Google gets FTC’s nod but will it suffice?
For almost two years, the US Federal Trade Commission has been investigating allegations that Google unfairly dominates the Internet search market. The end of the FTC’s 19-month investigation did not excoriate the search giant as it took no action on allegations that Google manipulated its search results to favor its own services. Many industry groups and businesses such as Yelp and FairSearch.Org, had made claims of large drops in traffic due to tweaks in Google’s search algorithms. But the FTC’s ruling came as a disappointment for competitors such as Yelp, Expedia and Nextag, who had hoped that the commission would bring an antitrust case against Google based on the commission’s authority to combat “unfair methods of competition.” The European Union’s competition authority, meanwhile, is running a similar investigation and may soon accomplish what the FTC concluded it should not. Google committed to the EU last month that it would outline changes to the way it displays its own services in search results as compared to services of competitors.
Complaints over Walmart’s price-based ad campaign
American retail giant Walmart’s recent price-based ad campaigns, in which it claimed to offer better prices on some products than its rivals such as Best Buy and Toys R Us, has led to the filing of complaints to attorneys general in several US states over the past few weeks. In its filing to Michigan officials, Toys R Us said it has complained about a series of Walmart’s ads over the recent Christmas holidays, citing what it claimed were inaccurate prices on several toy items. Walmart, however, has defended its ad campaign. “We know competitors don’t like it when we tell customers to compare prices and see for themselves. We are confident on the legal, ethical and methodological standards associated with our price comparison advertisements,” its spokesman said. Walmart, which launched the radio and television ads last spring, said the initial ads spurred a 1.2% boost in sales at stores open at least a year and a 1.1% rise in store visits in areas where those ads were aired, compared with similar regions where they did not run.
Toyota regains its top slot, again
The past year proved to be a hard-scrabble one for Japanese automaker Toyota. It posted its largest loss ever, became embroiled in a recall scandal and struggled with the punishing effects of a strong yen. But despite these setbacks, there was also some good news to cheer. In 2012, Toyota raced ahead of rivals General Motors and Volkswagen to regain its title as the world’s largest automaker, selling 9.7 million vehicles, a record for the company. Much of this growth has come from the US, where its sales increased 28.8% last year to 1.88 million vehicles through November. That’s more than double the industrywide increase of 13.9% over the same period. The company’s supply chain also bounced back more quickly than predicted, profits returned once again and with the yen now weakening Toyota is looking to be right on track to delivering significant levels of growth this year.
in the line of fire
Amazon and Facebook are facing the rap from digital media buyers for not adhering to the advertising industry’s standardized ad-privacy program even while a majority of large media firms and ad networks comply or integrate with the Digital Advertising Alliance’s (DAA) Ad Choices program. Both Web giants offer targeted display advertising that can sometimes incorporate behavioral data from third parties. But while nearly every other relevant media firm, ad network and ad-data firm either uses the industry’s self-regulatory Ad Choices program or operates one that can be easily integrated with it, Facebook and Amazon do not. Web publishers are are required to inform consumers when the data is provided by third parties but Amazon and Facebook are causing big problems for some of the largest digital-media buyers by not using the standardized ad-privacy program. All of this raises an even larger question – should data reporting be extended beyond third party reporting. Should the mega sites like Amazon, Facebook, Google and Yahoo! be required to inform the public about the targeting ads that they generate off of information that they gather themselves?
Gap widens its portfolio
Gap Inc, a leading global specialty retailer offering clothing, accessories, and personal care products for men, women, children, and babies under the Gap, Banana Republic, Old Navy, Piperlime, and Athleta brands, has acquired the New York based women’s apparel retailer Intermix Holdco for $130 million. The purchase will help Gap to further expand its footprint in the thriving luxury apparel market. Intermix sells clothing and accessories from prominent designers such as Yigal Azrouel, Yves Saint Laurent, Missoni, Helmut Lang, Stella McCartney, Jimmy Choo and McQ by Alexander McQueen, in its 32 stores in the US and Canada and on its e-commerce site. The acquisition will help Gap to extend its portfolio of brands and scale up its e-commerce platform further by making changes to the Intermix e-commerce site.
“ENJOY MPV WILL MAKE A GOOD MARK IN INDIA”
Paddock speaks to 4ps b&m about GM’s upcoming products and the response to its new sail u-va
Last November’s launch of the Sail U-VA showed your aggressiveness in the premium hatchback segment. But it’s the compact utility vehicles where the real growth is and many car manufacturers are pushing for this segment. Are you also looking at it as your next big target?
Sure we are looking at this segment seriously. Our upcoming multipurpose utility vehicle, Enjoy, is targeted towards the small MPV segment. Enjoy has been one of the hottest-selling products in China. I am very sure that it will make its mark very well in India as well. However, we will ensure that an appropriate level of innovation and customization takes place before the vehicle is launched in the country. This is similar to what we had done with the Sail U-VA to achieve the right quality, performance, right hand drive and dieselisation. The vehicle is very well targeted to appeal to the desired segment and we believe that it will drive enough numbers for us.
What is the overall capacity of your plants in Gujarat and Maharastra and how much of this capacity is being utilized currently?
We have a current capacity of roughly 160,000 units a year. That is for petrol 1.2L, diesel 1L & 1.3L combined. Our capacity utilisation varies from car to car. As we prepare to launch our new MPV Enjoy later this year, our utilization will move upward to 75-80%. On an average, we use 78% capacity of the production plant on a steady basis. But currently we are re-shuffling our product portfolio. For example, we are no longer producing the UVA and Aveo. We also have a new engine coming out soon. Once it is rolled out, our production will be optimally utilized.
Just as you have plans for rolling out new products to tap various segments, do you have similar capital expenditure plans to increase your production?
Currently we have no such plans. We are very comfortable with the facility in Talegaon, Maharashtra. It has world class infrastructure, manufacturing capability and power terrain. We have designed it in a way that we can increase the production depending upon market demand. The Talegaon plant has an annual production capacity of 1,60,000 units. It has already hit the 1,00,000 unit mark. With the launch of the Chevrolet Sail U-VA and the forthcoming launches of Chevrolet Sail and Chevrolet Enjoy, we will be stepping up the production at the plant. We look forward to achieving more milestones as we go ahead and offer best-in-segment cars in the Indian automobile market.
Talking about GM’s touch points in India, how many dealers you have currently and are you looking at expanding your network?
We have about 280 touch points across the country. Our aim is to get the maximum out of the existing network. So far it has helped us drive a good balance between our metro and rural market. We have done very well in terms of visibility in the metros like Bangalore, Chennai, Mumbai, Hyderabad and Delhi. But we are also looking at ways to improve our presence in the rural market. Since our sales is roughly balanced between the rural market and metro cities, both of them are equally important for us.
India being a price-sensitive market, how important it is for a player like you to go for price innovation in the Indian car market?
There is a price perception for every segment in the consumer’s mind. It is very important for any car manufacturer to be present at that price level with the maximum value he can offer. Take the example of the Sail U-VA. We have come out with a good launch price and we are offering air bags even in the base diesel model. We are also offering a 5 year warranty on power terrain. This demonstrates our confidence in our product.
Mahindra revs up bike launches
Mahindra & Mahindra kicked off the new year with a preview of two of its new “intelligent machines” that it says would redefine motorcycles in their class. Mahindra 2 Wheelers, M&M’s two wheelers arm, is readying for a comeback in the motorcycle segment two years after having had to withdraw its first bike Stallio due to glitches. Powered by a 110cc engine, M2W showcased the all-new Centuro and Pantero commuter bikes which are designed to compete with market leader Hero Splendor and other bikes in the segment like Honda Dream Yuga and Bajaj Discover. Currently, Hero MotoCorp and Bajaj Auto lead the motorcycle segment that includes newer players such as Honda Motorcycle & Scooter India and Suzuki, all of whom are planning new launches. M2W, which sells only scooters now, will first target the entry-level motorcycle segmentwith its new 110cc bikes and is looking at launching bikes in every segment going forward. It aims to launch the Pantero and the Centuro in the next couple of weeks while the commercial launch of its other new products is expected to to take place by March this year.
GCPL buys British deo brand
Godrej Consumer Products Ltd has acquired Soft & Gentle deodorant brand from Colgate-Palmolive in Britain for an undisclosed amount. The acquisition was carried out by the company’s subsidiary KeyLine Brands, which GPCL acquired in October 2005. Keyline operates in the household and personal care space and its portfolio includes a number of niche brands such as Cuticura, Aapri, Inecto and Touch of Silver. Over the last few years, Keyline Brands has delivered good performance and grown in double digits in a very tough market environment that is witnessing little to no growth. With sales of 21 million pounds in 2011, Soft & Gentle is Britain’s fourth-largest female deodorant brand by market share and retains strong brand equity with retailers and consumers. Soft & Gentle’s 2011 sales amounted to £21 million, according to GPCL’s filing to Bombay Stock Exchange. Analysts estimate that the company would have paid approximately 50% of the sales value for the purchase. The acquisition is being funded through low-cost debt and is in line with the company’s strategy of changing the mix towards owned brands and building more scale in the business.
Kingfisher’s revival in limbo
The revival plan for the grounded Kingfisher Airlines, which envisaged putting in an investment of Rs.650 crore into the beleagured carrier, has not found favour with the aviation regulator. Last month, Kingfisher Chairman Vijay Mallya had put forward a revival plan for his ailing airline with the Directorate General of Civil Aviation. But the plan failed to pass muster as it could not guarantee a reliable service and fell short of offering clear solutions to the plethora of issues regarding lenders, staff payment, airport fee etc. The airline had lost its operating licence on December 31, 2012, and had stopped flying since October. The airline’s management has been in discussion with multiple investors to secure a deal and bring in funding for the debt-laden carrier so as to help it launch a limited operations for the beginning of 2013. Mallya had recently written in a letter to the Kingfisher staff that the revival plan would be funded by the airlines’ parent UB Group and would involve using seven planes for the start of the summer season. Once India’s second-largest airline, Kingfisher is estimated to owe $2.5 billion in debt to banks, staff, vendors and others.
Marico Hives off skin care biz
Marico, the maker of Saffola oil and Parachute oil, will spin off its skin clinic business Kaya into a separate listed company. The restructuring, effective from April 1, 2013, involves demerger of the skin care business under the Kaya Clinic brand as a separate entity from Marico’s consumer products business. Marico, which is present in more than 25 countries across Asia and the African continent, had reported turnover of Rs.4,000 crore in 2011-12. Marico Kaya will be listed separately on the Bombay Stock Exchange and the National Stock Exchange and will have its own board of directors distinct from Marico’s board. Marico will also combine its consumer products business and international business group for operational cost benefits. Analysts consider it a positive move for investors who have been raising concerns about Kaya’s business model for some time now. Kaya, which offers skincare solutions through 106 clinics, contributed around 7% to Marico’s consolidated revenue of Rs.4,000 crore in 2011-12, but had a loss of Rs 29.1crore at the EBIT level. Company officials said there were strong cultural differences between Marico and Kaya that limited the growth prospects for Kaya.
