Saturday, March 16, 2013

Calamity or Opportunity?

In the post titled "From Post cards to Chappatis" (Please click here to read it), I had mentioned about how marketing opportunities are en-cashed by the wizards who lead by examples.  Another such stalwart who is a role model for budding entrepreneurs was one who converted calamities like epidemics and wars into business opportunities to give a thrust to his marketing forays and built a business empire of his own.

A calamity is defined as a great misfortune or disaster, especially one that causes extreme havoc, distress or misery.  Epidemics in the form of dreaded diseases like Plague and Cholera have consumed millions of lives in the early part of 20th century.  Wars are no less severe in bringing such distress and pain.  Opportunity is defined as an appropriate or favorable time or occasion for an attainment of a goal.  Is it possible to convert such epidemics and wars into an opportunity?   Rai Bahadur Mohan Singh Oberoi has showed that calamities of epidemics like Plague and Cholera as well as wars can be converted into opportunities, with foresight and hard work.  Acting smartly during such adverse times, from a penniless hotel clerk he rose to become a pioneer in luxury hotel industry.  His life story makes an excellent case study for students of marketing.  It is true that every salesman who reads his case cannot become another Oberoi.  But the case can motivate them to think out of the box and see an opportunity even in calamities.

Mohan Singh Oberoi was born on 15th August 1898 in village Bhaun, near Rawalpindi, in the undivided Punjab.  He used to mention his year of birth as 1900, two years later, and it was believed that this was because he did not want to be seen as dating from 19th century.  He could study only up to Matriculation due to family financial constraints and worked in a shoe factory as a supervisor.  The factory too closed down due to losses but taught him to always wear shining shoes.  He was forced to move out of his village due to the deadly Plague that hit Punjab and killed thousands.  Recently married, he moved with his wife to Shimla.  He chose Shimla because it was the summer capital of the Britishers who were ruling the country.  His knowledge of typing and shorthand skills and well-knotted tie and shining shoes got him a job in Cecil Hotel in Shimla.  Some years later when his boss wanted to sell the Hotel, by then known as Clarkes Hotel, he mortgaged his wife's jewellery to buy his first hotel.  From then he went on adding more hotels and at his death  his empire comprised of 35 hotels spread over India, Srilanka, Nepal, Egypt, Australia and Hungary.

Calcutta's famous "Grand Hotel" was closed down in the aftermath of the Cholera epidemic in 1933.  More than a hundred foreign guests died in the outbreak of the disease.  The hotel remained closed for five years due to fear of the epidemic lying latent in its water supply system.  M S Oberoi found an opportunity here and took lease of the hotel by raising funds from relatives and friends. When hotel owners talked of Goodwill, he silenced them by arguing that he be paid compensation as the place only carried Illwill and not Goodwill due to its history of deaths due to Cholera!  He got the entire water supply system thoroughly cleaned and yet guests were unwilling to arrive.  He promised incentives like cheap or free boarding facility to attract customers.  By that time Second World War had started and Calcutta was the pooling place for troops to fight on the eastern borders.  The government had the authority to acquire any building for war purposes.  He apprehended  that the hotel could be a potential target.  He improvised 1200 beds at the hotel and approached the authorities with an offer to provide accommodation for the soldiers at rupees ten per soldier per day.  The offer suited the war managers as they were free of the botheration of managing rations and food supply.  The losses in room rents were made up by charging extra for other facilities provided to the soldiers.  This ensured full occupancy of the hotel during the war period as well as avoiding losing control of the hotel.  British Government honored him with the title "Rai Bahadur" in 1941.  In 1943, he started to secretly buy the shares of Associated Hotels of India Ltd.  They were the days of  "Share Certificates" (Demat was not yet born) and he walked into the Annual General Meeting  of that company with canvas bags full of share certificates and presented them to directors.  Controlling interest passed into his hands from Spencer & Co and his hotel chain expanded further. 

M S Oberoi is also credited with bringing many changes in the hotel industry and providing comfort to his guests at the hotels.  His introduction of chambermaids in 1957 with vacuum cleaners in their hands raised a furor and was debated even in Parliament.  Probably this led him to try his luck as a parliamentarian and he won a seat in the Rajya Sabha 1n 1962.  He won an election to become a member of the Lok Sabha in 1967 and returned to Rajya Sabha in 1972.  He lost four Hotels in Pakistan during the 1965 war, but raised money in Saudi Arabia to invest abroad in new hotels.  He chose this route due to tight money controls in force in India then.  His partnership with Inter-continental group in 1965 started the Oberoi Intercontinental.  From then on, he specialized in spotting and refurbishing run down and undervalued properties and expand his hotel chain.  His service to the industry was recognized by his peers by making him as the President of Hotel and Restaurants Federation of India.  He was awarded Padma Bushman in 2002.

He believed that "too often efficiency and high standards once established are taken for granted" and hence made personal checks of how his hotels were run.  Called "Conrad Hilton of India", his belief in business is summed up in his statement "You think of money and you cannot do the right thing.  But money will always come when you do the right thing".  He lived a full life and died on 3rd May 2002, at age 103.  Even by his admission of year of birth as 1900, he lived for 101 years and was active throughout his long life.  An active life this long is itself a great achievement, even if other successes are not counted.

Thursday, March 7, 2013

From Post Cards to Chappatis

The Kumbh Mela at Allahabad last month (January-February 2013) was one of the biggest religious congregation in the history of mankind. Taking a holy dip in the Ganga-Yamuna-Saraswati sangam at Allahabad on these auspicious days during the fortnight is considered as a life time goal by many shraddalu persons. That the holy river waters which are expected to wash away the sins are themselves declared unfit even for bathing does not really matter to them. An estimated 30 million people were in the city of Allahabad at the peak of the Mela. The congregation was higher than the entire population of Australia and close to the population of Canada! The infrastructure, or the lack of it, to handle such a huge crowd naturally collapsed and yet the Kumbh was highly successful.

This Kumbh Mela, held every 12 years, made news for two issues. The first was the death of 38 people in a stampede at the Railway Station on the "Mauni Amavasya" (New Moon day) on February 10th. Indian Railways carries an average of 23 million passengers a day on its entire network throughout the country. The number of people at Allahabad that day was in excess of this number and the rush at the station could be gauged from these numbers. One can easily talk of crowd control measures. Physical control of such huge crowds is an administrator's nightmare.

The second issue, which probably overshadowed this tragedy, was the distribution of over 2.5 million rotis or chapatis in the Mela. The distribution of rotis itself is no big news; it happens in every Kumbh and many charitable and philanthropist organizations do such things regularly. Only that distribution of 2.5 million chapatis by one entity was a bit large enough. But the catch was actually embedded on the chapatis.  Each of them was branded with a message in the form of a question:  "Lifebuoy se haath dhoya kya?" in Hindi, meaning "Did you wash your hands with Lifebuoy soap?".

Unilever, manufacturers of the Lifebuoy soap wanted to utilise the opportunity of such a big gathering in one place to advertise its soap and reach out to millions on the occasion. Its advertising agency initially considered putting up stalls to display some games centered around health and hygiene. This idea was given up as Kumbh is a religious affair.  But the agency believed in reaching out directly to the millions and wanted to ensure that the message reached out each of them. After sifting and sorting through over 200 marketing ideas and dropping them one by one, the agency selected the "Chapati" approach. A tie up was made with over 100 Dhaba owners around Allahabad for making the chapatis. Each of them were given specially made "heat branding machines" with this message.  The chapatis so made reached more than 2.5 million hands and most of them cleaned their hands before eating the chapatis. The campaign was a big success. What will be impact on the cash registers remains to be seen.

The advertising agency for the campaign was "Ogilvy Action". A company bearing the name of David Ogilvy, considered as "The Father of Advertising".  Born in 1911, Ogilvy's  early childhood coincided with the Great Depressions of the 1920s. The brilliant young boy won a scholarship at the age of 13 to study in an Edinburgh college. He got another scholarship five years later to study at Oxford. Unsuccessful at his studies, he went to Paris, France and worked as an apprentice chef in a hotel there. His mind was cooking something else and he came back to Scotland a year later and started selling the AGA cooking stoves. This door-to-door sales provided him an opportunity to learn about consumer behavior and his sharp brain recorded every small detail. His success as a salesman prompted his employer to commission him to write a Sales Manual for use by other salesmen on similar duties. The manual he prepared titled "The Theory and Practice of selling the AGA cooker" was considered by Fortune magazine as the finest sales instruction manual ever written. That was thirty years later.

David Ogilvy later moved to London as a junior employee in one of the well known advertising companies. When  a client wanted to run an advertising campaign for the opening of his new Hotel, none of the senior executives were ready to take the job as the budget was only 500 pounds. David took the challenge and purchased post cards for the entire amount. He wrote on each of the cards about the Hotel's opening and mailed to whatever name and address he found on the London Telephone Directory. This hand written card campaign generated unprecedented attention and the Hotel opened to a full house! He had found the secret of successful selling - that of direct selling.

David Ogilvy worked for the British Intelligence Service in the British Embassy in Washington. His study of human behavior came in handy and he used it effectively to develop what was subsequently called as "Consumerism to Nationalism". It is said that Eisenhower's Psychological Warfare Board used some of his ideas successfully during the war. David Ogilvy's exploits as a advertising man have been recorded extensively. His advertisement for Rolls Royce car - "At 60 miles an hour, the loudest noise in this new Rolls-Royce car comes from the electric clock" - is considered as a masterpiece even today. When he temporarily retired and lived near the town of Bonnes in France, the volume of mail handled by the post-office increased manifold and the post office was upgraded! His mail flow was responsible for raising the salary of the post master.

There is no wonder that the mantra of "Direct Marketing" propounded by David Ogilvy has been taken to an altogether different plane by his successors, at the Kumbh Mela. It can actually be called "Campaign from Post Cards to Chapattis"!