Reliance Industries Limited (RIL) has diversified from its core petrochemical business into retail through Reliance Retail Limited (RRL). RRL aims to rapidly expand its network of stores across India to compete with street markets and kirana stores. It plans to source products locally and offer very low prices to attract customers used to shopping at streets. RIL's large capital base and experience in project management will help RRL quickly scale operations nationwide. Meanwhile, RIL has also acquired a stake in East India Hotels (EIH) which owns the luxury Oberoi hotel brand. This will help fund EIH's international expansion with RIL as a long-term committed shareholder providing stability to the
The Path to Product Excellence: Avoiding Common Pitfalls and Enhancing Commun...
Brand extensions - RIL
1. East India Hotels RELIANCE INDUSTRIES LIMITED Group 6 Akanksha Singh 0911004 Saurabh Chandra 0911047 Sumit Kumar 0911057 Arvind Choudhary 0911085 Bhawna Jain 0911301 Ganeshram K 0911309 Shikha Rawat 0911344
2. b2b Core Competencies Focus on capital intensive industries in which success turns on the ability to get around regulators & competitors Time and cost effective completion of complex & advanced technology projects Unmatchable ability to manage relations with the government b2c
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4. Among the top ten producers in the world in major petrochemical products
18. Politician Three faces of Ambani * Unique, Larger than life – A Brand name A schemer, a first class liar & has no values in life Napoleonic – Has a more sophisticated political brain, a dreamer & visionary Reliance Industries Limited – Dominant & Arrogant – a Road Roller! * Source: Ambani & Sons by H. McDonald
19. Brand Identity - RIL RIL as a Product RIL as Organization RIL as Person RIL as Symbol Simple Font – “no nonsense, we mean business” Circle around the drop signifying “end-to-end petrochemical” Or with its entry into Retail and other segments – “fluid brand with an ability to extend everywhere” Reliance Industries Limited – Growth is Life
37. Reliance Living: home ware, furniture, modular kitchens, furnishings Reliance Retail Limited – Everything you need for a happy home at Low cost, Value for Money
47. Ensures all your needs are met. Reliance Retail Limited – Mentally strong, Indian housewife
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49. The names are written on a red back ground – Aggressive
50. The ‘Reliance’ name is prominent & the font and symbol are the same as RIL – To eliminate confusion & establish strong parent backing
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52. Basis of Fit Skills (Project Management, Lobbying) Assets (Capital Base) Original Product Class: Petrochemicals Extended Product Class: Retail Complements – Petroleum Retail (Separate SBU. Not part of RRL) Strategic Fit: Diversified portfolio – Risks hedged. RIL RRL User Type: Not common. Extended into B2C Symbol: Gets them closer to “aam aadmi” brand
55. Efficiencies of scale: price points as low as Rs. 99 in its apparel brands to compete with street market prices
56. Top management – “Indians spend mostly on streets which is our main competition. We intend to bring those shoppers to RRL”
57. True Baniya – Willingness to supply private labels to other retailers.To compete with the kirana stores Will start home deliveries of groceries “As we keep going down the strata, our hypermarkets will keep getting smaller,” (average kirana store is 175 sq. ft in size) Retail, like its core businesses, is definitely a business where they can scale significantly and quickly.
85. Either heritage or very modern architecture, nothing in between!East India Hotels Luxury Redefined
86. Type of Brand & Ability to extend RRL Capital Intensive Long breakeven period Diversification Strategy EIH Capital Intensive High barriers to entry Long breakeven period High returns Philosophy Interest Knowhow Formula Product D B C E A Petrochemicals EPC Fuel Stations Low cost Airlines
87. Perimeters of Brand Extension RRL & Hospitality No-go Area Extension Zone Outer Core Forward Integration like Fertilizers Inner Core Line Extension Oil and Gas Fields Spontaneous Associations Latent Potential Non-conventional energy sources Threat to Brand’s capital assets
89. On EIH What PRS Oberoi says The hospitality business is very capital intensive. EIH has a growth strategy and it needs strong committed shareholders. RIL clearly satisfies these criteria. It is a long term investor and does not have any conflict of interest. Tussles between the next generation of Oberois is evident; PRS Oberoi will not want the brand to be diluted after his lifetime Strong external partner who can carry the flame after PRS Oberoi - RIL fills the gap Nita Ambani will be appointed to the board; 3 – 5 years down the line, RIL may buy controlling stake in EIH RIL will not change the Oberoi brand name, but be a shadow endorser What others say Emotional Investment Mukesh Ambani had approached the Oberois’ 3 years ago to buy the company Strategic Investment Avenue to invest the excess cash (to the tune of $8 billion) of RIL; RIL to help fund EIH’s international expansion into US & UK White Knight RIL stake intended to thwart takeover attempts by ITC Dark Knight Is it a replay of the L&T drama of early 1990s?
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91. RIL’s giant projects in urban development, distribution and retailing shows a belief that such schemes are beyond the capacity of the government
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93. Limitations of the frameworks Bases of Fit Not able to apply to completely unrelated industry sectors Type of Brand & Ability to extend Doesn’t discuss about the financial implications/viability No clear distinction between the types of brand Brand characteristics not analysed from end user POV Perimeters of Brand extensions Doesn’t discuss about the financial implications/viability No–go area not applicable for all brands Brand characteristics not analysed from end user POV
94. The Detail in Retail Hype & Interest of Retail in India Is Big Retail making money? Casualties: Shubhiksha, Vishal Retail, Indiabulls! Spencers’ loss: Rs 300 crore in 2008-09. Is still losing Rs 12-13 crore a month. Downsizing (<1 million square feet now) Shoppers Stop’s loss: Rs 64 crore in 2008-09 ABG’s More Chain (2007) hopes to become positive in 2012-13 Pantaloon highly leveraged (Rs 4,000 crore of debt) Reliance Retail: loss of Rs 700 crore in 2008-09 & Rs 450 crore in 2009-10.
95. RIL Vs ADAG Silent Calculating Opportunistic Ruthless Behind the scenes worker Constant stream of cash from petrochemicals Friends with both ruling & opposition parties Businesses tied with India’s growth Media savvy Emotional PR guy Cash stream from IPOs Friendship with Amar Singh –Suspect in the eyes of others Business success depends on taste of consumers
Hinweis der Redaktion
Gujarati in business sense while Jatt in attitude – westernized – coz is proficient in business nuances
RRL was close to breakeven in 2008, but the economic slowdown over took themCombined loss of 17 subsidiaries Rs. 244 Cr against a revenue of Rs. 5310 Cr
Not able to fit this framework for RIL and Hospitality Sector
EPC – Engineering Procurement & ConstructionB: Already into petrochemicalsC: Have a know how of constructing large industrial complexes starting from polyster plants to refineriesE: Philosophy of “aamaadmi” brandD: common denominator of capital intensiveRRL: overlap of know how (petroleum retail and lobbying) and interest is capital intensive and growing with growing economy
A: CausticsB: Interest in refineriesC: already into solar energy
