Monday, January 09, 2006

Brand extension and profitability

Voh Furstenberg..the name generated high margins regardless of category. However in a few years profitability plummeted.

Luxury brands increse in profitability when consumers perceive that these goods offer good value than other comparable products. De Beers, Bose, Louis Vuitton, Rolex

A study of 150 brands shows that this rule doesnt always hold..

Luxury brands profitability will usually increase as the premium degree increases but only if the brand is extended in to product categories adjacent to the core brand..

Louis Vuitton & Cartier enjoyed margins as high as 79%. These brands have profitability extended their names to categories adjacent to the core product. However, Pierre Cardin began early extensions into perfumes & cosmetics succeeded. The company began giving licenses indiscriminately. By 1988 it gave more than 800 licenses into unrelated categories genrating profits of $1bn. Pretty soon margins collapsed.

Some luxury brands are valued for functional aspects (Porsche)
Other luxury brands like Louis Vitton are valued for the lifestyle they project.
Symbolic brands can be more easily exported into non adjacent categories than functional brands and can succeed only when they consistently promote their core symbolic attributes.

Von Furstenberg made the mistake of emphasising the technical aspects of non adjacent products when it should have played up the symbolic value of brand name.
However, it shold also be seen weather symbolism can be consistantly promoted.

Sunday, November 06, 2005

Clean Development Mechanism

World has become a traders marketplace where absolutely everthing under the sun is traded.
Believe it or not, the latest on offering is Pollution.

What is Carbon Trading?
Carbon trading is a business that asks energy-intensive companies to restrict their harmful gas emissions to officially determined levels, or face penalties.
While those failing to meet their carbon reduction targets will be allowed to buy the cuts achieved by others, the efficient ones exceeding their targets will be able to make money by selling the surplus. The emission permits that are bought and sold will have a financial value and will have to be treated by companies as a balance sheet item.
Who is involved?
There are two categories of countries involved in carbon credit trading and finance:
• Developing countries, which do not have to meet any targets for GHG reductions. They can sell the ensuing credits to countries that do have Kyoto targets. These countries like India are covered by the Protocol’s Clean Development Mechanism.

• Industrialized countries which include OECD countries and countries in transition from centrally planned to open market economies.

Role of Developing countries

Developed countries have to spend nearly $300-500 for every tonne reduction in CO{-2} emission. Contrast this with $10-25 to be spent by the developing countries. The stage is thus set for trade to flourish. Trading carbon credits is hence seen as a less expensive option. Yet, there is a limit to which developed nations can buy credits.
In March this year, Det Norske Veritas (DNV) of Oslo, Norway, well known in the field of ISO certification was accredited by the UN to act as a validating body. The first organisation to get the accreditation, DNV has already lapped a few projects around the world. In India, DNV is in the process of validating 9-10 projects.

How can Organizations gain?
A company in a developing country can gain by trading carbon credits? Every tonne of CO{-2} not emitted is considered as one credit and every carbon credit fetches the company $3-6. The remuneration continues year after year. And the best part is that it is quite easy to implement technologies known to reduce emissions provided the project meets certain criteria.

Note: "The most important criterion is for the project proponent to prove that it is `not business as usual' and is a sustainable project." For instance, it is considered business as usual if it is a binding requirement (on the company) to change the fuel or technology. Thus the change over by the Delhi buses to CNG will not fall under the "is not business as usual" clause.


The Kyoto Protocol envisages carbon credit trade between countries with carbon sinks (planted forests) and others that produce higher levels of pollution than they are allowed to. At 15m hectares, India has the largest plantation area in the tropics, much larger than even Australia, which aims to be a major player in emissions trading. Australia hopes to add 2m hectares of plantation by 20. The many projects initiated by Indian companies after January 1, 00 in diverse areas such as energy efficiency, co-generation, natural gas, alternative auto fuels and hydel power, will also add to the country’s dominance as a large seller in the carbon credit market.
According to officials Indian companies that have jumped in the fray, from steel and sugar firms to utilities and could generate 500-600 million CERs or nearly a quarter of a global traded total of 2.5 billion units by 2012.
India is considered as the largest beneficiary, claiming about 31 per cent of the total world carbon trade through the Clean Development Mechanism (CDM). It is expected to rake in at least $5 billion to $10 billion (Rs22, 500 crore to Rs45, 000 crore) over a period of time.

The industries, which can qualify for the CDM projects, are as follows:

Renewable energy
• Wind power
• Solar energy
• Biomass power
• Hydel power
• Geothermal
• Tydel Power

Fuel switching from fossil fuel to green fuel like biomass, rice husk, etc.
Energy efficiency measures related to

• Boiler
• Pumps
• Turbines
• Installation of various speed drives
• Efficient cooling systems
• Back pressure turbines, etc

Cogeneration in industries having both steam and power requirements

In waste management
• Capturing of landfill methane emission to generate power
• Utilization of waste and wastewater emissions for generation of energy for captive use of power generation

In transport
• Fuel switch from gasoline and diesel to natural gas
• Modal shift from air to train, road to train at macro level
• Replacement of shipment of certain raw materials through road to pipelines

Wednesday, October 26, 2005

Macromarketing to Micromarketing

Marketing strategy plays a crucial boundary-spanning role between an organization and its customers. This research seeks to examine the fast emerging concept of “Micromarketing” and its effects in the way products and services are sold in the market. The study will look at the reasons of the shift observed from mass marketing to micromarketing and the way forward.

Reach me if you wish to know more about the study at

Wednesday, September 07, 2005

LiveMark .. Inter B School Marketing Case Study competition

LiveMark is a Inter B School Marketing Case Study competition, conducted by Brandwagon, marketing club at IIFT, where cases involving current "hot" concerns in the industry are analysed thread bare. Ground work for conducting this seminar entails lot of interaction with the companys concerned, designing the cases etc.
Present Status
Case confirmation from Arvind Brands - Flying Machine

Target Cases
ITC - Sunfeast Pasta
Reva - Electrical Car
HLL - Kwality Walls
Mc Donalds
Career Launcher

We welcome people for giving inputs for making this event a success.

Future Plan of Action
1. Developement of website for LiveMark
2. Getting the final Cases
3. Informing corporates and B school about this event

LiveMark team

Brandwagon Coordinators
Nitin Kochhar - 9811661872
Vaibhav Chadha - 9891015619
Manveet Singh Hora - 9811756781

Deepak Venugopal
Rahul Biswas

For any clarification, contact any of us.

Monday, August 29, 2005

At IIFT CII National Symposium Posted by Picasa


B®ANDWAGON, the Marketing Club of IIFT School of International Business, is a forum of students that are interested in marketing, either as a subject or as a preferred career. It plays an important role at IIFT, hosting various activities that enrich and expand upon students’ classroom experiences.
It is by far the largest and one of the most active clubs on campus, contributing significantly to its members.

  • Presentations and discussions on pertinent issues offer insights on various aspects of the marketing function.
  • Sharing of new ideas or latest developments in the marketing sector help to broaden perspectives.
  • Opportunities to interact with professionals allow the students to understand, explore and link the theoretical with the practical.
  • Offers academic, recruiting and networking assistance to its members, thereby preparing them for successful careers in sales, marketing or business development.
  • Encourages students to participate in Live-cases that enrich their exposure to marketing in the "real world".

  • Provides valuable team-play and leadership opportunities to students that participate and contribute to its various events.
    Has a lot of fun together !!

Thursday, August 25, 2005

Its me

This is Vaibhav Chadha Blog