The mobile phone advertising market
With over 600 million users in India, advertisers are looking to cash in on the mobile phone’s potential as a campaign tool, with spending on this medium is expected to jump more than ten-folds to touch a size of up to Rs 500 crore in next five years. The number of mobile phones in use is also growing much faster than the number of computers. Mobile advertising market currently valued at Rs 40 crore can grow more than nearly twelve times if the telecom companies provide open Internet access at low rates along with standardization of regulations. Most mobile advertising currently are in the form of text messages. This money can come from integration with below-the-line (BTL) budgets, retail budgets and the digital budget. The bottleneck, however, is the prohibitive cost of Internet on mobile and also disproportionate sharing of revenue between telecom service providers and advertisers. The operators have to stop acting as gatekeepers to the Internet and allow consumers to access content and services on the Internet easily and cheaply, using their mobile devices. Currently mobile advertising revenue is split at 70:30 ratio between operators and the companies.There are three types of business models functioning in the Indian market.

There are companies that provide short codes which are the four-digit numbers that you SMS The next is a direct relationship with the service operators; content providers have exclusive tie-ups with operators like Airtel, Vodafone or BSNL The third working model is with application service providers who are into voice-based services.

Other tid-bits

* India has the lowest calling rates in the world – about two cents a minute.* Telecom Services Spending among Indian SMBs Grew by over $200 Million in 2006.* Mobile phone production in India is expected to grow from 31 million units last year to more than 100 million by 2011. Also predicted is that mobile phone production revenue will reach US$13 billion in four years – up from US$4 billion in 2006.Latest Offerings

MSN India and Mobile 365 are forging an alliance. Loop Mobile subscribers will be able to access their Hotmail e-mails and chat with their MSN buddies on SMS anywhere, anytime.Reliance ADA Group’s financial services and products distribution company Reliance Money has unveiled its ‘Mobile Financial Portal’.Mobile 365, mobile messaging and data services provider has announced that it will provide SMS services to Skype, allowing Skype users to send an SMS to a mobile phone from their PC’s.A company has tied up with comics guru Anant Pai for multilingual comics content on mobiles.The mobile VAS market in India has just opened up. With the entry of 3G and the government taking keen interest, operators and content providers are bullish on the market.eDeskOnline.com offers applications. Service for an affordable cost per text message.MyToday Dailies is the largest direct-to-consumer mobile service, with over 3 million subscribers spread across the country. With 25 successful channels, it is a free opt-in SMS subscription service with a cumulative reach of 10 million people everyday. offers advertisers a platform to leverage the power of mobile advertising. It enables advertisers to deliver ads to mobile handsets.Content Providers
Some players in the content segment are
* Mauj,
* Indiagames
* Hungama
* Nazara
* Sound buzz (music)
* Coruscate Tec.The content market …is expected to increase tenfold in the next 5 years.Bulk SMS Service
From one’s desktop one may send promotional, festival, birthday, anniversary and other greetings by way of SMS’s to one’s Customers, Family and Friends in groups with a personalized Sender Name all across the country (Your name/co.name will be displayed on the receiver’s mobile) for the price mentioned below.

Database Rental – 0.02 ps extra per sms if you want us to use our own databases. You can use your own databases and send sms from our website.Type of Content
Areas like cricket, Sensex, movies, health, beauty, and the Bhagvad Gita.Mobile advertising

Is cost-effective besides giving advertisers a targeted access to consumers. Text advertising: With an ever-growing number of mobile phone users in India, advertisers see the handset as a medium with high potential. A student thought a friend was playing a prank on her when a text message on her mobile phone suggested she visit a website to find herself a partner. It was no prank. Her friend, in fact, was one of the many mobile users who volunteer space in their mobile text messages for advertisements in exchange for several incentives such as lesser tariff for value-added services and enhanced features on their mobile phones.With an ever-growing population of mobile phone users in India, advertisers see the handset as a potential medium for reaching consumers with their targeted messages. “Unlike television and print, mobile phones provide a much more focussed and assured access to consumers,” “One always knows that one’s ad has been seen by the consumer, which is not the case with TV or print.”Affle’s SMS 2.0 technology, which once a consumer downloads free from its website, replaces the phone’s existing SMS system with a default browser that installs features such as colours, emoticons, icons, and signature in the user’s text messages. In return, users have to lend the bottom space in their message box for advertisements.SMS GupShup, another mobile marketing company, offers users the option to create their own mobile communities. The company allows these user-created communities to send SMSs or micro-blogs to the entire group for the price of one. In return, the consumers have to agree to accept advertisements.SMS MyToday offers consumers a free messaging service that provides consumers daily updates in areas of their interest. In these updates, however, it smartly incorporates ads and consumers don’t complain about it because the service is free. “On an average, SMS updates will contain 160 characters, of which 70 characters belong to an ad,” says Abhijit Mukherjee, chief executive of Netcore Solutions.mGinger even offers users money to allow marketers to flood their inbox with advertisements. Users get paid 25-30 paisa per SMS, which typically earns them close to Rs30 at the end of the month.The mobile marketing companies charge advertisers anything between Rs05 lakh and Rs20 lakh a month for their campaigns.Mobile marketing in India has yet to take off, despite the large number of calls and messages on our mobile phones every day. The bulk messages sent to hundreds of thousands of mobile users in India are not yet yielding fruitful results – merely antagonizing two-thirds of the user base.

Top Players Advertisers / Service Users

PepsiCo India Holdings Pvt. Ltd,
PVR Cinemas Ltd
Microsoft Corp.
Pantaloon Retail India Ltd,
Reebok India
Cleartrip Travel Services Pvt. Ltd.
Nike Inc.,
Britannia Industries Ltd,
ICICI Bank Ltd,
Board of Control for Cricket in India’s Indian Premier League.
World Phone RPG Cellucom Sony Entertainment Mary Kay cosmetics Airtel

Providers platform for advertisers who want to reach the mobile users of India

SMS 2.0 of Affle India Pvt. Ltd,
SMS GupShup of Webaroo Technology India Pvt. Ltd,
SMS MyToday of Netcore Solutions Pvt. Ltd,
Vakow Technologies Pvt. Ltd.
mGinger of GingerSoft Media Pvt. Ltd.

Size of the Market

Case studies

Service Provider
India times Client  Vishal Mega Mart1 Lakh SMS Footers of 100 characters during Twenty20 cricket world cup on CRI keyword on 58888.Campaign:Download the Desktop Scorecard from indiatimes.com & avail 20% discount from Vishal Mega MartResult:About 9,000 users downloaded the scorecardabout 7,000 users availed the discount from outletsICICI Bank / Product

ICICI Fixed Deposit Promotion3 million SMS Footers in 1 month (September ’07)ICICI Bank offers deposits with 9.5% int. p.a. To apply SMS FD <Name><City> to 58888 or visit branchKeywords used: News, Stocks, Astro, Jokes, DatingLEADS Generated: 20000Godrej Lifespace Purpose

Promotion of Godrej Lifespace website3 million SMS Footers in 1 month (Oct.-Nov’07)Campaign: Get fabulous deals on home and interior products from Godrej Lifespace. For details visit godrejlifespace.comKeywords used: News, StocksLEADS Generated: 20000.StatisticsTEXT-MESSAGE MARKETING – Scourge of SMS spam swamps mobile users.The SMS you got last night–the one that woke you up just as you’d fallen asleep, urging you to consider exquisite three and four BHKs in Supertech Noida, starting from Rs24.35 lakh all inclusive–very possibly came from Jaspreet Singh’s office.Citi Flight Online Data Solu- tions Pvt. Ltd operates out of a handful of cubbyholes in a basement in Connaught Place. The walls are covered with strange blue sheets of laminated wood, and sometimes an employee may be snoozing in the claustrophobic conference room. For a data solutions firm, computers are noticeably absent, but Singh, the owner, vaguely mentions a back-end in Naraina. “And the SMSes,“ he says, “I send from my lap- top, wherever I am.“Last year, noting an upwelling of demand for text- message marketing, Singh started a service called SMS4India. At the time, he had already been running, for nine years, another business called Database4India, which hawked fat databases of mobile phone numbers to anybody who wanted them. These records are, Singh realized, “the life- line of the SMS marketing in- dustry“, so the new venture seemed a logical step.Today, Singh sends close to 20 million SMSes per month, roughly half of them on behalf of real estate developers, who have become the most prolific and annoying spammers in this particular medium. It takes Singh just a minute to send 100,000 SMSes, for which he charges Rs4,000; for one million SMSes, the rate drops to 3 paise per message. “If you call 100,000 people, even at 30 paise per call, imagine how much more expensive it would be,“ Singh points out.Comparisons with other media are instructive. According to Lodestar UM, a media buy- ing agency, the cost to reach 1,000 people via print is, on average, Rs180 for an ad sized 100 column cm. Via a 30-sec- ond television advertisement, reaching 1,000 people costs Rs25.The average response rate to these SMSes is, Singh esti- mates, roughly 1%, and even less for realtors–low, but ac- ceptable for such inexpensive advertising, and higher than an Internet banner ad’s aver- age of 0.5% for click-throughs.The sheer ease of sending these messages and a per-SMS price that has plummeted in near-suicidal manner over the last two years, have combined to yank this industry into over- drive. SMSes go out now from every manner of business: in- surance companies, realtors, bars and restaurants, neigh- bourhood grocers, stockbro- kers, gyms, and schools. Satya Yerramsetti, founder of Hy- derabad-based firm SMSCoun- try Networks Pvt. Ltd, says he even has, as a client, a barber in Mumbai, though he profess- es to not know what kind of messages this barber sends.The largest sender of such SMSes is ValueFirst Messaging Pvt. Ltd, and its chief executive officer Vishwadeep Bajaj esti- mates that 150 million market- ing messages–of both spam and non-spam variety–are sent every day in India; his firm sends a full one-third of these. On a half-wiped white- board at his office in Gurgaon, Bajaj chews through the num- bers; assuming each message costs, on an average, 3 paise, that would bring the industry’s annual revenue to Rs200 crore.“Around 30% of these are promotional SMSes,“ he says, politely refraining from the word “spam“. The remaining would then be service messag- es–SMSes that the receiver has opted to get, such as bank account activity alerts. Bajaj insists this is the split, though the empirical experience of re- lentlessly spammed receivers suggests perhaps that the ratio is lopsided in the opposite di- rection.As rapid as the industry’s growth has been, Bajaj pre- dicts just as rapid a demise. “A couple of companies have driven down the per-SMS price so low that the margins are very thin,“ he says. He remem- bers the “good old days“, in 2002, when SMSes cost any- where between 90 paise and Rs1.50; the margin, per SMS, is now often a solitary paisa, and sometimes less. “We survive because of our scale, but other companies should just go home. Wait six or eight months, and you’ll see that ev- eryone is going to die.“ Value- First is already preparing, Ba- jaj says, to reorient itself, to- wards the construction of mo- bile applications.The ecosystem of SMS marketing is a varied and fractured one. Most visibly, there are half a dozen big companies (such as ValueFirst and SM- SCountry) and a smattering of smaller ones, all of which buy bulk messaging capacity–or “pipes“–directly from telecom operators.Around 60-70% of the capac- ity used by SMS marketeers is sourced from Tata Teleservices Ltd, Bajaj says, often at rates so low that they translate into 1 or 2 paise per SMS. But Lloyd Mathias, chief marketing offi- cer of Tata Teleservices, puts his company’s share in the market far lower. “We are not focused on this market at all,“ he says. “It does form a part of the value-added services reve- nue that we make, but I would not be able to say how much it contributes to our revenue.“Issues
According to rules set down by the Telecom Regulatory Authority of India (Trai), every telemarketeer must be regis- tered with it. Also, every mar- keting SMS must be stamped with a unique sender name, bearing a prefix that identifies the operator who has provided the requisite capacity. A “TM“ prefix, for example, fingers Tata Mumbai; an “AD“ mes- sage comes via Airtel Delhi.Even these basic rules are now flouted routinely. “We have…started getting com- plaints of people sending SMSes without the mandatory stamping, which is against the rule,“ a Trai official, who asked for anonymity, confirms. So an SMS simply stamped “PRIME“, advertising the Rosewood City Township in Jaipur, is, to put it most bluntly, illegal. And it can only be delivered, as per the existing system, if a rogue op- erator sells messaging capacity and allows the SMSes to pass through unstamped.Another new method for by- passing the stamp–another method, in essence, that makes it difficult for the regu- lator to bear down on illegal telemarketeers–involves the use of modems with multiple SIM cards. “These modems are slower,“ Bajaj says. “They send maybe eight messages a min- ute.“But with pre-paid SMS cards, costs are low, and with spam, it matters less how fast it goes out and more that it goes out at all.The sway of the unorganized section of the SMS marketing industry is strong: Onais Rafiq, manager of media sales and alliances at SMSCountry, estimates that only 40% of these text messages are sent by“or- ganized“ firms such as his own. Instead, a tier below Value- First and SMSCountry lies a sea of resellers–mom-and- pop shops such as Singh’s Citi Flight, which purchase capaci- ty from the big players, dice it up further, and sell it on to ei- ther still-smaller resellers or local customers.These resellers have now be- come difficult to ignore. Bajaj says that ValueFirst started, last year, to sell capacity to re-sellers. Similarly, SMSCountry began only a few months ago to sell a white-label version of its SMS-sending software to re- sellers because, as Yerramsetti admits frankly, “We thought we were losing a large market share to our competitors.“ SMSCountry has grown rapidly in the same time frame; from 70 employees in December, Rafiq says, they now have 300, and hope to reach 500 by the end of the year.In the bitterest irony, though, Bajaj notes that as per-SMS prices have plunged, the smaller resellers, who have grown the industry to such mammoth proportions, suffer first and the hardest. Margins dilute further as they squeeze down the chain. “It’s the mom- and-pop guys–you know, two guys somewhere with a PC–who’re telling us: `Thanks boss, but we’ve had enough’,“ Bajaj says. “Once upon a time, the margins for these guys used to be enough that they could buy a Honda City after eight months. Now, they can’t even buy a Maruti.Your mobile number is out there, brace for more SMS spam:Four years after Harshit Gupta dropped out of school to set up ItDoon.com, an SMS marketing firm in his home town of Dehradun, he began to notice a trend. “Somebody with a political background, say, would want to send campaign SMSes to voters in Uttarakhand, but they wouldn’t have any numbers to target,” Gupta recalls. “When I said that I didn’t have any numbers either, they’d simply take their business elsewhere.”So, five months ago, Gupta did what any pragmatic businessman would do: He started to sell databases of mobile -phone information as well, Excel sheets full of names and numbers, sometimes running into the millions. “There are a lot of vendors out there,” Gupta says. “I just buy the databases and resell them.”At the seamy heart of the Rs200 crore per year SMS marketing industry—and, indeed, of the far larger Rs11,000 crore per year telemarketing industry—sits a remarkable auxiliary business: the buying and selling of mobile phone numbers. Here, telemarketeers can be both retailers and customers. Every small SMS marketing shop such as ItDoon.com now offers Excel sheets of mobile numbers, and every shop makes the same claim Gupta does: “I don’t know how my sources get the databases. I simply buy them.”This auxiliary business is responsible for not only the millions of spam SMSes sent, but also for rendering ineffectual the lone barrier that the Telecom Regulatory Authority of India (Trai) has erected against spam: the National Do Not Call (NDNC) registry, established in 2007.These mobile number databases can get eerily specific. Jaspreet Singh, owner of a service called Database4India, which operates out of a basement in Connaught Place, says he can provide numbers by geography, or by the incomes of their owners; he can even purchase a database of all the Honda car owners in New Delhi. “Although, to be honest, not every number in that database will be accurate,” he admits. “There will be a lot of fake numbers in these really specific databases. But the generic databases, with lots of numbers, are all accurate.”How these numbers are collated remains the subject largely of speculation, though one Trai official, who asked to remain anonymous, contends that it is “not difficult to get the information.”Many firms use auto-diallers, trying one number after another, and compiling the results. “They can…just call in a series,” the Trai official said. “Anybody in the telecom sector knows that the 98 series is full and so is the 94.”Even less sophisticated and even more rampant, however, is the phenomenon of data leakage—trickles of personal information that seep out of banks, schools, courier companies, employment websites, credit card companies, insurance brokers, and (if Singh’s database of Honda owners is any indicator) car dealerships. One executive at a large multinational bank, who did not want to be named, admitted that, as recently as last year, “a lot of our databases were freely out there”. He emphasized the main challenge: that the systems of vendors and data collection agents were not necessarily as secure as the bank’s own.At one major insurance firm, several internal investigations are under way to identify and stop leaks of customer records. In this case, with their information available on the open market, customers are prime targets to be called and poached by other firms. “We’ll match this data being sold to see how accurate it is and where it’s coming from,” says one member of the investigation. “The guy we’re buying the data from is confident that he’ll be able to provide mobile numbers and policy details.”Surprisingly, the sale of consumer information is not illegal. (The rudiments of a privacy Bill are only now being discussed, as Mint reported in June.) “A personal data protection Bill was introduced in the Rajya Sabha in 2006, but it more or less disappeared,” says Lawrence Liang, a Bangalore-based legal researcher. Some regulations approach privacy, he points out, “obliquely”. Section 72 of the Information Technology Act, 2003, for example, “provides protection against breach of confidentiality and privacy” of electronically stored data.Another close brush with protecting customer data came in 2006-07, when the ministry of consumer affairs set up a working group to study online shopping. “We recommended that leaking data constitutes a deficiency of service and therefore be actionable under the Consumer Protection Act—and not just for online retailers, for any company,” recalls Bharath Jairaj, a Chennai-based consumer rights advocate who served on the working group. “But that recommendation is still lying with the Central government. It hasn’t been implemented.”In the absence of such legal recourse, the NDNC registry is the sole, flimsy guardian against spam. Three years after it was established, the registry contains around 60 million mobile numbers—barely one-tenth of all the mobile subscribers in India.Worse, even NDNC-registered numbers receive spam texts; in fact, in the world of database vending, an Excel sheet of NDNC numbers is often worth a premium.Partly, the fault lies with the insufficiency of the NDNC filter. Registered telemarketeers should present Trai with every number they are calling or messaging; within 24 hours, Trai should “scrub” that set of numbers, winnowing NDNC numbers from others. “Barring a few exceptions, most of the scrubbing has been given back within the stipulated time,” the Trai official says, though he then admits: “There are many telemarketeers that haven’t registered.”Trai’s scrubbing capacity is, in the face of 150 million bulk SMSes sent daily, also severely limited. For each telemarketeer login, Trai offers to scrub 0.39 million numbers every day, so companies such as ValueFirst Messaging Pvt. Ltd, which sends 50 million text messages daily, must buy multiple login. “We have a team of 12 or 13 people who do nothing but scrubbing,” says Vishwadeep Bajaj, chief executive officer, ValueFirst. With a host of prestigious, legitimate clients, a company such as ValueFirst cannot afford the taint of spam and, is therefore, meticulous about its scrubbing.But smaller resellers have no such compunctions. “If a customer gives me a database of numbers and assures me that they’re all opt-in customers of his, I can hardly check each one,” says Singh. In such situations, he “lifts the filter”, sending the SMSes on through a system that performs no scrubbing. “Only if I get a complaint about a particular customer will I realize that they are sending spam.”Even when complaints are registered, they bear sparse fruit. Unregistered telemarketeers, when caught, should be disconnected; registered telemarketeers who violate NDNC protocol are levied meagre fines. “If the operator doesn’t take any action, they are penalized Rs25,000 for the first offence and Rs50,000 for the second,” says the unnamed Trai official. “But the operators don’t let it reach that stage. It’s easier for them to disconnect that account of the violator and create another one.”The NDNC could be applied far more strongly, but that apart, few solutions appear to exist. Trai recently mooted a Do Call registry, a mirror image of the NDNC that would consist of people wanting to receive marketing messages. In consultation papers that Trai invited on the subject, the Do Call concept was almost universally scoffed at.“It won’t work. I don’t think that even five million people would register in a Do Call list, but imagine if they do,” Bajaj says. “Then these poor guys will get 500 SMSes a day, and they’ll also drop out.” What’s needed, in his view, is enforcement, “and that’s just not happening. That’s why this industry has become so messy.”Opportunities Value added Services

TRAI has put mobile sector revenues at around Rs 25,000 crore for FY05 comprising both voice and data services. These revenues have been growing at a compounded annual rate of 40 % over the last five years. Revenues from VAS such as SMS, ring tones and ring back tones were about 10 % of that recorded last year. Wireless operators, music and film companies, comics content developers, game developers and musicians are all entering the mobile content market for ring tones, gaming, mobile imagery and streaming audio and video. The Indian mobile market is riding high on rich media content, with SMS being the biggest revenue generator. Ring tones downloaded from the Internet or with a short code service, both need SMS. Thus it is by far the largest revenue generator.” Mobile music downloads (including ring back tones) are valued at Rs 400 crore. Rs 50 crore was paid in royalties to the music industry in the past 18 months. About 400,000 ring tones are downloaded daily The price point of games is still an issue in India. “We as a nation do not have a gaming culture as they do in Korea, Japan or European countries.” Nokia is working with service providers like Vodafone for providing services to their customers. Service providers want to work with manufacturers and content developers due to their declining average revenue per unit (ARPU). Though the number of people going mobile is increasing, they use the bare minimum of services.

Movers and Shakers

Bulk Faxing Services are available for sending faxes in large quantity to a predefined set of database locally, nationally or internationally at low-cost, high-success fax transmissions.

Cost implications are here below.

• 500 to 10000 Faxes Locally @ Rs. 4/- + ST per minute
• 10000 to 30000 Faxes Locally @ Rs. 3/- + ST per minute
• 30000 to 60000 Faxes Locally @ Rs. 2.80ps + ST per minute
• 60000 and above @ Rs. 2.50ps + ST per minute

International Prices for bulk faxing would depend on the destination chosen,

Database could belong to the service provider as well as yourself.

Top Players

Size of the Market

Case studies

Statistics

Issues

Opportunities

Additional Readings

Movers and Shakers

Email marketing is a powerful tool and gives good ROI. Direct E-mail Marketing is the fastest option for sales. Email is versatile and simple to organize, as long as your database is in good shape. A email campaign will deliver responses within 48 hours. This is one of the fastest possible media. However, as the usage of this method is expanding, it is becoming increasingly difficult to launch a successful email campaign.

54% of small businesses surveyed rated e-mail as the top online promotion to drive site visitors and customers to their web sites.

Today there are many regulations that form various boundaries on this form of marketing. 

The “Can Spam” Act provides relief to legitimate email marketers everywhere.  Among other advantages, recipients cannot sue the senders of bulk email. Now, there’s just one law and one set of much easier rules for email marketers to follow.

 Summary of the requirements for sending unsolicited bulk email under the law:

One must honor remove requests within business 10 days.
Use a valid return address (return address must remain active for 30 days after mailing) cannot use misleading subject lines.

Include physical address in the message (even if it’s a PO box). Sexually oriented messages must be clearly labeled in the subject line.

Cannot forge headers.

Cannot sell your remove list for others to mail to.

Makes illegal to send through “protected computers” without authorization. In short, hacking into a person’s computer to send mail is still illegal.

E-mail address acquisition and use: Q and A..

Opt-in/opt-out?
Is some form of affirmative consent to receive email marketing messages required?
Ans: Yes.

Is some form of “opt-out notice” required to be included in each marketing message.
Ans: yes

Are there specific content, location, or form requirements, such as required use of a language, or two languages, positioning of the notice at the head of the message, etc.
Ans: No

If opt-out is exercised, is there a time limit within which the list owner must  remove/suppress the address.
Ans: Within a reasonable time.

If opt-out is exercised, is there a time period within which the opt-out becomes null and the address may be used for marketing again.
Ans: The opt opt cannot become null .

Must “opt-in” proof be maintained or stored.
Ans: Yes.

For how long.
Ans: Till the email communications continue

Is there a legal definition or best practice which defines effective opt-in.  Ans:  No

Is “opt-in” time limited or forever until withdrawn.
Ans: Forever until withdrawn

Is “opt-in” or permission required by law or best practice for the transfer of an address to a commercial partner for purposes of marketing.
Ans: No

If such transfer is intended, must prior notice be given to the individual before this is done.
Ans: No. It is understood

Is there a legal definition or best practice of what this notice must state.  

Ans: No

If so, please provide a sample.
Ans: Not applicable 

Is “opt-in” required before transfer
Ans: no

Is providing notice and opt-out sufficient.
Ans: Yes

Ques: Are there any subject line requirements or best practices, such as “ADV” or similar.
Ans: Yes

If so, please list:
Ans: Subject line requirements are that “ADV” should be placed for an advertisement

Must a privacy policy or link to a privacy policy or other legal notice be included in the e-mail.
Ans: No

Are there either legal or best practice requirements regarding providing html vs text versions of commercial messages.
Ans: No distinction

Must there be a physical address listed in the email for any purpose.       Must it be within your country.
Ans: Yes

Must the e-mail or the e-mail marketing system provide self-enforcing limits on the frequency of use of the address for marketing purposes.
Ans: Yes

Ques: What is the legal status of “forward-to-a-friend”, or “member get member” marketing techniques in e-mail, that is when a commercial message contains a request that the recipient forward the message on to a friend or relative.
Ans: Common law provisions apply

Ques: Are there constraints of law or best practice on this technique?
Ans: Yes: common law provisions apply

Research has concluded that there are certain times, days, headings that attract a better response than others. Vendors run E-mail Marketing campaigns which includes features like creating relevant data base for your target market by internet search, writing effective mail message to increase response rate & sending mails at one-to-one bases not in bulk mail style. They provide you complete data base of the companies to whom we mail and also handle E-mail marketing campaign at a specific time. Many businesses turn to professional Email Marketing companies for better results:

Top Players:

E-newsletters by email are becoming the rage.

Whether for maintaining a loyalty program, or for sending out balance statements, email is the preferred media. One can choose one’s area of interest; sign up, and start receiving the content of one’s choosing.

Examples

• You stay in a hotel, and you start receiving offers of discounted stay.. Four Seasons .. Mumbai 
• You sign up for a bookstore loyalty card: you get a monthly statement, along with special invites. Crossword.. Mumbai
• You can get your favorite columnist send you his musings by a regular newsletter… Hindustan Times.. Delhi

E-alerts by email are becoming more relevant.

Examples

• Your stock-broker can program his computers to alert you of significant price movements .. Motilal Oswal 
• Google will send you updates on search engine results: you simply provide them with your preferred “query”

Both e-newsletters and e-alerts are “media-property” in the sense that they provide advertisers with a platform to convey their spiel. Most readers do no mind this: advertising subsidizes the cost of producing the newsletter.

Safeguards are in place to ensure that only “double opt-in” subscribers get entered into the database. The IP address and time is logged in as proof of the opt-in.

Recipients of the emails that tire of the content simply need to “unsubscribe”.

Movers and Shakers

Mr. K Manjunatha of Aghreni Technologies, Bangalore

Direct mail is an effective DM tool in Indian conditions.Indians aspire to a Western way of life and feel flattered on receiving mail-pieces (especially the ones with a foreign post-mark). English-language mail-pieces impart snob-value to the recipient. Direct mailers now account for about five per cent of the total-marketing pie: this will rise to 20 per cent following the restrictions on telemarketing. At present, direct mailers are targeted only to high-end customers. Banking, Insurance, Charity, Publishers, are a few of the major which are depending on Direct Mail for marketing their products. Reasons which would “be likely to increase consumer interest in direct mail”

* I’m already a customer/have dealt with the company – 73%
* I feel its relevant to me – 72%
* I have heard of the brand name – 69%
* I am interested in/considering this type of product/service – 68%
* It is correctly addressed – 67%
* It looks like it contains a free sample – 62%
* It has the name of the company on the envelope – 62%

A Mailing Preference Service is not likely to be introduced in the future. Direct mails – addressed. Some examples are insurance, banking, and tourism.Some firms active in using direct-mailers are: Name of firm pcs Million

industry segment

* CITIBANK 3.0 credit cards* AMERICAN EXP 1.0 consumer merchandise* INDIAN AIRL 1.0 consumer merchandise* LIVING M 1.0 magazines * READERS’ DIGEST 0.7 general interest magazine * INDIA BOOK HOUSE 0.4 magazine subscriptions Examples include * building traffic for Standard Chartered Bank, * driving footfalls into retail stores such as Wills Lifestyle.* Driving truck drivers for loyalty for Apollo Tyres…* HPCL, Xerox, Wipro, Hindustan Lever, ITC, Air India.* Pidilite manufacturer of FEVICOL adhesive engages in direct marketing by publishing magazines and sending them to almost 300,000 carpenters every quarter.* Fund raising campaigns for charitable organization like World Vision, CRY, Help Age and Unicef are very common. Direct mails – un-addressed Examples: Geographically specific newspaper inserts Direct Mail product from the Postal Dept. Billing inserts of banks, and telecom forms. There are consumer forums: both governmental, and NGOs. Response rates are high for freebies. However, the marketer has to be careful to screen the respondents to his campaign. A publisher of a high-priced chemical-industry newsletter offered a free trial-subscription to all trade-fair visitors.After the free trial period expired, it got zero conversions. He should have insisted upon strict qualification criteria. Thus, free-loaders can be minimized. Pre-qualification of the prospect would have been cost-effective. This could have been done by first requesting a business card; & then selecting only the serious prospects. In the case of a consumer-goods marketer, this can be done by asking for a self-addressed pre-stamped reply-envelope. A direct-mail campaign is the most effective DM tool in Indian conditions. Bilingual mail-pieces are not necessary. Distribution of Mail Order Sales Percent (%) Electronics 30Cosmetics 10Fitness 35jewelry 5 Others 20Despite 14 official languages and myriad dialects throughout the country, English is widely spoken and understood and virtually all mailings and other printed media are in English.Postal Campaign: Marketers may send out product fliers & brochure by courier to the vendors’ databases or one’s database at the following rates: Rs. 9/- per envelope (Mumbai) – Weight less than 250 gmsRs. 18/- per envelope (All India) – Weight less than 250 gms(Labeling, Insertion, Printing of Labels and Courier Charges are borne by the vendors). Minimum Requirement – 5000 Fliers or Brochures which have to be supplied by the marketer.

Unaddressed

Postal Campaign: * The vendor can also send out the marketers’ product fliers & brochure to high profile societies in Mumbai in tie-up with the postal authorities. This envelope is sent out unaddressed or without any label on it once the societies have been identified. This activity can be done area-wise as well. Rs. 3.50 per contact (Mumbai) – Weight less than 250 gms. Minimum Requirement – 2000 Fliers or Brochures which have to be supplied by the marketer.* DABAWALLA Insertion: Send hard copy fliers in 1,50,000 Lunch Boxes which are delivered daily by the vendors’ very own Dabawalla’s just @ Rs. 0.45 pcs per contact.* Insert Pamphlets in newspapers of your choice and send to areas of your choice in Mumbai @ Rs. 250/- per 1000 inserts.* Reliance Energy Bill Inserts: For selling your products along with electricity bills to the whole of suburban Mumbai? An agency of a leading power supply company will help you to reach out to more than 20 lakh consumers with your product or service. The costs of a mail campaign can be gauged from…A4 color letter head – with preprinted matter on 80gms good paper in the region of about Rs 0.55per sheetLaser personalization if required – Rs 0.60 per impressionLaser labels if required – Rs 0.35per label with laser printing and bar codes.Return envelope – BRE – Single color – on 80gsm paper – abut Rs 0.50per envelope.Outer envelope in 2 colors – on 80gsm paper – abut Rs 0.55per envelope.Brochure – need more information – size, paper specs, no of colors.Mail handling costs – approx Rs 0.30per envelope.Postage on actual – rate of the postal authorities – Book Post Rs 4.00, First Class – Rs 5.00, Direct Post – LOCAL – Rs 1.50, Outstation Rs 2.00Foreign Postage Rates for Sample & Small Packets: Nepal, Bhutan, Bangladesh, Pak- * Rs.13 till 100gms* Rs.23 till 101-250gms* Rs.42 till 251-500gmsAPPU Countries-* Rs.17 till 100gms* Rs.31 till 101-250gms* Rs.56 till 251-500gmsUPU Countries-* Rs.20 till 100gms* Rs.37 till 101-250gms* Rs.66 till 251-500gmsAsian Pacific Postal Union (APPU) Countries: Afganistan, Australia, Brunei, Cambodia, China (Peoples republic), Fiji, Indonesia, Iran, Japan, Korea (republic), Laos (republic), Malaysia, Maldives, Myanmar, Nauru, New Zealand, Papua New Guinea, Singapore, Soloman Island, Srilanka, Thailand and Vietnam. * Foreign inland letter Rate Rs. 15/-Postal rate for sending envelope cover (air mail) :Grams – Rate Rs.20 – 25/-40 – 38/-60 – 51/-300 – 207/- Top PlayersIndian PostElectricity CompaniesNews Paper distribution vendors Size of the MarketTraffic Projection for Direct Mail in India(crores of Pieces) (per an independent study)
Year / Total Direct Mail / Un-Addressed Mail    that goes out in India      addressed letter post mail         addressed parcel post mail                    (local+ to abroad)         (local+ to abroad)        as ‘published products’

2005             40                                         25                                         10                                         20

2006             50                                         50                                          30                                        10                                              30

2007             60                                         35                                          10                                         40

2008             70                                         45                                          10                                         50

2009             85                                        50                                            10                                        60

2010             105                                      60                                            10                                        70

2011             120                                      75                                             10*                                      80*

no considerable increase because of new mediums like email….

Statistics

In the USA, mail offers to new and existing customers are 8.4 billion pieces.Projections & future outlook of the direct mailing industry sub-set of the direct marketing industry in India:2008 $ 2 billion 2009 $ 3 billion2010 $ 4 billionThese figures have been collated from different sources and economic surveys.The reports from several advertising bodies were also considered. IssuesThe government-monopoly mail-service is slow (4th day delivery). More importantly, it is only 90 % reliable. India does not have any Bad Business Bureau. Foreign mailers should bear in mind that Indian laws have to be complied with, e.g. for an insurance offer, a disclaimer “Insurance is the subject matter of solicitation” needs to be appended.

Opportunities

Marketers using Direct-mailers are interested in English-literate consumers.* This target audience typically have money to spend. * The universe of this sector is 200 million. * Dividing by a factor of 4, (being the average family size), one arrives at a figure of 50 million such families.* Consumer reaction to direct-mail is extremely positive.* Indians aspire Western way of life.* Indians feel flattered on receiving Western-style mail-pieces (especially ones with a foreign post-mark).* This is because the recipient feels wealthy enough to be targeted.* Furthermore, the Indian-consumer views direct-mail as ‘infotainment’.

IntroductionDirect mail is an effective DM tool in Indian conditions.Indians aspire to a Western way of life and feel flattered on receiving mail-pieces (especially the ones with a foreign post-mark). English-language mail-pieces impart snob-value to the recipient. Direct mailers now account for about five per cent of the total-marketing pie: this will rise to 20 per cent following the restrictions on telemarketing. At present, direct mailers are targeted only to high-end customers. Banking, Insurance, Charity, Publishers, are a few of the major which are depending on Direct Mail for marketing their products. Reasons which would “be likely to increase consumer interest in direct mail” * I’m already a customer/have dealt with the company – 73% * I feel its relevant to me – 72% * I have heard of the brand name – 69% * I am interested in/considering this type of product/service – 68% * It is correctly addressed – 67% * It looks like it contains a free sample – 62% * It has the name of the company on the envelope – 62% A Mailing Preference Service is not likely to be introduced in the future. Direct mails – addressed. Some examples are insurance, banking, and tourism.Some firms active in using direct-mailers are: Name of firm pcs Million industry segment* CITIBANK 3.0 credit cards* AMERICAN EXP 1.0 consumer merchandise* INDIAN AIRL 1.0 consumer merchandise* LIVING M 1.0 magazines * READERS’ DIGEST 0.7 general interest magazine * INDIA BOOK HOUSE 0.4 magazine subscriptions Examples include * building traffic for Standard Chartered Bank, * driving footfalls into retail stores such as Wills Lifestyle.* Driving truck drivers for loyalty for Apollo Tyres…* HPCL, Xerox, Wipro, Hindustan Lever, ITC, Air India.* Pidilite manufacturer of FEVICOL adhesive engages in direct marketing by publishing magazines and sending them to almost 300,000 carpenters every quarter.* Fund raising campaigns for charitable organization like World Vision, CRY, Help Age and Unicef are very common. Direct mails – un-addressed Examples: Geographically specific newspaper inserts Direct Mail product from the Postal Dept. Billing inserts of banks, and telecom forms. There are consumer forums: both governmental, and NGOs. Response rates are high for freebies. However, the marketer has to be careful to screen the respondents to his campaign. A publisher of a high-priced chemical-industry newsletter offered a free trial-subscription to all trade-fair visitors.After the free trial period expired, it got zero conversions. He should have insisted upon strict qualification criteria. Thus, free-loaders can be minimized. Pre-qualification of the prospect would have been cost-effective. This could have been done by first requesting a business card; & then selecting only the serious prospects. In the case of a consumer-goods marketer, this can be done by asking for a self-addressed pre-stamped reply-envelope. A direct-mail campaign is the most effective DM tool in Indian conditions. Bilingual mail-pieces are not necessary. Distribution of Mail Order Sales Percent (%) Electronics 30Cosmetics 10Fitness 35jewelry 5 Others 20Despite 14 official languages and myriad dialects throughout the country, English is widely spoken and understood and virtually all mailings and other printed media are in English.Postal Campaign: Marketers may send out product fliers & brochure by courier to the vendors’ databases or one’s database at the following rates: Rs. 9/- per envelope (Mumbai) – Weight less than 250 gmsRs. 18/- per envelope (All India) – Weight less than 250 gms(Labeling, Insertion, Printing of Labels and Courier Charges are borne by the vendors). Minimum Requirement – 5000 Fliers or Brochures which have to be supplied by the marketer.

Unaddressed Postal Campaign: * The vendor can also send out the marketers’ product fliers & brochure to high profile societies in Mumbai in tie-up with the postal authorities. This envelope is sent out unaddressed or without any label on it once the societies have been identified. This activity can be done area-wise as well. Rs. 3.50 per contact (Mumbai) – Weight less than 250 gms. Minimum Requirement – 2000 Fliers or Brochures which have to be supplied by the marketer.* DABAWALLA Insertion: Send hard copy fliers in 1,50,000 Lunch Boxes which are delivered daily by the vendors’ very own Dabawalla’s just @ Rs. 0.45 pcs per contact.* Insert Pamphlets in newspapers of your choice and send to areas of your choice in Mumbai @ Rs. 250/- per 1000 inserts.* Reliance Energy Bill Inserts: For selling your products along with electricity bills to the whole of suburban Mumbai? An agency of a leading power supply company will help you to reach out to more than 20 lakh consumers with your product or service. The costs of a mail campaign can be gauged from…A4 color letter head – with preprinted matter on 80gms good paper in the region of about Rs 0.55per sheetLaser personalization if required – Rs 0.60 per impressionLaser labels if required – Rs 0.35per label with laser printing and bar codes.Return envelope – BRE – Single color – on 80gsm paper – abut Rs 0.50per envelope.Outer envelope in 2 colors – on 80gsm paper – abut Rs 0.55per envelope.Brochure – need more information – size, paper specs, no of colors.Mail handling costs – approx Rs 0.30per envelope.Postage on actual – rate of the postal authorities – Book Post Rs 4.00, First Class – Rs 5.00, Direct Post – LOCAL – Rs 1.50, Outstation Rs 2.00Foreign Postage Rates for Sample & Small Packets: Nepal, Bhutan, Bangladesh, Pak- * Rs.13 till 100gms* Rs.23 till 101-250gms* Rs.42 till 251-500gmsAPPU Countries-* Rs.17 till 100gms* Rs.31 till 101-250gms* Rs.56 till 251-500gmsUPU Countries-* Rs.20 till 100gms* Rs.37 till 101-250gms* Rs.66 till 251-500gmsAsian Pacific Postal Union (APPU) Countries: Afganistan, Australia, Brunei, Cambodia, China (Peoples republic), Fiji, Indonesia, Iran, Japan, Korea (republic), Laos (republic), Malaysia, Maldives, Myanmar, Nauru, New Zealand, Papua New Guinea, Singapore, Soloman Island, Srilanka, Thailand and Vietnam. * Foreign inland letter Rate Rs. 15/-Postal rate for sending envelope cover (air mail) :Grams – Rate Rs.20 – 25/-40 – 38/-60 – 51/-300 – 207/- Top PlayersIndian PostElectricity CompaniesNews Paper distribution vendors Size of the MarketTraffic Projection for Direct Mail in India(crores of Pieces) (per an independent study)
Year        Total Direct Mail            Un-Addressed Mail          that goes out in India      addressed letter post mail         addressed parcel post mail                    (local+ to abroad)         (local+ to abroad)        as ‘published products’                  2005             40                                         25                                         10                                         20 2006             50                                         50                                          30                                        10                                              30    2007             60                                         35                                          10                                         40 2008             70                                         45                                          10                                         50      2009             85                                        50                                            10                                        60 2010             105                                      60                                            10                                        70 2011             120                                      75                                             10*                                      80* no considerable increase because of new mediums like email…. StatisticsIn the USA, mail offers to new and existing customers are 8.4 billion pieces.Projections & future outlook of the direct mailing industry sub-set of the direct marketing industry in India:2008 $ 2 billion 2009 $ 3 billion2010 $ 4 billionThese figures have been collated from different sources and economic surveys.The reports from several advertising bodies were also considered. IssuesThe government-monopoly mail-service is slow (4th day delivery). More importantly, it is only 90 % reliable. India does not have any Bad Business Bureau. Foreign mailers should bear in mind that Indian laws have to be complied with, e.g. for an insurance offer, a disclaimer “Insurance is the subject matter of solicitation” needs to be appended. OpportunitiesMarketers using Direct-mailers are interested in English-literate consumers.* This target audience typically have money to spend. * The universe of this sector is 200 million. * Dividing by a factor of 4, (being the average family size), one arrives at a figure of 50 million such families.* Consumer reaction to direct-mail is extremely positive.* Indians aspire Western way of life.* Indians feel flattered on receiving Western-style mail-pieces (especially ones with a foreign post-mark).* This is because the recipient feels wealthy enough to be targeted.* Furthermore, the Indian-consumer views direct-mail as ‘infotainment’.

The Indian Post Department comes under the Ministry of Communications and Information Technology, Government of India, The Indian postal network system is the largest in the world. Almost all villages having a population of over 500 have been provided with Letter Box facilities.To make the extensive network of Post Offices available for the growing Direct Mail advertising industry of India. Indian Post Dept. has introduced the Direct Mail system which will not only help the businesses in accessing the prospective customers all over India in a cost effective manner, but would also help the Department of Posts increase its market share of the …corporate communications sector.* Direct Mail 590 million Pieces* Un-Addressed Mail 367 million PiecesThere are no weight or size restrictions, & no off-peak rates are available. Domestic postal rates in India for a 20 gms package are 8 cents (an additional 8 cents for each additional 20 grams). Other mailing options available are:
For an extra charge of 20 rupees, any mail-pieces can be ‘speed-delivered’.
Periodicals can use a special low rate by registering themselves as a newspaper.
A business-reply-envelope license can be obtained (costing 5 cents per response; plus the applicable postage charges);
Discounts of up to 5 % are available for bulk mailing (over 10,000 pieces);
Registered mail pieces take a couple of days longer to be delivered but are 99 % reliable. Extra charges are 40 cents per piece;
For bulky packages, self-declarations are necessary and local taxes are leviable. Per article price for 1st 20gms: Local Rs.1.50, and for inter-city Rs. 2.For every additional 20 gms or part thereof: Rs.1 per article.

Direct Post for distribution of advertising material by the Post Offices
Direct post..The Direct post articles can be sent only within India. Direct Post would allow businesses to send their un-addressed mailers, pamphlets, brochures, to prospective customers at very low rates of Rs. 1.50 for local articles, and Rs. 2 for anywhere in India. The senders would be eligible for a 5% discount for mailings of over 50,000articles.Non-traditional areas such as e-banking, e-government and e-commerce. India Post is already a major player in the banking sector through the Post Office Savings Bank, which handles over 110 million money orders a year, and holds approximately U$44 billion in savings accounts. Indian Post Department other services includes

Speed Post Passport Service
Introduced Corporate e-post
Finance Marts for saving bank customers
‘Logistics Post’ to exploit the market for bigger parcels and consignment loads,
‘Bill Mail Service’ to provide a cost effective communication tool for periodic financial instruments, *‘Direct Post’ to provide a cost effective direct marketing avenue for un-addressed articles,
Developing Post Offices in to ‘one stop shops’ for various services,

Launching following products:

Sale of postage stamps by postmen at the doorstep
Collection of mail by postmen while on their normal beat.
Release of an A-4 size embossed envelope measuring 220mm X 110mm
Packaging of Bill Mail Service which allows bulk booking of bills/statement @ Rs. 3/- per article for local delivery)
Expanded e-post & coverage of Speed Post
Retailing of Government Securities in selected
Sale of 17 UTI Mutual Fund Products through select post offices
Sale of non-life insurance products.

Planning following new initiatives

Launch of an on-line domestic money transmission service called IMO
Introduction of Accidental Death Insurance Cover of Rs. 1,00,000/- for Post Office Savings Bank Account Holders.
Introduction City Post/Inter City Post
Introduction of Premium Speed Post
e-commerce initiative
Introduction of portable digital hand held delivery cum sale system
One India, one rate’ speed post
Surface Air Lifted (SAL) is one more premium mailing service from India Post.

Domestic Service:For Tariff information relating to Letters, Postcards, Book Packets, Periodicals, Parcels, Money Orders, Postal Orders. etc.: e.g… Item: Letter Weight: 100 Grams. PostageRs.25 Registration FeeRs.17 TotalRs.42 Miscellaneous Services: Certificate of Posting, Post Box, Recall of an Article, Telegraphic Money order etc.http://www.indiapost.gov.in/Netscape/PostageCalculator.htmlBranding exercises:
1.Media Post:An innovative & effective vehicle for Brand and Marketing managers to communicate their corporate messages across the nation. India post handles more than 3000 million pieces of unregistered mail every year, reaching out to millions of households in the country and the world. Every time a person sends or receives a postcard, an inland letter or an envelope, he gets to see your logo or your message. The Aerogramme even gives you the opportunity to make a global impact. Postcards, Inland Letters and Money Order Forms can carry your message in any Indian language or in English. Aerogramme will carry your message in English only. On Aerogramme and Postcards, the printing can be done in four colors of your choice.

2. Speed Post: tariff under ‘One India, One Rate’ schemewould have a new weight slab of up to 50 grams under this scheme. Speed Post tariff under this scheme will be Rs 25 for the first weight slab of ‘up to 50 grams’, irrespective of the distance. However, in respect of ‘local’, the current Speed Post rate structure will continue,’’ the sources said. The new tariff of Rs 25 for the weight slab of up to 50 grams (other than local articles) will be inclusive of service tax and educational cess, irrespective of the distance involved.The next time you walk into a post office, don’t be surprised to find Spice products and recharge coupons on shelves. Spice Telecom, Karnataka’s oldest and quality cellular service provider has announced a tie up with the Department of Posts to market Spice Uth prepaid cards and recharge coupons through the network of post offices across Karnataka. This is the first time in Karnataka that a cellular operator has made a tie-up with the postal department. Through this facility, a customer can buy Spice Uth cards and recharge coupons in all denominations from post office counters across the state. The facility is first being introduced in Bangalore and Mysore.”By using the extensive network of post offices, the company is enhancing its services to subscribers in the state. This tie-up increases Spice’s distribution reach and is another step towards bringing mobile services closer to the people of Karnataka.”

3. India Post goes mobile:India Post has launched a mobile phone campaign across the Chennai region this month, promoting a new, international logistics product.

4. The World Net Express (WNX) servicesA partnership with Deutsche Post World Net – offer speedy shipment of documents and parcels, with a 24/7 track and trace ability. The deliveries are backed by Deutsche Post’s network of more than 350 aircraft, 130,000 vehicles and some 500 employees in 220 countries.

Statistics> Direct Mail 590 million Pieces
> Un-Addressed Mail367 million Pieces
The Indian postal network system is the largest in the world. Almost all villages having a population of over 500 have been provided with Letter Box facilities.Indian Post Department delivers 1,575 crore mails every year linking every nook and corner of the country through a network of 1,54,149 post offices and 5,64,701 letter boxes.The future.. A advertising campaign is targeting users of logistics services, including private and public sector officials, and the student community. Postmaster general, Chennai region, MS Ramanujan, said: “We have found a big market as more and more students are sending applications and correspondences to foreign universities.”Additional ReadingUse: http://www.indiapost.gov.in/PostageCalculator.html for Postage calculations
Foreign Rates – http://maharashtrapost.gov.in/htmldocs/internationalchart.htm

Advertising Postcard http://en.wikipedia.org/wiki/Advertising_postcard

The spread of 3G mobile will herald the change as the value added services market will witness tremendous growth and lead to affordable handsets, attracting users in both rural and urban areas.
Healthy competition among phone manufacturers and service providers, resulting in dramatic drop in prices of handsets and call charges, has already led to deep penetration.

User-friendly and affordable technology has come as a boon for micro-enterprises, people living in interiors, and urban and rural poor: It is enabling them to improve their income by providing access to market information and direct contact with customers. For instance, the fishermen of Kerala, who till a couple of years ago were at the mercy of buyers, have successfully increased their profits by eight per cent through better access to information.
It would not be wrong to say that m-commerce and m-advertising will gather momentum in the coming decade given the fast pace of diffusion.

Digital convergence in the banking, retail, manufacturing and service sectors is almost a certainty with operators planning to focus on adoption of new applications and value-added services. With feature-rich smart phones that can support multi-tasking and run different kinds of applications like mobile office and mobile Internet becoming cheaper by the day, cell phones are set to become tools of empowerment for many.

But a good starting point could be allowing the banking sector to create a successful mobile banking platform because a mobile wallet service will reduce transaction time and costs and allow customers access to financial services like making payments and transferring money.
The Reserve Bank of India has taken the first step by relaxing mobile banking policies and increasing the mobile payment limit to Rs 50,000 to ease financial transactions in areas with low ATM penetration. The next step can be converging the unique identification project with mobile services.

Mobile banking in India is set to explode – approximately 43 million urban Indians used their mobile phones to access banking services during quarter ending August, 2009, a reach of 15% among urban Indian mobile phone user.
For years now the global Mobile Payments/ Commerce industry has kept a keen eye on the developments taking place in the Mobile Payments sphere in India. The need for low cost financial instrument coupled with rapid growth of mobile penetration leads to the prospect of a huge market for mobile payments.
Already 700 million subscribers and a yet to be penetrated subscriber base of almost 600 million speaks about the size of the opportunity being talked about. Add the fact that only 30% of this total is banked underlines the fact that numbers enough to cater to the both the unbanked and banked sectors of the population.

The Reserve Bank has now opened up the regulations just enough for the Telcos, Banks and independent payment service providers to start looking beyond the standard Bank account linked mobile banking services and move to the now allowed ‘ semi-open’ wallet.

These rules are different from the way in which mobile payments work in the US or Europe. However, it is important that to start with we operate under stiffer regulations so that these new technologies move in the right direction. Once the foundation is well laid out in terms of security, transaction limits can be increased.

We can also see how mobile payments can be used as an alternative mode of payments for the unbanked masses.

The RBI has given its endorsement to mobile banking and this has acted as a fillip to public sector banks which are now taking bold steps to adopt the same.

Top Players

ICICI bank maintains its position as country biggest private lender on mobile screen as well with 17.75 million users. HDFC accounts for second most subscribers with 9.1 million subscribers followed by State Bank of India with 6.13 million subscribers.

Utiba is a mobile commerce technology provider. Mr. Bhalla is responsible for the overall operations and business processes of the company in India, Sri Lanka, Nepal, Bangladesh and Bhutan.

But some like Obopay, a company into money transfer platforms, is advocating a gradual approach. Says Ravi Shankar of Obopay, “Let the current system of mobile banking develop confidence amongst users of its safety and security. The reason behind inclusion of banks in the guidelines is that RBI may have a direct control over the system. Only after the success of mobile banking with banks as intermediaries, non banking companies should be introduced.”

Case studies

* Fascination with anything “foreign” (particularly American, European)

* Well-informed segment that already devours American and British media and entertainment Indians

* No language problem. Comfortable with English and western culture.* Pent-up demand for foreign goods cannot be satisfied fast enough.

Factors affecting the consumer spending pattern

* India has a middle class as big as the whole population of the United States * Growing income levels resulting in more disposable income with individuals, * changing attitudes towards consumption, * changes in prices, * introduction of new products, * availability of credit such as loans, mortgages and credit cards, * rising aspiration levels, * increased literacy, * growing brand consciousness and * rapid urbanization.

* A credit card culture. Members can also make purchases in foreign currency

* Rising incomes * Tendency to differentiate oneself by showing off of material goods

* Emergence of professional women as a spending class. * Growth in telecommunication infrastructure

Statistics

Growth in Gross Domestic Product

Annual growth by economic activity in Gross Domestic Product (GDP) for the year 2010-11, released by the Central Statistics office (CSO) of Government of इंडिया

* The 20- to 49-age group is growing; about 159 million households are expected to earn between US $ 500 and US $ 1 000 per year.

NCAER’s The Great Indian Middle Class, the 72 million households in India that earn over $ 2 000 annually on an average are evenly divided between urban and rural areas.

* The growth in outsourcing shows little sign of slowing down, despite stiffer competition from other low-cost Asian markets.* India has emerged as the world’s fastest growing wealth creator, thanks to a buoyant stock market and higher earnings.

Demographics
billion population, of which 25% are middle class
“Youth Market” or Working population between the age of 16 – 35. India has one of the highest working populations. This boosts the economy. Comparatively China has a “working population” of around 40% lesser than India. In China, although the population is more, the bulk of the working masses are getting older and closer to retirement, and fresh blood is diminishing gradually.
A booming economy and growing incomes have meant that even the upwardly middle class can now aspire for lifestyles that only the very rich enjoyed decades back. The liberalization process brought more than high economic growth rates. It showed the people what was possible.
The IT revolution, and the consequent demand for Indian brainpower, has created a whole new breed of wealthy global Indians . An increasingly open economy has created new business opportunities, which has resulted in a slew of new, extremely successful first-generation businessmen. They spend. But they may not even be comfortable with English.
31% of the population is under 14 (337 million) Families that earned more than Rs 2 lakh (Rs 200,000) a year; 100 million: by 2009-10, it will be 173 million. A country with 120 million TV sets, kids TV viewership has doubled the past three years. 37% of Indians eat fast food at least once a week, (35% in the USA).
Retail is India’s largest industry. Unprecedented growth of large malls and hypermarkets.
India currently has around 28 million affluent consumers, 1 million of which belong to the ‘luxury’ category and another 6 million fall under the ‘very affluent’. Over and above this are 10 million consumers in the ‘mid-affluent’ category and 12 million under ‘mass affluent’. The study estimates that the Indian luxury market is about USD 444 million with a huge potential in the future.
Indians splurge US$ 2.9 billion on luxury assets, spend another US$ 953 million on luxury services and top it by buying luxury goods worth US$ 377 million.
Developers are putting together homes that can stretch up to 10,000 sq ft – and they are finding buyers. Such homes come complete with all amenities – jogging tracks, swimming pools, health clubs, personal car parking spaces and private gardens. This growing demand led to the development of prime homes across the country – NCPA Towers and Buckley Court in Mumbai, Laburnum in the upcoming suburb of Gurgaon and Hiranandani Gardens in Powai, Mumbai, among many others.
Macro Economic Indicators

Note: The financial year for India is April 1st-March 31st 

Recent Trends in Indian Economy

The Indian economy has emerged with remarkable rapidity from the slowdown caused by the global economic crisis and emerged stronger in 2011.The Indian economy is estimated to grow at 8.6 per cent in 2010-11 as compared to the growth rate of 8.0 per cent in 2009-10. The growth rate of 8.6 per cent in GDP during 2010-11 has been due to the robust growth rates of over 8 per cent in the sectors of manufacturing, construction, trade, hotels, transport and communication, financing, insurance, and, real estate and business services.
The agriculture, forestry and fishing sector is likely to show a growth of 5.4 per cent during 2010-11, as against the previous year’s growth rate of 0.4 per cent. According to the Department of Agriculture and Cooperation (DAC) of Government of India, production of food grains and oilseeds is expected to grow by 6.5 per cent and 11.9 per cent, respectively, as compared to the previous agriculture year. The production of cotton and sugarcane is also expected to rise by 41.2 per cent and 15.2 per cent, respectively, in 2010-11. Among the horticultural crops, production of fruits and vegetables is expected to increase by 4.1 per cent and 3.8 per cent, respectively, during the year 2010-11.
The growth in mining and quarrying and manufacturing sectors during 2010-11 is expected to be 6.2 and 8.8 per cent respectively over previous year. According to the latest estimates available of the Index of Industrial Production (IIP),mining and manufacturing registered growth rates of 8.0 per cent and 10.0 per cent respectively during April-November, 2010. The estimated growth rate for construction sector is 8.0 per cent in 2010-11. The key indicators of construction sector, namely, cement production and steel consumption have registered growth rates of 4.4 per cent and 8.8 per cent, respectively during April- December, 2010.
The estimated growth in the trade, hotels, transport and communication sectors during 2010-11 is placed at 11.0 per cent, mainly on account of growth of 14.9 per cent in passengers handled in civil aviation, 21.3 per cent in air cargo handled and 40.9 per cent in stock of telephone connections. The sales of commercial vehicles witnessed an increase of 34.1 per cent per cent in April-December, 2010. The financing, insurance, real estate and business services sectors are expected to show a growth rate of 10.6 per cent during 2010-11, on account of 14.0 per cent growth in aggregate deposits and 22.6 per cent growth in bank credit during April- November 2010 (against the respective growth rates of 18.6 per cent and 10.1 per cent in the corresponding period of previous year). The growth rate of community, social and personal services during 2010-11 is estimated to be 5.7 per cent.
India’s per capita income, often used to measure a country’s standard of living, increased by 17.9 per cent during 2010-11 to US$ 1226.4 as compared to US$ 1040.2 in 2009-10.

Top Players

Size of the Market * The NCAER’s The Great Indian Market forecasts that, by the end of the decade, roughly 11 % of demand for cars/jeeps will come from rural areas, as will 48 %of motorcycle demand and 43%of demand for regular-sized color TVs. * As per Technopak estimates, Indian consumers will spend an additional $ 100 billion by 2011.* 44 % of the Top 100 Fortune 500 companies are present in India.

* India ranks second in the Asia-Pacific region in terms of the value of private equity deals (US$ 2,433 million) done in the first half of 2007.

* Exports are slated to grow by 19 per cent, while imports could expand 25 per cent. Businesses were able to withstand the impact of higher energy costs, thanks to booming demand for products and infrastructure.  

Case studies

Issues 

Projecting favorable prospects for remittances, the review said, “NRIs may find India and the public sector dominated banking system a safe haven at a time of unprecedented global turmoil and uncertainty.” The direct exposure of Indian banking system in the sub-prime market is “almost absent”. However, there may be very limited investments by a few Indian banks in the collateralized debt obligations.

Retaining general economic outlook in the short run to be one of “cautious optimism”, it said unprecedented global crisis has affected India with increased impact on export andmanufacturing sector.

“Specific export intensive sector (for example gems and jewellery) could be strongly affected”, it added. India’s exports in October 2008 showed a negative growth of 12.1 per cent, though in the earlier months they grew by over 20 per cent.

Opportunities

Mid-Year Review : Dec 2008 : The government indicated “aggressive” easing of interest rates and “fast-tracking” reforms to offset the impact of global turmoil on growth which is expected to moderate to around 7 per cent this fiscal besides inflation returning to “normal levels” by March.The Mid-Year Review of the economy presented to parliament said, “there is a considerable scope for monetary policy easing over the next six to 12 months to offset the global increase in demand for money that is being transmitted to India…”An aggressive monetary policy may be necessary if the global economic depression continues to adversely affect manufacturing,” the review said.

Following cuts in the policy rates by RBI, several banks have already reduced their lending rates giving relief to the hard pressed borrowers especially in the sectors including housing, exports, small and medium enterprises. Through a slew of measures, the central bank has injected about Rs 3 lakh crore into the cash-strapped system. Preparing the country for a “significantly” slower growth in the second half of the fiscal, the review projected economic expansion at around seven per cent for the year. It attributed the moderation in growth from 9 per cent in the previous fiscal to crisis in the industrialized countries affecting India’s external sector including exports andcapital flows.

On the positive side, the review said the decline in commodity and fuel prices will help bring the inflation to “normal” levels by March 2007. From a peak of 12.91 per cent in August, the inflation has come down to 6.84 per cent in early December.

Having introduced the insurance reforms bills, pending for four years, Government want to “fast-track” the pending agenda to revert to 8.5 to 9 per cent growth.

In the face of global slowdown and moderation in domestic investment demand, the government wants acceleration of pending reforms to flag the business sentiments.

Increased expenditure on infrastructure is an option being favored but it may then be difficult for the government to adhere to the fiscal consolidation targets for the year.    As per the budget 2008-09, the fiscal deficit was targeted at 2.5 per cent of the GDP, well within the framework of Fiscal Responsibility and Budget Management Act. On the positive side, India retained its position as a preferred destination for foreign direct investment.

While the global situation deteriorated massively after mid-September following the collapse of Lehman Brothers, investors, particularly the non-resident Indians, continue to retain faith in the Indian banks dominated by public sector.

Additional Reading

Movers and Shakers

Quick Facts on the Retail Industry in India

• Retailing of mobile handset and accessories will grow to Rs. 5000 crores by 2010.
• Third party logistics market is estimated at US$ 20 billion by 2011.
• Demand for private labels in the rise, will grow further.
• In-house brands will see a growing demand amongst the retailers and will also ensure margin stability.
• India’s fast moving consumer goods (FMCG) industry has introduced 251 new products up to October 2007, as against 191 in the same period last year.
• The Indian healthcare IT market is expecting a growth rate of 22% says a Springboard Research report.
• India’s food and beverages sector, growing at 9%, is expected to attain US$ 117.25 billion by the end of this year
• With 54% of its 1.1 billion people aged below 25, it is one of the world’s largest markets for TV.
• India’s food service industry is expected to grow 48% to US$ 667.49 million in the next two years.
• According to a report by Price Waterhouse Coopers, India could grow to almost 90% of the size of the US economy by 2050.
• According to Confederation of Indian Industry, Yes Bank study, India’s US$ 35.17 billion rural retail market is expected to cross US$ 45.22 billion by 2010 and US$ 60.29 billion
  by 2015. The size of the luxury market in India is estimated at around US$ 3.5 billion, and could easily leapfrog to US$ 30 billion by 2015.
• Indian consumer spending will quadruple to US$ 1.77 trillion by 2025, from about US$ 431.69 billion in 2005 due to a jump in its middle-class population and a rise in household income, according to a McKinsey study.

‘Direct Marketing’ in retail

Top Players 

Aditya Birla Retail Ltd.
Arvind Brands Ltd
Bata India Ltd.
Bharat Petroleum Corporation Ltd.
Bombay Swadeshi Stores Ltd.
Crossword Bookstores Limited
Damas Goldfields Jewellery Pvt. Ltd.
Ebony Retail Holdings Ltd.
Fabindia
Garden Silk Mills Limited
Gini & Jony
Givo Ltd.
Globus
GR Thanga Maligai
Guardian Lifecare Ltd.
Heritage Foods (India) Ltd.
ITC Ltd – LRBD
K. Raheja Corp.
Kalanjali Arts and Crafts
Kirtilal Kalidas & Co
Koutons Retail India Ltd.
Levi Strauss & Company
Lifestyle Manipal Cure and Care Pvt Ltd.
McDonald’s India
Nalli
NEXT Retail India Ltd.
Nirula’s
Pantaloon Retial India Ltd
Piramyd Retail Ltd.
Provogue (India) Ltd.
Raymond Ltd
Reliance Fresh
Reliance Petroleum Ltd.
Reliance World
Sankalp Retail Value Stores Pvt. Ltd.
Siyaram Silk Mills Limited
Spencer’s Retail
Subhiksha
TCS Textile Pvt. Ltd. (The Chennai Silks)
The Bombay Dyeing & Manufacturing Co. Ltd
Titan Industries Ltd.
Trent Ltd.
Unilever India Exports Ltd.
Vivek Ltd.
Wadhawan Food Retail Pvt Ltd.
WITCO (India) Ltd.
Zodiac Clothing Co. Ltd.

Size of the Market 

At present, India’s retail sector stands at about $ 320 billion growing at a compounded rate of around 7% per annum according to various reports by industry bodies and consultancies like CII, AT Kearney, PWC and E&Y.

KSA Technopak estimates that organized retail may actually touch the $70 billion dollar mark by 2010 with investments from small players being a significant chunk of the same. Says Pavas Bhatia, principal consultant KSA Technopak, “While investments from foreign and domestic majors like Reliance and Wal-Mart will be substantial cumulative investments by individual brands for increased retail presence will also be quite significant.”

Organized retail sector is expected to generate 10 to 15 million jobs over the next five  years, and the value of the organized retail sector in India by 2010 would be around Rs. 2,00,000 crore or USD 45 billion. According to the report, organized retail in India has the potential to generate some 2.5 million direct jobs through retail operation and over at least 10 million additional jobs in retain support activities including contract production and processing, supply chain and logistics, retail real estate development and management etc. The organized sector accounted for Rs.55,000 crore (USD 12.4 billion) business at current prices in the calendar year 2006 increasing its share to 4.6% of the total Indian Retail Value that stood at Rs.12,00,000 crore (USD 270 billion).

==

120401 yuvraj
> Google Search =  size of the Indian retail market in India
> URL: http://articles.economictimes.indiatimes.com/2011-12-13/news/30511989_1_retail-story-retail-sector-retail-market

Unfortunately, no discussion has taken place even once in these years on the importance of the retail sectorto India (not only just the 15+ million independent retailers and street hawkers), the need to make the producer to the consumer distribution system more efficient and less wasteful, and how to make these millions of independent retailers not only relevant for tomorrow but actually increase their numbers and enhance the economic and social vibrancy of their vocation.

Sadly, much more attention has been misguidedly focused on just one single dimension of modernisation of the distribution and retail infrastructure namely “foreign direct investment”. And most of the rhetoric of recent years and in particular, of the last few weeks, has largely been on emotional and sometimes incorrect factual positions.

Private consumption has long been the larger constituent of India’s economy and even today, it accounts for almost 60% of India’s GDP. Of this private consumption, more than 60% is what would constitute what we typically route through retail channels.

The fact is India’s retail story is not a zero sum game i.e. growth of new, modern, and sometimes larger in scale retail businesses has to come at the expense of decimation of the traditional, independent retail business owners. Even at a real growth of 6% per year and inflation of about 5% for the next 15 years, India’s nominal GDP will be about $8,000 billion in 2026. The size of India’s retail market would have also moved up from about $500 billion in 2011 to about $2,500 billion in 2026.

Traditional retail currently accounts for as much as about $475 billion of this market. Even if modern retail attracts as much as $150 billion in fresh direct and indirect investment (from within India and overseas) over the next 15 years (i.e., $10 billion per year), the size of modern retail business in India is not likely to cross $300-350 billion by 2026, implying that traditional retail will account for as much as $2,150-2,200 billion in revenues (or more than four times of their current size).

Accounting for inflation and some increase in productivity of traditional retailers, it can be very confidently assumed that in the most optimistic of all scenarios as far as investment in modern retail is concerned, the numbers of independent retail outlets in India will more than double by 2026 rather than show any decline whatsoever. If these facts are understood, then what should India be doing to facilitate this retail consumption taking place in a planned, organised manner rather than seeing millions of illegal retail establishments sprouting all over?

First, our politicians, our bureaucrats, and our urban planners must realise the need and relevance of providing for retail spaces in an integrated, holistic planned way. At the very least, about 10-12 square feet of retail space is needed for every urban inhabitant. Urban agglomerations such as NCR, Greater Mumbai, and Kolkata therefore require at least 200 million square feet each of legalised retail space.

Case studies

Direct to home retail venture, Sangam
After six years of slow burn, Hindustan Lever has finally exited its direct to home retail venture, Sangam. The under Rs 100 crore business was sold off to Wadhawan Retail that runs the Spinach brand of grocery stores in Mumbai. But experts say to make money; the new owners will need to use Sangam in tandem with more traditional formats.

When India’s biggest FMCG company, Hindustan Lever, launched its direct-to-consumer retail venture: offering over 3,500 grocery and household products. Orders could be placed on the phone or online. It claimed a base of 50,000 regular customers.

Even though Sangam had successfully created effective systems, its poor delivery record failed to inspire customers.  Although delivery to the customer was effected within 24 hours, the call centre, manpower and transportation costs pinched Sangam’s margins. In any case, grocery margins are low at around 15%.

So, while HLL ran Sangam as a standalone service, Spinach will merge its operations with Sangam. The majority of Sangam’s orders will be serviced through the stores, cutting down on delivery time and costs. It also expects to use Sangam’s database to gain shopper insights.

However, many analysts argue that home delivery works best only in the time- strapped city of Mumbai. Otherwise, Indians love going to the market to shop.

Subhiksha begs to differ saying that cities other than Mumbai will take to home delivery in a big way. It has launched the dial-in home delivery service in cities like Ahmedabad and Bangalore.

Statistics 

Snapshot of Indian Retailer, Indian Consumer, Indian Retail Market Size and Potential
• The Indian retail industry accounts for 10% of the GDP and 8% of employment.
• India is being touted as the next big retail destination with an average CAGR of 40% to 45%
• The sheer size of the population demands attention from retailers worldwide and the potential for growth in this nascent industry is tremendous.
• As per AT Kearney’s GRDI for 2008, India ranks second to Vietnam. It topped the list in 2007.
• India is the world’s 4th largest economy in terms of Purchasing Power Parity, after USA, China and Japan; it is expected to move to the third position by 2010.
• India is rated ahead of China on the Foreign Direct Investment Confidence Index (FDICI) making it an attractive retail market among other emerging economies in the world.
• According to a study conducted by the Associated Chambers of Commerce and Industry (ASSOCHAM), the annual retail sale that was close to US$ 6 billion in 2007, is expected to reach USD 17 billion by 2010.
• The ICRIER study found that total Indian retail business would grow at 13%, from US$ 322 billion in 2006-07 to US$ 590 billion in 2011-12. The unorganized retail will grow 10% from US$ 309 billion 2006-07 to US$ 496 billion in 2011-12.
• India is rated in the highest category of the Aspirational Index in Asia as per the AC Nielsen Online Omnibus Survey 2005
• According to NCAER, only 14% Indian households will have annual household incomes less than US$ 921.66 by 2012.
• An Economic Times study of 50 top consumer goods and services firms in the June quarter of 2008-09 saw sales grow at an average rate of 24% year on year

Issues 

Retail Reform
The Government allows 100 per cent foreign direct investment (FDI) in “cash & carry” through the automatic route & 51 per cent in single brand outlets. Besides, the franchise route is available for big operators. Further, the Government plans to open FDI into retail after convincing stakeholders about no threat from large players. 

Opportunities

Commenting on the Paper, ASSOCHAM President, Sajjan Jindal said that, “India’s vast middle-class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets and India provides for the ideal locations”.  Since, Delhi and its suburbs have so far seen the growth of 100 bigger and smaller malls; roughly 600 new malls are coming up in other metropolis and large townships in which less than 35% of retail business is going to be transacted.
The Paper reveals that over 1000 malls are in the pipelines for smaller townships in which the retail sector is projected to grow at over 60% because of ample availability of land and increased purchasing power of the folks living in those areas because of increased economic activities. Naturally, the large players will prefer to go there and put up their shops by sourcing their supplies from the places convenient to them, further states the Paper.

Retailers Association India (http://www.rai.net.in)

Retailers Association of India (RAI) is the unified voice of in India retailers. RAI working with all the stakeholders to create the right environment for ensuring growth of the modern retail industry in India. RAI is the body that encourages, develops, facilitates and supports retailers to become modern and adopt best practices that will delight customers. RAI has a three charter aim of Retail Development, Facilitation and Propagation. 

Additional Reading

Ref. URL http://www.india-reports.com/articles/facts-retail.aspx

ref. URL http://www.india-reports.com/summary/Snapshot_Retail_industry.aspx

Movers and Shakers

• Mr. Arun Narayan (National Head of Sale), Titan Watch.
• Mr. Kishore Biyani, Pantaloons.
• Mr. B S Nagesh, Shoppers’ Stop
• Mr. Noel Tata, Trent Ltd
• Mr. Vinay Nadkarni, Globus Stores
• Mr. T. Shantakumar, Kirtilal Kalidas Jewellers Pvt. Ltd.
• Mr. Sumantra Banerjee, RPG Retail
• Mr. B A Kodandarama Setty, Viveks
• Mr. Vikram Bakshi, McDonalds India (North & East)
• Mr. Ajit Joshi, Infiniti Retail Ltd
• Mr. Rajiv Agarwal, The MobileStore Ltd
• Mr. R C Agarwal, Vishal Retail Ltd
• Mr. Gibson G Vedamani, Kirtilal Kalidas Jewellery Pvt. Ltd.
• Mr. Kumar Rajagopalan (CEO), Retailers Association of  India.
• Ms. Saloni Nangia (VP), Technopak Advisors Pvt. Ltd.
• Ms. Smeeta Neogi (Marketing Head), Westside
• Mr. Rohit Aggarwal (Director), Lite bite foods Pvt. Ltd.
• Mr. Rohtas Goel (CMD), Omaxe
• Mr. Vineet Nanda (VP Marketing), Omaxe
• Ms. Sangeeta Assomall (CEO), Marigold Group
• Mr. Ravinder Zutshi (Deputy MD), Samsung India Electronics Ltd

=======================

copy from edesk

> Course Material

Retail Quick Facts on the Retail Industry in India Retailing of mobile handset and accessories will grow to Rs. 5000 crores by 2010. Third party logistics market is estimated at US$ 20 billion by 2011. Demand for private labels in the rise, will grow further. In-house brands will see a growing demand amongst the retailers and will also ensure margin stability. India’s fast moving consumer goods (FMCG) industry has introduced 251 new products up to October 2007, as against 191 in the same period last year. The Indian healthcare IT market is expecting a growth rate of 22% says a Springboard Research report. India's food and beverages sector, growing at 9%, is expected to attain US$ 117.25 billion by the end of this year With 54% of its 1.1 billion people aged below 25, it is one of the world's largest markets for TV. India's food service industry is expected to grow 48% to US$ 667.49 million in the next two years. According to a report by PriceWaterhouse Coopers, India could grow to almost 90% of the size of the US economy by 2050. According to Confederation of Indian Industry, Yes Bank study, India's US$ 35.17 billion rural retail market is expected to cross US$ 45.22 billion by 2010 and US$ 60.29 billion by 2015. The size of the luxury market in India is estimated at around US$ 3.5 billion, and could easily leapfrog to US$ 30 billion by 2015. Indian consumer spending will quadruple to US$ 1.77 trillion by 2025, from about US$ 431.69 billion in 2005 due to a jump in its middle-class population and a rise in household income, according to a McKinsey study. [ref. URL = http://www.india-reports.com/articles/facts-retail.aspx] At present, India’s retail sector stands at about $ 320 billion growing at a compounded rate of around 7% per annum according to various reports by industry bodies and consultancies like CII, AT Kearney, PWC and E&Y. KSA Technopak estimates that organized retail may actually touch the $70 billion dollar mark by 2010 with investments from small players being a significant chunk of the same. Says Pavas Bhatia, principal consultant KSA Technopak, “While investments from foreign and domestic majors like Reliance and Wal-Mart will be substantial, the cumulative investments by individual brands for increased retail presence will also be quite significant.” Organized retail sector is expected to generate 10 to 15 million jobs over the next five years, and the value of the organized retail sector in India by 2010 would be around Rs. 2,00,000 crore or USD 45 billion. According to the report, organized retail in India has the potential to generate some 2.5 million direct jobs through retail operation and over at least 10 million additional jobs in retain support activities including contract production and processing, supply chain and logistics, retail real estate development and management etc. The organized sector accounted for Rs.55,000 crore (USD 12.4 billion) business at current prices in the calendar year 2006 increasing its share to 4.6% of the total Indian Retail Value that stood at Rs.12,00,000 crore (USD 270 billion). India Retail Industry: Snapshot of Indian Retailer, Indian Consumer, Indian Retail Market Size and Potential •• The Indian retail industry accounts for 10% of the GDP and 8% of employment. •• India is being touted as the next big retail destination with an average CAGR of 40% to 45% •• The sheer size of the population demands attention from retailers worldwide and the potential for growth in this nascent industry is tremendous. •• As per AT Kearney’s GRDI for 2008, India ranks second to Vietnam. It topped the list in 2007. •• India is the world’s 4th largest economy in terms of Purchasing Power Parity, after USA, China and Japan; it is expected to move to the third position by 2010. •• India is rated ahead of China on the Foreign Direct Investment Confidence Index (FDICI) making it an attractive retail market among other emerging economies in the world. •• According to a study conducted by the Associated Chambers of Commerce and Industry (ASSOCHAM), the annual retail sale that was close to US$ 6 billion in 2007, is expected to reach USD 17 billion by 2010. •• The ICRIER study found that total Indian retail business would grow at 13%, from US$ 322 billion in 2006-07 to US$ 590 billion in 2011-12. The unorganized retail will grow 10% from US$ 309 billion 2006-07 to US$ 496 billion in 2011-12. •• India is rated in the highest category of the Aspirational Index in Asia as per the AC Nielsen Online Omnibus Survey 2005 •• According to NCAER, only 14% Indian households will have annual household incomes less than US$ 921.66 by 2012. •• An Economic Times study of 50 top consumer goods and services firms in the June quarter of 2008-09 saw sales grow at an average rate of 24% year on year. [ref. URL = http://www.india-reports.com/summary/Snapshot_Retail_industry.aspx] 'Direct Marketing' in retail HLL has started setting up its own retail networks in form of net based and real stores like Sangam Direct, to take on the coming onslaught by the hypermarkets and the supermarkets. Kids' retail When it comes to Indian children, retailers are busy bonding and branding: • Monalisa, the Versace of kids, is coming to India. • International brand Zapp tied up with Raymond to foray into kids' apparel. • Disney launched exclusive chains, which stock character-based stationery. • Pantaloon's joint venture with Gini & Jony will set up a retail chain to market kids' apparel. Mobile Retail The retail market for mobile phones, handset, accessories and airtime is already an over US$ 17.33-billion market growing at the rate of 15-20 per cent. In fact, India recorded the fastest sale of mobile phones in the world during the quarter ended September 2007 accounting 8.5 per cent of worldwide sales. Rural Retail Led by the rising purchasing power, changing consumption patterns, increased access to information and communication technology and improving infrastructure, the rural retail market is estimated to cross the US$ 45.32-billion mark by 2010 and US$ 60.43 billion by 2015, says a study by CII and YES BANK. Corporate India is already firming up concrete plans to tap the US$ 100 billion-dollar rural retail market, which is growing at double the rate of urban markets, with innovative schemes and human resource policies. And with 87 per cent of rural markets not having access to any sort of organised marketing and distribution, this segment has tremendous potential for growth. International Retailers India's vast middle class with its expanding purchasing power and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets. • The world's largest retailer, Wal-Mart, has tied-up with Sunil Mittal's Bharti Enterprises to enter the Indian retail market. • Microsoft's first shop-in-shop pilot has been launched with the Tata Group subsidiary Infiniti Retail's multi-brand consumer durables retail format, Croma. • Apple Inc has entered into an exclusive marketing and distribution deal with Reliance Retail through "iStore by Reliance Digital". • US coffee chain Starbucks' is well on its way to set up its first store in India this year. Agriculture Retail India's huge domestic market, along with export potential and policy reforms has attracted a large number of corporates into the agricultural retail segment. • ITC after establishing 6,400 kiosks covering 400,000 farmers is planning to increase its e-Choupal footprint by adding 20,000 more kiosks and 10 million farmers. • Adani Agrifresh plans to invest US$ 251.79 million in the next three years to create a supply chain from farms to retailers of fresh fruits and vegetables. • Reliance Retail plans to establish links with farms on several thousand acres in Punjab, West Bengal and Maharashtra with a multi-year US$ 5.6 billion investment. • PepsiCo after has launched a five-year program with the Punjab Government to provide several hundred farmers with four million sweet-orange trees for its Tropicana juices by 2008. Retail Reform The Government allows 100 per cent foreign direct investment (FDI) in “cash & carry” through the automatic route & 51 per cent in single brand outlets. Besides, the franchise route is available for big operators. Further, the Government plans to open FDI into retail after convincing stakeholders about no threat from large players. Case Study: Direct to home retail venture, Sangam. > After six years of slow burn, Hindustan Lever has finally exited its direct to home retail venture, Sangam.The under Rs 100 crore business was sold off to Wadhawan Retail that runs the Spinach brand of grocery stores in Mumbai. But experts say to make money, the new owners will need to use Sangam in tamdem with more traditional formats. > When India's biggest FMCG company, Hindustan Lever, launched its direct-to-consumer retail venture: offering over 3,500 grocery and household products. Orders could be placed on the phone or online. It claimed a base of 50,000 regular customers. > Even though Sangam had successfully created effective systems, its poor delivery record failed to inspire customers. Although delivery to the customer was effected within 24 hours, the call centre, manpower and transportation costs pinched Sangam's margins. In any case, grocery margins are low at around 15%. > So, while HLL ran Sangam as a standalone service, Spinach will merge its operations with Sangam. The majority of Sangam's orders will be serviced through the stores, cutting down on delivery time and costs. It also expects to use Sangam's database to gain shopper insights. > However, many analaysts argue that home delivery works best only in the time- strapped city of Mumbai. Otherwise, Indians love going to the market to shop. > Subhiksha begs to differ saying that cities other than Mumbai will take to home delivery in a big way. It has launched the dial-in home delivery service in cities like Ahmedabad and Bangalore. RETAILING INDUSTRY Portal http://www.retailduniya.com/ provides .. * Retailers & Shopkeepers: Find exciting and profitable retailing opportunities * Brands: Find Retailer & Shop Keepers to Retail you products and services * Malls & Shopping Centers: Get Leading brands in your mall * Retail Service Providers: List your company provide professional services to the Retailing Industry Organised retail in India will top US$22bn by 2010: "ASSOCHAM" The total retailing size in India is currently estimated at US$16bn of which organised sector accounts for only 25% market share and remaining 75% is in the unorganised sector The size of Organised Retail in India will exceed US$22bn mark from current level of about US$4bn with its space requirement touching over 220mn sq. ft., by 2010, according to The Associated Chambers of Commerce and Industry of India (ASSOCHAM). In a Paper brought out by ASSOCHAM on `Retail Scenario in India and Its Related Issues', it has been stated that approx. 40mn sq. ft. is currently generating a business of about US$4bn in organised retail. According to the Paper, the total retailing size in India is currently estimated at US$16bn of which organised sector accounts for only 25% market share and remaining 75% is in the unorganised sector. Slowly and gradually, with boom in retailing continuing, the organised retail sector in small towns beyond metros will grow at a staggering level of 50-60% as compared to less than 35% in the large cities purely on account of scarcity of space which is in plenty beyond metros with reasonable land prices and without cumbersome procedure for land acquisitions, says the Paper. Commenting on the Paper, ASSOCHAM President, Sajjan Jindal said that, "India's vast middle-class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets and India provides for the ideal locations". Since, Delhi and its suburbs have so far seen the growth of 100 bigger and smaller malls, roughly 600 new malls are coming up in other metropolis and large townships in which less than 35% of retail business is going to be transacted. The Paper reveals that over 1000 malls are in the pipelines for smaller townships in which the retail sector is projected to grow at over 60% because of ample availability of land and increased purchasing power of the folks living in those areas because of increased economic activities. Naturally, the large players will prefer to go there and put up their shops by sourcing their supplies from the places convenient to them, further states the Paper. Retailers Association India (www.rai.net.in) Retailers Association of India (rai) is the unified voice of in India retailers. rai working with all the stakeholders for creating the right environment for the growth of the modern retail industry in India. rai is the body that encourages, develops, facilitates and supports retailers to become modern and adopt best practices that will delight customers. rai has a three charter aim of Retail Development, Facilitation and Propagation. Top Players: Aditya Birla Retail Ltd. Arvind Brands Ltd Bata India Ltd. Bharat Petroleum Corporation Ltd. Bombay Swadeshi Stores Ltd. Crossword Bookstores Limited Damas Goldfields Jewellery Pvt. Ltd. Ebony Retail Holdings Ltd. Fabindia Garden Silk Mills Limited Gini & Jony Givo Ltd. Globus GR Thanga Maligai Guardian Lifecare Ltd. Heritage Foods (India) Ltd. ITC Ltd – LRBD K. Raheja Corp. Kalanjali Arts and Crafts Kirtilal Kalidas & Co Koutons Retail India Ltd. Levi Strauss & Company Lifestyle Manipal Cure and Care Pvt Ltd. McDonald's India Nalli NEXT Retail India Ltd. Nirula's Pantaloon Retial India Ltd Piramyd Retail Ltd. Provogue (India) Ltd. Raymond Ltd Reliance Fresh Reliance Petroleum Ltd. Reliance World Sankalp Retail Value Stores Pvt. Ltd. Siyaram Silk Mills Limited Spencer's Retail Subhiksha TCS Textile Pvt. Ltd. (The Chennai Silks) The Bombay Dyeing & Manufacturing Co. Ltd Titan Industries Ltd. Trent Ltd. Unilever India Exports Ltd. Vivek Ltd. Wadhawan Food Retail Pvt Ltd. WITCO (India) Ltd. Zodiac Clothing Co. Ltd. Movers and Shakers: Mr. Arun Narayan (National Head of Sale), Titan Watch. Mr. Kishore Biyani, Pantaloons. Mr. B S Nagesh, Shoppers' Stop Mr. Noel Tata, Trent Ltd Mr. Vinay Nadkarni, Globus Stores Mr. T. Shantakumar, Kirtilal Kalidas Jewellers Pvt. Ltd. Mr. Sumantra Banerjee, RPG Retail Mr. B A Kodandarama Setty, Viveks Mr. Vikram Bakshi, McDonalds India (North & East) Mr. Ajit Joshi, Infiniti Retail Ltd Mr. Rajiv Agarwal, The MobileStore Ltd Mr. R C Agarwal, Vishal Retail Ltd Mr. Gibson G Vedamani, Kirtilal Kalidas Jewellery Pvt. Ltd. Mr. Kumar Rajagopalan (CEO), Retailers Association of India. Ms. Saloni Nangia (VP), Technopak Advisors Pvt. Ltd. Ms. Smeeta Neogi (Marketing Head), Westside Mr. Rohit Aggarwal (Director), Lite bite foods Pvt. Ltd. Mr. Rohtas Goel (CMD), Omaxe Mr. Vineet Nanda (VP Marketing), Omaxe Ms. Sangeeta Assomall (CEO), Marigold Group Mr. Ravinder Zutshi (Deputy MD), Samsung India Electronics Ltd. 

knol link : http://knol.google.com/k/direct-marketing-association-india/marketing-medium-retail/275cg0astabrk/63

Markets of Rural India have assumed great importance for Companies because of the huge potential it offers for all kinds of products and services. Statistics show that there is a huge income shift taking place in Rural India, with increasing purchasing power, is focus of marketing initiatives by Corporates.
Direct Selling / Network Marketing are the business of the next millennium providing a powerful platform for distribution of products. Though construed as different from Network Marketing, Direct selling is akin to Network Marketing only difference being that while Network marketing lays more stress on direct recruitment Direct selling lays stress on selling.

Preamble

Markets of Rural India have assumed great importance for Companies because of the huge potential it offers for all kinds of products and services. Statistics show that there is a huge income shift taking place in Rural India, with increasing purchasing power, is focus of marketing initiatives by Corporates. 

The Case Study

Company, ABC introduced the following two Agro Products, using both Traditional and the powerful platform of Network Marketing.

ABC Care, a totally natural and cost effective product based on Cow’s urine blended with concentrated extract of different ayurvedic plants. This formulation when used in right quantities directly protects the crop from soft insects, fungus, different types of bacterial diseases and viral infections. Regular usage of ABC Care helps to reduce the cost of any crop cultivation.

Observations

Sales & Reach through Network Marketing

Through Traditional Marketing

Employing 40 Bsc / Msc Agri Field Staff, 3 Supervisors, covering only Western Maharashtra achieved a Sale of 6,000 – 8,000  Units from Sept to Dec 2008

Additional Observations

Conclusion

It is noted that using the platform of Network Marketing, the reach of the Product is spread far and wide and the proportionately the quantities sold / consumed are far greater vis a vis Traditional Marketing.

Hence it can be safely concluded that Network Marketing can be effectively used to penetrate and create awareness in the Market, including the Rural Markets.

To site a few examples

1. APSA – 80,  is widely popular with Farmers
2. NONI Fruit Juice entered India via NM but today is available in all Medical / General Stores
3. Aloe Vera Juice / Products popularized by a NM Company  are today  available rampantly
4. SWADESHI popularized the “Swadeshi Vitaran Kendra” concept in the Rural region.
5. “Kohinoor Rice” also available in NM.
6. DENIM range of products re-introduced in NM.
7. A leading brand of Suit length was sold in excess of 110,000 pieces.
8. NM Recorded the highest number of sales of Induction Cookers.

Network Marketing – India

World over Networking Marketing has become a successful concept that empowers ordinary people to turn into successful entrepreneurs. Direct Selling / Network Marketing are the business of the next millennium providing a powerful platform for distribution of products. Though construed as different from Network Marketing, Direct selling is akin to NM only difference being that while NM lays more stress on direct recruitment, Direct selling lays stress on selling. 

Network Marketing, the concept, which took roots around 9 years back in India, is at a nascent stage, but, is expanding at a phenomenal growth rate. India, due to its population and largest independent consumer market in the world, is the most attractive proposition for NM, provided that it is customized to suit Indian culture as well as its requirement.

However, at this point in India the NM industry invites mixed reactions and is facing problems from the mushrooming growth of unscrupulous NM operators who are giving genuine NM companies a bad name.  It is only a matter of time that Government of India will set norms for anyone who intends to run a NM company in our Country. 

Another misconception amongst people about NM companies is that only new Companies begin with NM as a method of distribution.  This is far from the truth; take the example of HLL in our Country a company that has over 10,000 crs in turnover to have decided to enter into NM. This should lay to rest all doubts in one’s mind about the power and legitimacy of this form of business. A large amount of Fortune 500 companies produce goods for NM companies, only proving that NM companies also focus on quality of their products.

To understand the potential of NM in India and its future we need to first consider the number of people in the industry in various countries and the turnover they generate, statistics show that roughly 3% of the population of those countries are involved in NM. 

Percentage of Population doing Network Marketing

For India to reach 3% of its population it would mean 30 million people even if we take 3% of middle class which roughly 350 million peoples it means over 10 million people will be involved in NM which is 10 times the present amount of people involved in the industry. Which should also lead to a 10 times increase in the turnover which will be close to 3 billion dollars or roughly 14,000 crs 

One can imagine the boon it will be for the people in this country, which faces tremendous levels of unemployment and business opportunity for the middle class? It is the best and the safest method to create an additional income in the house without having to give up the present form of creating income.

Suggestion

Though the Author / Consultant strongly advocates Network Marketing, as a powerful platform for distribution, it would be futile to suggest that everyone jump on the bandwagon of starting a NM Company. The Consultant suggests an effective alternate solution which could prove to be mutually beneficial to all concerned, that is to piggy ride on an existing NM Company for distribution of Products.

A Case Study – by Mr. Pankaj L Shah (www.plshah.com) is a Consultant / Business Startup Advisor to Direct / Network Marketing Companies, cell: +919820144566, mail@plshah.com ,  plshah@vsnl.com