Ads – Fads

For people like me for whom marketing is a profession, it is a way of life. But like it or not, this is true for all others as well. Come to think of it – we have to market ourselves to our employers – both current and prospective, life partners (before and after marriage), relatives, social circle and everyone else. Conscious or otherwise, it is an activity that we can’t do without.

 

Some people take it to extremes – too much show off, some underplay it. Same is true for brands - great brands connect with their consumers and are able to charge a premium while others flounder. There is some inherent value and some perceived – for good brands the perceived value is very high. While good products and services eventually get popular, the role of advertising should be restricted to the dissemination of information about the launch of a new product or service.

 

With the overload of information and the emergence of electronic media, more and more advertising campaigns have been “trying” to be different to break the clutter. Some of the recent ones have been downright stupid, as below -

 

Two time strong jeans –

So till now we were wearing weak jeans, even then the normal jeans refuse to wear and tear after years of abuse, I wonder what will the newer stronger jeans will do to us.

 

3D TV ad in normal TV -

If I can appreciate the features of a 3D TV in my normal 2D TV then I don’t need the 3D TV. Period.

 

Better sound ads in normal speakers -

Same as the above. If my normal speakers can make me differentiate how a “better” speaker will sound, I definitely don’t need a better speaker.

 

Air cushion shoes to bare foot running -

The shoe makers have taken us for a grand ride. All these years the focus was on “cushion” shoes – air cushion soles and what not. All this was apparently scientifically proven – that is why we paid more and more money for shoes. Apparently all that was hogwash. The latest trend is “barefoot running” – shoes so thin that you feel you are running barefoot. Also they cost more than your normal cushion shoes.

 

Deo/Aftershave/Perfumes -

This industry is built on creating “desirability” amongst males. Nothing else matters – if you are using the right brands of the above girls will flock to you. Except the fact that now all the above have the same advertising and hence in order to have a sure shot result it is better to apply all the ones at the same time so that at least one works. Unfortunately nothing of this sort works.

 

Fairness creams -

Our weakness for fair skin is legendary. Many fairness creams (for both males and females) have taken advantage of this weakness and launched products. Now there are powders available to make us look like westerners. These products are like the “garibi hataao” policies of the Congress – so many decades of implementation and no results. Same is true for the users of these products.

 

Good Luck medallions/rings/bracelets -

If there was ever a product category made to benefit from our insecurities – it is this. This is 2^nd on the list of things that irritate me – on top are the chain mails/sms’s that if not forwarded immediately bring you bad luck for many years to come. Come to think of it – if adding or removing an alphabet to your name or wearing any of the above could change destinies then the makers of these would be rich beyond imagination and not peddling these services to make their ends meet.

 

While marketing helps, it can’t really support a weak product – truth eventually prevails as one can’t fool all the people all the time. See how chinks appear in the carefully cultivated image of our aspiring PM Pappu every time he opens his mouth. I hope we start to see better campaigns and some memorable ones like Hamara Bajaj, Neighbours Envy - Owners Pride and others.  

 

I end the week wishing the readers a happy Diwali and a prosperous festive season.

 

Keeping with the festive mood next week I will write on the relationship between “gyan” and “dhan”.

Education = Knowledge = Opportunity

Education has always been a very important part of our society, well educated citizens generally earn the respect of their community. The Guru Shishya Parampara is rooted in our psyche and we pay our homage to our gurus on the pious occasion of Guru Poornima every year. I am sure we all remember some of our teachers who have inspired us to be what we are today.

Takshshila was the earliest recorded centre of higher learning in India from at least 5th century BC. The Nalanda University was the oldest university-system of education in the world in the modern sense of university. Western education became ingrained into Indian society with the establishment of the British Raj and the knowledge of English was possibly one of the good things that they did for our country.

Education is also very important for our socio – economic well being - India has seen success in the field of IT and Pharma industries because of its large educated population.

In Numbers –

We produce 50 lakh graduates every year

We produce 15 lakh engineers every year – more than US and China added together

The size of the Indian Education Industry is about Rs 3.5 lac crore now and will almost double to Rs 6 lac crore by 2015 as per a recent India Ratings research report. India's higher education system is the third largest in the world after USA and China.

Reach -

Our census puts the literacy rate at 66% - not good enough after so many years post independence.

As per the Annual Status of Education Report (ASER) 2012, 96.5% of all rural children between the ages of 6-14 were enrolled in school. 83% of all rural 15-16 year olds were enrolled in school. The challenge is now to keep these children in school and the programmes like the mid day meals certainly help.

Quality of Government run institutions -

20% of primary education is privately run whereas 60% of higher education is privately run. We know the problems in the govt run institutions – poor quality infrastructure, absent teachers, lack of motivation on the part of the teaching staff etc. Since a majority of our population (specially rural) goes to the government run schools, it is very important for their quality to improve.

World Class -

IITs and IIMs are the only world renowned institutes in the country. Their alumni today run many companies in India and overseas. There is a strong case for many more such high quality education institutes in the country.

Qualit0y of output -

While we produce a staggering number of students every year, very few of them are employable. All companies have a comprehensive training programme to train freshers every year. The quality of the students will improve once the curriculum is revised more frequently and have more interactions with the industry to gauge their demands so as to be able to adjust the inputs accordingly.

Commercialisation -

The private sector loves education. All aspiring businessmen now want to have a piece of this action and are creating more and more institutes. The potential of the sector is high – high profit margins, capitation fees and the chance of converting black money to white – no wonder most of the politicians have schools and colleges being run by them. The problem with this is the rapid escalation of costs across the industry – my friends today pay more for their kids pre school (couple of hours) than what I paid for 2 years of my post graduation – all this has changed over the last 10 years!! No one seems to mind really – education loans have become commonplace with some MBA colleges charging upwards of 15 lacs per year – I sadly think of graduates from these institutes who have a EMI burden on them before they start working.

New ways of delivery – online education -

The industry needs to innovate fast – a cost effective way to deliver education online/on mobile/TV needs to be found and implemented. There is very little possibility that those who are hungry for education would find their way into a school or a college – if the students can’t come to a school can the school go to the students?

Role of NGO’s/Training Institutes -

NGO’s are playing an increasingly important part in the industry – they reach out to students and adults and train them. Training Institutes which provide basic skills to the youth to make them employable in the catering business/shop floor/retail industry are also doing a good job.

Education builds character in an individual and hence is essential, more so in today’s world where your basic education qualification matters. One can also argue that it is not necessary -  one of our top industrialist was not even a graduate, but that was 30 years ago. In the modern world it has become absolutely necessary.

Some of the most successful people never stop learning – that is a characteristic that our education system should instil in all students – education can stop but learning should not.

Next week I will question some marketing fads – as a marketing graduate I hope that I would be able to do some justice to it.

Healthcare industry – what went wrong and what can be done

I begin this blog with the invocation of Lord Dhanvantari, an avatar of Vishnu, a medical practitioner and the surgeon of gods.

The Indian healthcare industry comprises of hospitals, medical infrastructure, medical devices, clinical trials, outsourcing, telemedicine, health insurance and medical equipment. Potential Healthcare is the world's largest industry with total revenues of approx US$ 2.8 Trillion. In India as well, Healthcare has emerged as one of the largest service sectors with estimated revenue of around US$ 30 billion constituting 5% of GDP and offering employment to about 4 million people. Sample this -

·         We have the largest number of medical colleges in the world.

·         We produce among largest numbers of doctors in the developing world. Indian doctors work in many other countries and are considered among the best in the world.

·         We get ‘Medical tourists’ from many developed countries reflecting the high standard of medical skill and expertise here. They seek care in its state-of-the-art, high-tech hospitals which compare with the best in the world.

·         We are the fourth largest producer of drugs by volume in the world and are among the largest exporter of drugs in the world. Indian Pharma companies are feared across the world for their cost efficient production methods and competitiveness.

Since we Indians have a genetic makeup making us vulnerable to heart and sugar ailments, our visits to the doctors is virtually guaranteed. Let us look at what ails the Indian Healthcare industry -  

Avoidable deaths

We don’t value the human life in this country. A mere look at the simple ailments that cause many deaths in the country – 40,300 Indians died of malaria last year, about the same no of typhoid, 50 lakh kids die every year during childbirth (called the Infant Mortality Rate which is 42 per 1,000 births for us) and we lost about 56,000 mothers during childbirth last year - the highest women mortality rate during childbirth in the world. Very little effort can make a big difference to save so many lives, but then, who cares?

Accident victims

18 deaths occur every hour in our country as accident victim don’t get timely medical aid (the first hour is the most crucial). Do the maths – how many lives are lost each year? Let me tell you, these numbers are again are the highest in the world. But we don’t care. If we did, the courts would not need to continuously remind hospitals to admit accident victims so that their lives can be saved. Still the hospitals will not do what is instinctively the right thing to do – what’s the point if the patient is unable to pay the bills?

Too much greed

A doctor’s job is good for society.  But that was 50 years ago. Now it is a cash cow which needs to be milked as much as possible. Why not? The medical fee is so high and the cut offs so impossible that only the brightest make it to medical school. There is then the fierce competition to make money for the hospitals that you are associated with to justify the set up costs and profits. Don’t worry about your bill – just swipe your credit card or better still – there is a medical insurance to fall back on. Also the Gold Loan branch is just around the corner – in case you need to raise some quick money by mortgaging your ornaments.

Private sector – the wrong way

The motto of the private sector is to maximise profits. If hospitals are run by the private sector, don’t blame them for not thinking twice before engaging in questionable behaviour to maximise profits.

Consider this - most of the medical resources lie with the private sector - 80% of all doctors, 26% of nurses, 49% of beds and 78% of ambulatory services and 60% of in-patient care. It is naive not to exploit the dominant position. I wonder why almost all the deliveries of my friends were caesareans – maybe a couple of days more spent in the hospital is good for the hospital profits. Why would anyone complain about that, after all there is a bundle of joy to show for the “expense”. Freely recommend angioplasty and other complex procedures – who minds spending a couple of lakhs on a surgery when it might extend your life. There is a BIG case for the hospitals to be run purely on a “non profit” basis. Why should our celebrities (Mangeshkar) and business houses (Ambanis, Hindujas) run hospitals to make money? Don’t they have enough already?

Customer Centricity

I am sure that a majority of the readers will not be “happy” with their interactions with the medical practitioners. Are we all “customers” of the services offered by them? Yes. Do we feel like “customers” when we visit them? Certainly NO. I am yet to see a doctor who is on time, a 2-3 hour delay is considered normal. And I have never heard them apologise if the patient is kept waiting for hours after the scheduled appointment time, we are supposed to understand that there are emergencies and many lives of us ordinary citizens that these angels are supposed to be saving. When loved ones are admitted for procedures in hospitals, the relatives are made to sign a declaration absolving the doctors of many things. Is this not one sided? I hope the courts in the country take note – we have no choice but to sign the totally one sided declaration. This is not the way a customer – service provider relationship is supposed to operate.

Human Touch

How do you handle patients? They are suffering and need a delicate touch – not the push and the cold shoulder. Arrange for the money and only then the critical operation will be performed. Make arrangements for the blood. Sign these forms which absolve us from punishment in case the patient dies due to our mistake. The canteen is only for the patients – relatives are free to go out and eat. The waiting benches are uncomfortable? Why are you thinking of comfort when your loved one is in danger?

Five star treatment

The hospitals are now 5 star hotels and the per night room rates also match. If it was not for the sanitized smell and the presence of white coats around, you would not be able to make out the difference. The charges on the items of the bill vary depending on what sort of “room” you are admitted in. But then, not everyone can afford 5 star. What happens to the not so lucky in the society? Who decided who can pay how much for a treatment. Foreigners are welcome to be treated in our country – Indians – well what is your net worth?

Compulsory medical insurance

Each visit to the doctor is getting costlier. Each admission to the hospital can easily set you back by a couple of lacs. Everyone of us should have medical insurance – but that is not the solution. There are no free lunches in life – the insurance company will compensate you but unless the industry corrects its way, the premiums that we pay will keep going higher every year and will become unsustainable at some point of time – at the current rate – very soon is my guess.

Pharma value chain –

Companies make medicines. They have a sales force that can be seen sitting outside the doctors cabins, eager to meet them. Their job is to “influence” the doctors to prescribe their medicines over others. On offer are prizes, white goods, cars and foreign holidays. Let’s look at the entire value chain – the drug producing company makes 20%, the wholesaler 10% and the pharmacy 20 – 60% Pharmacy retailing, people in the jewellery business and agricultural middlemen are the most consistent profitable (legitimate) businesses in this country. Is the cost of this intermediation good for the society? NO

Drug prescription and pricing

We buy the medicines that the doctors prescribe. What are medicines? They are chemicals agents that are mixed together and some of them are now generic household names like Paracetamol. Generally in the markets there are more than 20 brands available for the same chemical agent. So a diabetic patient should only be recommended a chemical agent that he can buy from a pharmacist or given a choice of 5 brands to choose from instead of buying the expensive brands that are prescribed so that fat commissions can be paid to the doctors and pharmacists. The high drug costs lead to very high out-of-pocket (OOP) expenditure for the general public. It is estimated that 78% of all spends on healthcare are paid by the people and 72% of this is on drugs alone. Estimates suggest that 39 million people are forced into poverty because of medical expenditure. 

Imagined ailments, expensive prescription

The industry keeps researching new (questionable) ailments to cure and the doctors are more than happy to prescribe them. Anxiety, hypertension, sleep disorders, vitamin D deficiency, bipolar disorder and schizophrenia, ADHD, osteoporosis – latest being sweating while sleeping, the industry is in a mad rush to create new ailments and expensive drugs around the same. The new fad is combination drugs – one may not work so try a combination – dosen’t matter what effects they have on the human body. Why don’t we still have a cancer cure? (refer to my earlier blog- 10 questions that need answers). 

Is medicine science

In science you can control the output based on inputs. In medicine you can’t. Doctors say it is difficult to estimate the end result as the human body is complex and different people react differently to treatments. Most of the decisions on the line of treatment that the doctors take are based on “experience”. In earlier times surgeries were performed s a last resort on patients that had no hope of survival. Thanks to anaesthesia now surgeries are recommended performed as a routine for ailments that did not exist some years ago.  I would encourage readers to pick up Antifragile by Taleb and read the chapter on Medicine – it is an eye opener.

Government intervention –

The government spending on healthcare is grossly inadequate. We spend about 1% of the nation’s GDP on healthcare – lower than even some of our neighboring countries. Healthcare was never a top priority after independence which has led to social sectors like health and education (my next blog) being neglected. In fact, it wasn’t until 1982 that the National Health Policy was endorsed by our lawmakers. Medical education is also neglected, there are no great Indian medical institution brands like the IITs or the IIMs.

I am a strong supporter of “government should not be in business”  However there is a good reason why the private sector should never be allowed to run law and order, utilities (water supply, electricity, transport) and defence as the profit motive mentioned above will lead to the exploitation of the monopoly that these services create.

Healthcare is facing the same problems today. The private sector should run hospitals but the government should be in the dominant position and the private sector should operate on the fringes (say 80:20). The private sector should compete with the government sector in providing healthcare services – today the private sector competes with each other and this way the costs will only keep on rising. Only a significant government intervention will make a difference. I know that the majority will (rightly) feel that the government cannot run any enterprise effectively – let alone something as critical as hospitals. The other solution is a cap on the returns that the private sector can make from these businesses, let us say 20%. I don’t know which is a better solution, but one thing is for sure, things cannot be allowed to run in this way.

Need for a change and choice –

We should have a transparent choice between doctors and hospitals.

We should have a choice of brands for purchasing the medicines that the doctors prescribe.

There should be accountability in the medical profession

We should be treated as customers deserve to be treated.

Medical insurance should cover all costs – including visits to the doctor

There should be a regulator/watchdog for the industry

Government should be the leading service provider for the industry.

Disclaimer– I hate taking any medicine and going to the doctors/hospitals (like most of us) so some of this may be biased, but a lot of it is (unfortunately) true.

I also end this blog with the invocation of Lord Dhanvantari, an avatar of Vishnu, a medical practitioner and the surgeon of gods. I also hope the practitioners stops chasing only the “Dhan” in Dhanvantari. I wish all readers a Happy Dussera and pray that the industry return to the right path that they should follow.

Next week I will take the readers on a journey to take a look at the Indian Education Industry.

Poll promises to be made and kept

Before every election all the parties vie for the attention of the voters by putting up manifestos – documents detailing the work that the party will do if voted to power. Voters should take note of the manifestos as they affect our lives. Now a days the party in power wants to cling to power at all cost and the challenging parties are often desperate to come to power as the opportunity cost of staying out of power is too high. This has resulted in the election promises going from weird to absurd – free food, free medicines, free laptops and mobile phones, regularisation of slums, free power and what not.

Today I will attempt to put forward the items that parties can promise the electorate to implement if they are voted to power. The criterion for choosing the items was simple – things which can be easily implemented but will have a profound impact on the country and will also result in winning votes for the parties - 

Abolish income tax -

How much do we collect in income tax every year – 1,93,402 cr in 2011 - 12

How many people pay taxes in India – 3.5 cr (3% of population)

What is the size of the income tax department – 43,000 employees

Size of the Indian Economy – 120 lakh cr (2 trillion dollars)

Share of services in the economy – 84 lakh cr (70%)

Tax of 10% on half of service sector will yield in collection of – 4,02,000 cr (double of current income tax collection)

The government should just abolish Income tax and introduce a tax on consumption instead.

Although this math is simplistic (we already tax some services, last years taxation was 70,000 cr) the idea of the same is to highlight the potential of taxing consumption and not income. Not only is this easier to collect and monitor (at source) but it also encourages savings which are vital for a developing country like India. It is also logical as services contribute about 70% of the Indian GDP and are growing at the fastest pace in the last 2 decades (agriculture and manufacturing contribute almost equally to the other 30%)

What happens to the staff of the IT department then? They can be merged with the service tax department to handle the increased work load of the department.

Law reforms -

Court cases in India are nightmarish. Because of the huge backlog of cases (more than 3 cr court cases are pending in various courts of the country) the judicial system is unable to deliver timely justice resulting in a cavalier approach of the people breaking the laws. It took our system 17 years to sentence Lalu Prasad to a jail term for 5 years during which he was a key supporter of the UPA government. We just cannot have so much delay in delivery of justice. This one reform itself will led to the resolution of a lot of the problems facing the country today – I have covered the topic in detail in my earlier blog – “Many problems? One solution”

Police reforms -

We all know that the law enforcement agencies are in the need of a major overhaul. We as citizens can (rightly) complain that the police is corrupt and lethargic. But lets examine the issue from their point of view – they work under lots of pressure (both political and otherwise), have long working hours, don’t get too many public holidays as they are busy protecting us, have terrible working and living conditions, their stressful lives are at potential risk every day (so is everone else’s even in a simple activity like crossing a road) but for these people it is a part of their “job description” all this and they don’t get any respect from the society (fear yes, respect no). And what are they paid for all this trouble? Sample this – for Maharashtra Police the per month pay range for a sub inspector is Rs 5500 – 7000 and for a constable is 5200 – 20200 (source mahapolice.gov.in) These days many drivers in the private sector are paid more than this.            

“Bhookhe bhajan na hoye Gopala” is apt here. We would be fooling ourselves if we expect them to do a great job given what they are paid and what they go through every day. Let’s treble their salaries and then demand delivery – for people who don’t fall in line the courts (after reforms) can quickly decide if someone is guilty and take appropriate action.

Bureaucracy reforms -

What is true for the police above is also true for the bureaucracy. Starting from the babus to their seniors, the entire hierarchy is grossly underpaid. So let’s treble the packages again and expect to see tremendous improvements – for people who fail to deliver there would be enough people to take their places.

Social spending heads in budget

We spend over 1,30,000 crore every year for 147 schemes (plan is to bring it down to 70 schemes this year). To name a few of these schemes – Sarva Siksha Abhiyaan (budgeted spend Rs 61,734 cr for 2011 - 12), NREGS (budgeted spend Rs 40,000 cr for 2011 - 12), Rajiv Gandhi Gramin Vidyutikiran Yojna (budgeted spend Rs 6,000 cr for 2011 - 12), Mid Day Meal (budgeted spend Rs 10,000 cr for 2011 - 12). This is a utter waste of taxpayer money and a breeding ground of corruption. How can anyone keep a track of so many schemes and their proper implementation? Let the new government run only 10 scheme and tightly monitor them – once the intended benefits are realised the other priority areas can be taken up.

River interlinking –

The earliest plan for river interlinking in India was proposed in 1972.  The gist of the plan is to link the water surplus rivers of the East and North to the water deficit rivers of the West and South India. It is indeed a grand plan both in vision and the positive spin offs it can create – government spending on infrastructure will create a multiplier effect on sectors like cement, steel, capital goods, construction companies and generate productive employment for many, more land will come under cultivation, water scarcity will get solved in many areas, the waterways can be developed as an alternate way of transport, we will conserve a precious resource such as fresh water, flooding will get reduced, fishing and other activities can be created along the new rivers, power can be generated, water tables will get recharged and water levels improve in the areas where the rivers will flow from. There are too many direct and indirect benefits to ignore this project.

New ways of service delivery -

Almost everyone today has a camera phone. Thanks to cheap mobile plans videos can be uploaded and downloaded quickly. It is possible to deliver a lot of services to the people using this facility – can I upload my grievance on a website, can the citizens become the eyes and ears of the government to notify law breaking, potholes, garbage, land grab, stagnant water, bribery, waiting lists at hospitals/courts/government offices to a portal where it can be tracked and solved? Yes. Can I get the status of my requests on my mobile? Yes. Should the government start thinking of its citizens as its customers? Definitely yes.

Government landbanks –

The government holds large land banks in practically every city. Although only a few of them are vacant, most of them are occupied by crumbling structures created decades ago. There a case for redeveloping these (except heritage structures) so as to create a better infrastructure and enabling webcams, sprinkler systems and other modern office tools. Let the government make better use of its properties and the life of the people working in those structures get better.

  

Government hospitals -

Same applies to the government run hospitals, most of them are in a very bad shape. Let there be a massive effort to redevelop these in record time so as to provide better services to the needy. Not only the buildings but the equipments, layouts, capacity and the staff quarters. The costs of a medical problem have become so high in the past few years because of the excessive commercialisation of this industry (more of this in the next blog) that the weaker sections of the society have to depend on the government created infrastructure for the delivery of this basic necessity. Let there be more people who can avail of this service and the quality of the delivery improve.

Agricultural produce movement -

In India the agricultural and farm produce cannot freely move across the country due to a law passed in the 1954 (called the APMC act) which gives the states the power to create mandis and decide who can participate in them. It also forces the farmer to sell their produce in these mandis to middlemen. The 5 – 6 layers of middlemen that the goods pass through ensure that the good sell at least 3X the price of what they are bought from the farmers. While the states have been protecting the middlemen and the traders for decades now, never before have they been so brazen in hoarding goods and creating artificial scarcity and benefiting from the price rise (like the current case of onion prices). In the name of protecting the farmer the government is hurting both the farmer and the consumers. Today when goods can move freely across the worlds, why restrict their movement within the country, especially when the inflation rates are so high and hurting everyone?

Although the list can be much longer, I chose to focus on the high impact items here that are also vote catching. I am hoping that most of these items are a part of the agenda of the party that aims to form the next government.

Next week – medical industry – what went wrong and what can be done.