquire the East European market. In the year 1995, an international express hub is established at John F Kennedy airport to transfer the shipments between North America, Europe, Africa and Middle East.

The important core products in DHL international express industry are DOX Worldwide Document Express, WPX Worldwide parcel express, EUX European Union Express, World Mail and Import Express. Besides these core products there are some other complimentary services like customer automation, insurance services, help desks, weekend collection and deliveries. To improve the quality of service, DHL invested heavily in Information Technology. For example, to track a deliver the customer needs to provide his 10 digit tracking number and country of origin which in return gives the details of date and time of the delivery also with the name of the recipient.

References:

Click to access CourieL_WP2_Chapter2_final.pdf

http://businesscasestudies.co.uk/dhl/the-number-1-express-carrier/just-in-time.html#axzz3auTd6tUW

http://www.dhl.com.au/en/about_us/dhl_in_australia.html

http://www.google.com.au/imgres?imgurl=https://www.edb.gov.sg/content/dam/edb/en/case%252520studies/DHL/DHL_722x340.jpg&imgrefurl=https://www.edb.gov.sg/content/edb/en/case-studies/dhl.html&h=340&w=722&tbnid=9-YxYs_j5rTu0M:&zoom=1&docid=BUJr82yx9q_1rM&ei=L9RfVe7DOMLUmgWUtYH4BA&tbm=isch&ved=0CDkQMygIMAg

By

Arun Teja Mattaparti (213347061)

Subramanyam Raju Gangaraju (213340871)

Electricity: Who’s benefited – “Distributors”? “Providers”? Retailers”? “Consumers”?

          Electricity plays one of the major role in everyone’s life. Imagine a life without electricity every day, from the time we wake up and till we sleep. Can we run our day without power supply? Just think what if our mobile runs out of battery and have no power to charge it, what if all the electronic devices (Examples: Television, home appliances, washing machines, etc)  stop working due to lack of electricity? Can you imagine the consequences for these? To be frank, it would be a mechanical life without electricity, by using motors for each and everything we do in our daily life. I think ‘Imagining a life without electricity is something like human being without eyes’.

          The production of electricity has been increasing every year and every one are making use of it 24 hrs a day. But at what cost. Are consumers benefited with the electricity prices they get?

Australia is the world’s biggest exporter of coal and natural gas. The real asset for generation of power is coal. Coal is plentifully accessible all through Australia. For power era, black coal is majorly utilized as a part of New South Wales, Queensland and Western Australia. Though in Victoria, brown coal is the prevalent source. In the year 2013, “247 billion kilowatt hours (TWh)” of power is created by the “Australia’s energy stations”, which is very nearly 59% overabundance than the power delivered in the year 1990. Out of 247 billion kilowatt hours (TWh) of power, 15 TWh is utilized by the power stations and almost 12 TWh is lost amid transmission and the remaining is used by the buyers.

National Energy Market (NEM) foundation incorporates both state and private assets and is administered by a blended sack of substances under the general course of the Australian Energy Market Operator (AEMO).The framework burden component was around 55% and the store edge around 28%. In the focused business sector the wholesale cost found the middle value of about $55/MWh. This included around 20% of last retail charges (51% being system, 20% being retail client administration and vitality effectiveness projects, and 9% being carbon cost). Not at all like some abroad power markets where the transmission framework administrators initiate dispatchable limit 45 minutes in front of saw need, in Australia the NEM has constant adjusting with the commitment on renewables up to five minutes prior to conveyance. Costs are subsequently topped all that much higher, at $13,500/MWh. This has given motivation to interest in new adjusting plant, with 4 GWe of adaptable limit being included late years. In 2013 spikes went to $7000/MWh, with a considerable measure above $1500/MWh. (In Germany the top is €3000/MWh and the most astounding spike in 2013 was about €130/MWh, offering ascent to little speculation.) In Australia a gas-terminated plant may keep running for 900 hours for each year (burden figure 10%), on 1050 events, with 400 of the starts being for five minutes just, however it can be economic.

Much power in Australia is presently exchanged so that dissemination organizations purchase at the best cost accessible from hour to hour from contending generators. The troubles coordinating supply with interest can be judged from the way that Victorian interest reaches from 3900 MWe to 10,000 MWe, and that in NSW from 5800 to 15,000 MWe.

Australian power costs were practically the most reduced on the planet to around 2007, yet have risen altogether from that point forward, and worldwide examinations are exacerbated by the conversion standard. Henceforth 2011-12 normal Australian family costs are above Japan and EU normal and much higher than USA. By state, WA, Vic, NSW and SA, 2011 costs rank behind just Denmark and Germany.

The prior low costs made a noteworthy issue in pulling in interest in new producing plant to cater for resigning old plant and taking care of new demand – a 25% increment by 2020 was anticipated, and indeed a 40% ascent happened by 2011, with another 30% anticipated to 2013.

Eastern Australia’s National Power Market (NEM) works the world’s biggest interconnected force framework that keeps running for more than 5,000 kilometres from North Queensland to focal South Australia, and supplies some $10 billion power every year to take care of the demand of more than 10 million end clients. The NEM volume-weighted normal cost in 2008-09 ran from $36/MWh in Queensland to $49/MWh in Victoria and $69/MWh in SA. NEM base contains both state and exclusive resources, and is overseen under the general heading of the Australian Vitality Market Administrator (AEMO), which was built up by the state and central governments.

The supply of power starts with generation of power in power station. The generating of power is done by utilizing numerous natural assets that are accessible, similar to coal (significant asset in Australia), renewable energy – sun based, wind, hydro, and a some fuels for low power generation. Generally these power stations are situated in the regional places where there is less population. In Australia, there are number of power stations in every state. “Loy Yang” is situated in Victoria and is the biggest power station in Australia.

The power produced in these power stations are transmitted to diverse districts with the assistance of transmission links. Every locale has its own particular wholesaler who purchases power from the power stations in mass at a low cost. These wholesalers supply energy to the suppliers independently in diverse areas at a value which would be gainful to the merchant. The no. of suppliers are not confined to one and only in a locale, there are atleast 2 to 3 suppliers for a district. (For example: AGL, Origin, Power direct, Jemena are the suppliers of power in Victoria. AGL and Origin are likewise retailers of the power market). These suppliers offer power to the retailers at higher cost than they get. The retailers then alter their very own cost and give it to the clients. This is a long channel of appropriation of power from the producers to the purchasers. Because of the move of power in this long channel, the costs are brought at every point up in the channel and when reaching the end (Consumers) the costs are increased than the manufacturing costs and it varies with different retailers.

The retail organizations that are currently accessible in the business, purchase power effortlessly and make benefits by offering it to the clients at distinctive expense. This is making clients feel uneasy with the costs and making them to choose alternate options like solar energy (for example). At last, the retailers are benefited on the whole than the consumers. Many people switched to the solar energy in the resent years, which made the power prices high.

Honourable Prime Minister of Australia, Mr. Tony Abbot has told in an interview stating that “Australians will notice a difference on their next power bill and argues that the government has lowered the overall tax burden on people” (In a video interview with Sarah Ferguson (Reporter) on 17/07/2014 at Australian Broadcasting Corporation). He also says that the retail companies are advertising on the prices that are going to be reduced soon. Later on the prices of electricity reduced to some extent but not much low.

Resources:

• World Nuclear Association – “Australia’s Electricity”, Appendix to Australia’s Uranium Paper, 2015.
• CME report to Energy Users Association, Electricity prices in Australia: An International Comparison, March 2012.
• “Data and Statistics – Energy in Australia”, ESAA: Policy and Research, esaa.com.au.
• Brady, “A Dictionary on Electricity”, Prepared for Australian National Committee of CIGRE, 1996.
• Warrick, “Living without Electricity”. Essay written for youth tour essay contest organised by White River Valley Electric Cooperative at Gainesville High School.

By

Subramanyam Raju Gangaraju (213340871)

Arun Mattaparti (213347061)

Coca Cola Life , A Healthy Addition ? – Place ( Distribution )

The Coca-Cola Company is the world’s biggest drink organization, invigorating buyers with more than 500 shimmering and still brands. Driven by Coca-cola, one of the world’s most profitable and conspicuous brands, our Company’s portfolio includes 20 billion-dollar brands including, Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitamin water, powerade , Minute Maid, Georgia and Dasani. Together with their packaging accomplices, they rank among the world’s main 10 private superintendents with more than 700,000 framework partners.

From a place and distribution point of view the coca cola company has targeted markets all around the world with particular advertisements based on the culture , language and standard of living of that particular region.

Also , commenting on the latest addition to the coca cola family , the new coca cola life has emerged with more then a few criticisms based on its marketing strategy that is to target a health conscious audience. In terms of distribution , i personally do not feel that this product can make a mark on the already existing range of products that coca cola has to offer , like the Diet coke and the zero sugar coke. With the introduction of this product , coca cola has tried to draw a line between its already existing original Coke beverage and the Coke with zero sugar.

First look – Coca Cola Life

Moreover ,

Well being specialists have blamed Coca Cola for ‘health washing’ purchasers with the dispatch of its new ‘lower-calorie’ soda as despite everything it contains everything of a grown-ups prescribed every day stipend of sugar.The soda pop Goliath’s most recent item, Coke Life, is part of the way produced using an actually sweet plant called Stevia, in an offer to target well being cognizant soda pop sweethearts.At the same time, a 330ml jar of Coca Cola Life still has 22g of sugar, likeness six teaspoons and 89 calories.At the point when contrasted with a 330ml jar of general Coca Cola which has 35g of sugar, likeness just about 10 teaspoons of sugar and 139 calories, that is 35 for every penny less sugar.On the other hand, the World Health Organization (WHO) prescribes that grown-ups of typical body mass list just eat 25g (six teaspoons) of sugar altogether every day.

My question being , if it is seriously sweet , with still a fair amount of sugar , and a reasonably large amount of calories for a small can , what makes it any different from other such offerings? Here is a picture i found where in the senior lecturer at the University of Sydney has made remark about the coca cola life being a healthy addition

“10 teaspoons of Sugar” – Beneficial or Harmful ?

In a general sense, this is around an organization propelling a sugary item to urge more individuals to expend a substance that adds to a scope of dietary and well being related issues, including diabetes. Coca-Cola gives off an impression of being utilizing the front of the administration’s disparaged obligation arrangement to search praise for drawing out an item that still contains more than 4 teaspoons of sugar for each 330ml can, which likens to one-quarter of a kid’s every day prescribed intake of sugar. As indicated by The Australian, Coke’s worldwide deals are under weight, and aggregate soda utilization in the US has declined more than 20 for every penny since 1998. In April, Coca-Cola Amatil cautioned financial specialists the organization’s assets were required to fall 15 percent for every penny in the six months to June 31.

HOW MUCH SUGAR IS IN YOUR DRINK? 

DRINK	SERVING SIZE	GRAMS OF SUGAR (PER SERVE)	TEASPOONS OF SUGAR
Coca Cola Regular	375ml	40g	10
Coca Cola Life	375ml	27g	6
Diet Coke	375ml	0	0
Sprite	600ml	61g	15
Fanta	375ml	42g	11
Solo	600ml	72.6g	18
V Energy Drink	500ml	53g	13
Red Bull	250ml	27g	7
Gatorade	600ml	36g	9
Powerade	600ml	34g	8.5
Lipton Ice Tea: Peach Flavor	500ml	34g	8.5
Vitamin Water	500ml	27g	7

As indicated in the chart above ,in the metaphorical sense coca cola life is like the equator on earth , my point being it has more than half sugar as compared to Diet coke and just a bit more than half when compared to Regular Coke.While numerous are astonished by The Coca-Cola Company’s prerogative far from its famous red naming, there may be a much more unpretentious purpose behind it than the decency of green. The new item is said to contain impressively less sugar than regular Coke (in light of the fact that its sweetened with a plant concentrate), however doesn’t contrast positively and the two current items in the organization’s line-up. A container of Coca-Cola Life contains about 27 grams of sugar – contrasted with 40 grams in regular Coke and none in the two “eating regimen” offerings.Diet Coke and Coke Zero are sweetened with a mix of acesulfame potassium, a without calorie sweetener that is 200 times sweeter than sugar, and aspartame, additionally calorie free and 200 times sweeter than sugar.

The coca Cola life promotions based on place vary in different regions. For example here is an image clicked on southern cross station in Melbourne , Australia which advertises this new product.

“Let life Surprise you” – small yet catchy

Interestingly , from a distribution perspective Coca Cola Life has all the presence of a shopper’s choice, not an organization impulse. In reasonableness to Coca Cola, while Coke Life resembles a strategic reaction to the natural issue, it is discreetly revealing the Plant container in nine unique nations. So it is not a joke. Likewise Coca-Cola Life is bundled in the organization’s Plant Bottle, which is the first recyclable container produced using petroleum-based materials and up to 30% plant-based materials. The trust is to make a 100% plant-based container later on.

Coca cola products have been one of the top competitors in the beverage industry in the past decades but the question to be answered here is weather the introduction of coca cola life would provide a boost or is it going to fail the aspirations of the company. In terms of targeting the market , success based on distribution of the product would also contrast the pricing of the product when compared to the already existing products. The stand out factor is what will determine the success of the coca cola life , unlikely of what region the product is expected to hit. Only time will tell !

“As we tried to instill in each of our subjects over and over, WICKED is good.”The subjects being the audience or the target market and the product being Coca Cola Life along with ‘WICKED’ being the debate.

References

http://www.theguardian.com/business/2014/jun/11/coca-cola-fewer-calories-less-sugar

https://www.business.tas.gov.au/growing-and-improving-your-business/marketing-your-business/doing-a-swot-analysis/checklist-marketing,-promotion-and-distribution-channels

http://www.findingdulcinea.com/news/on-this-day/March-April-08/On-this-Day–Coca-Cola-Company-Releases–New-Coke-.html

http://radiopaedia.org/articles/coca-cola-bottle-sign

Place (Distribution) is at the Heart of Walmart’s Success

   

Walmart is unarguably the largest and leading retailer in the global retail industry with the net sales of $482.2 billion in the financial year ending 2015. The success of the company is based on various elements and strategies, and the effectiveness can simply be noted from the fact that it serves nearly 250 million customers every week, managing and operating over 1050 retail stores across the world in over 26 countries with more than 71 brand identities and corporate banners (Walmart, 2015).

However, the moist important yet interesting fact about the Walmart is defined as its supply chain and distribution strategy which is also considered as the industry benchmark. The main reason is the fact there is no other corporate player in the global marketplace owning the similar size of business portfolio and along with such diversified market existence. It is also revealed from the research studies that the place and distribution strategy that is designed and executed by Walmart is not only the key to its success, but also a source of its competitive advantage.

The company also claims that the primary reason behind its fast pace growth, continuous financial success and diversified product, market and customer portfolio is its distribution strategy which is further supported by the logistics and operations. The effectiveness of Walmart’s distribution strategy can also be noted from the fact that it claims to be seriving more than 250 million customers every week, which in practical context can only be possible, if the strategy is truly effective (Walmart, 2015).

The company i.e. Walmart has established highly automated and centralized distribution units which operate round the clock and 365 days. In order to ensure that customers in each of its targeted regions are served and entertained effectively, the company has established multiple distribution centres in every regional zone. For instance, in the case of United States, over 45 distribution units are established which are dedicated to import goods from around the world and ensure each of the store within the US is managed with the demanded products. These 45 regional distribution units are further supported by over 150 distribution centres that are in direct contacts with retail units across the region. It is also important to understand each of the distribution centres caters the need of 75 to 100 retail stores (Walmart, 2015). This distribution strategy can further be defined as hierarchy which operates in most unique and systemized way to ensure the errorless flow of products from the suppliers to customers at their door step.

Taking the global distribution context into consideration, it is observed that the company in total has established 158 distribution centres which are claimed to be the keys to organisational success. Unlike any other retailer in the world, the Walmart’s distribution network is also claimed to be the world’s largest and most effective within the retail industry. Its logistics activities are performed with the help of more than 6,450 tractors and over 54,000 trailers which are operated by more than 7,000 drivers (Walmart, 2015).

Furthermore, each of its distribution centres has high-tech and modernized systems to moves hundreds of thousands of cases each day. In addition, each distribution centre caters 90 to 100 stores on average that are strategically located with an aim to provide rapid responses to the connected retail stores.

A part from the activities and operations within the context of distribution and place strategy, the company is also found to believe that its workforce assists it to generate enough power to cater its stores as well as every customer at the same time. Walmart therefore puts extra focus on its recruitment, selection, training as well as development and considers it as a part of its distribution strategy. Since the distribution activities involve the logistics too, the company ensures that each of its drivers is not only qualified, but also experienced. The strict company’s policy can be noted from the fact that it only hires drivers those have driven minimum of 300,000 accidental free miles (Walmart, 2015).

In addition, the company also accepts its corporate social responsibility and ensures that its distribution and logistics activities are environmental friendly (Walmart, 2015). For this, the Walmart does not only follow the self-designed and self implemented code of conduct, but also ensures that the global standards in relation to corporate social responsibility are met at all times (Walmart, 2015).

References:

Walmart, 2015, Our Story, retrieved 20^th May 2015, <http://corporate.walmart.com/our-story/>

Walmart, 2015, Walmart Logistics, retrieved 20^th May 2015, <http://corporate.walmart.com/our-story/our-business/logistics>

Walmart, 2015, Truck Fleet, retrieved 20^th May 2015, <http://corporate.walmart.com/global-responsibility/environment-sustainability/truck-fleet>

Walmart, 2015, Reducing Carbon Emission in Our Stores and Global Supply Chain, retrieved 20^th May 2015, <http://corporate.walmart.com/global-responsibility/environment-sustainability/greenhouse-gas-emissions>

By- Sagar Lakhisarani and Siyu Yue

How to win battle in this soft-drinks market–Coca-Cola

Introduction

Last year’s sales increase, buoyed by some much-needed warm, sunny weather should serve as a reminder that this sector continues to provide opportunities for growth.Water and energy drinks stand out as the winners from 2013 and despite some of the claims by campaigners, the soft drinks industry continues to lead the way in providing choices for health-conscious consumers. Specialist food and drink consultancy, Zenith International, has been commissioned to produce the 2014 BSDA UK Soft Drinks Report. All data and insights contained in this report were produced using Zenith’s internal market databases and primary research.In compiling its research, Zenith relies on the goodwill and co-operation of companies active in the marketplace. During Zenith’s annual research into the UK soft drinks industry, over 100 soft drinks producers are contacted. This includes larger branded operators, retailer own label specialists, contract packers and a significant number of smaller independent companies.Based on individual producer volumes for the year, market sector and segment totals are calculated from the ‘bottom up’. At a sector and segment level, adjustments are then made for any double counting of contract and licensed bottling. Estimates for unauthorised soft drink imports sold through the ‘grey market’ are also included. This is more pronounced in categories such as carbonates rather than dilute-to-taste drinks, for example. The market figures presented therefore encompass all aspects of the market including: take home, impulse and on premise; water cooler volumes for the office; home dispensed carbonated soft drinks; and draught dispensed carbonates.Following a detailed review of all data files received, certain adjustments have been made to historic volumes. There is a soft drink for every occasion and consumers are entitled to choose from an ever increasing wide range of drinks. However, the industry recognises the role it can play in encouraging consumers to make healthier choices.Companies are investing heavily in sugar-free alternatives and the evidence from the first few months of 2014 suggests this is the direction consumers continue to head in.Investment in innovation and skills underpins the contribution the soft drinks industry makes to Britain’s economy. Analysis shows the wider supply chain has a value added impact of £7.7 billion and supports a total of 135,000 jobs.

Method–How to expend market share

Coca-Cola company use 5 to 6 methods for expending market share.

1. Focus on the best lines – Coca-Cola concentrates on its most profitable lines. In 1984 77of Coca-Cola’s operating income came from soft drinks. Today the figure is 97 By selling off businesses not sharing the same attractive financial fundamentals as the soft drink business Coca-Cola now operates only in the area of high-return business.
2. Reinvestment – Re-investing profits is the key to ongoing business development. If profits are made today it is important to make sure of a base from which profits may be made tomorrow. In the 199Os Coca-Cola has concentrated its profits on re-investment. In 1983 the company’s dividend payout ratio was 65i.e. most of its profits were paid out as dividends to shareholders. Since then Coca-Cola has been increasing dividends at a slower rate than earnings growth, so that today, 6Oof profits ($66O million in 1994) was available for reinvestment.
3. Focus on the consumer – All successful businesses today are based on focusing on the consumer. If a company meets the requirements of its consumers (and indeed exceeds these requirements), then you have a sure-fire recipe for success.
   An important measure of success is the volume and value of sales that you make.
   The world-wide success of Coca-Cola is illustrated in the chart below:
   Coca-Cola has set out to become the world’s number one consumer marketing company by taking clear actions to differentiate their products.
4. Differentiation with customers – The direct customers of Coca-Cola are outlets such as service stations, newsagents, leisure centres, cinemas, clubs, supermarkets and many other retailers selling soft drinks. In this area the emphasis in marketing has therefore been on providing superior delivery, promotional services and sales support. All of these elements clearly differentiate Coca-Cola as being the beverage supplier most likely to generate profits for retailers.
5. Differentiation with consumers – The end consumers of Coke are the millions of people who consume soft drinks world-wide. Over many years Coca-Cola has expanded its markets horizontally in country after country, until there is virtually no place on earth where people do not drink Coca-Cola. Today this horizontal growth is almost total, with fewer than 20 countries not taking the product. Coca-Cola is therefore now trying to develop the brands vertically.

This simply means creating a deeper consumer desire for that brand than existed the day before. It involves giving people additional reasons to buy Coca-Cola brands instead of reasons to buy competing ones. That is the essence of differentiation. It is not an easy task, because already 5.6 billion people have a well established understanding of what Coca-Cola means to them. However, there are considerable strengths which support Coca-Cola in this task namely:

• The trademark which is so widely known and part of the public imagination.
• Coca-Cola is continually building on its existing expertise in marketing and consumer understanding, and is supported by access to a wealth of financial and creative resources.
• Coca-Cola has an ‘action orientation’. Instead of waiting for change to happen it is at the leading edge, driving action forward.

6. Win the largest market share – Being the major player in a business market is the key to business success. A company only becomes the major player in a market by being the best, and being the best means having a detailed understanding of its consumers’ requirements and then exceeding these requirements.

Once a company is a major player then it has considerable advantages to draw upon. These advantages are based on having a higher return on capital than its rivals and the opportunity to plough this return into fresh investment. Such areas for investment are marketing, product research and development, and other aspects of sound business growth.