Smart Move by Reliance: selling 20-26% stake to foreigh partner

Reliance Communications is set to sell up to 26% stake to foreign partner, says ET report. Report also says that this money will be utilized for auctions for 3G spectrum allocations. Reliance communications is India's second largest telecom operator by number of subscribers.

I would say that this is smart move by reliance. Reliance is the only operator which doesn't have any foreign partner. Also, with strong optical fibre backbone network and presence across the country makes it capable of distributing 3G services easily and efficiently. RCom would be utilizing these money for 3G auctions. Also, by collaborating with foreign partner, they will gain access to knowledge asset of their foreign counter part and develop skills necessary for 3G implementation. So, local reach and global expertise will result in to efficient 3G distribution for Reliance. Apart from this, they will get some cash in hand to bid for 3G spectrum.

I would say, this is right choice at right time. Perfectly targeted strategy - something to learn for business strategy makers.

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Fighter Brand - Hope for marketers during tough times.

Well, it is tough time for marketers. Recession has hit each segment of economy and businesses are suffering. Biggest challenge for marketers is to keep the customer interested in his product. Now when customer does hot have enough credit and cash, how would one devise strategy to keep the brand alive? Also, with reducing profits, companies are cutting their budgets for marketing exercises. One strategy is to cut the prices - however, when you brand has been doing well since years and if you are lowering prices, it will surely dilute your brand image. Marketer has to take a call on this decision. Also, when economy will regain, marketer cannot raise prices. So, this strategy can prove dangerous because it can dilute overall brand image of company. Mohammad Rafi - author of The art of Pricing also suggests the same thing. He says: "keep lowering the price you'll sell more units, but you'll also devalue the product. For the sake of the short term, you can wreck the long-term value of your brand." And price cuts can be hard to rescind when economic conditions improve.

So, how can marketer keep the profits up with declining economy?? Answer is to introduce "fighter brand". Fighter Brand is low priced version of successful brand. It offers same features and advantages. However, at low price. Fighter Brand will easily influence price conscious customer - which indeed are customers largely affected by recession. Fighter brand needs to achieve delicate balance i.e. to identify itself with premium brand without cannibalizing it. This is another challenge for marketers! We have seen many fighter brands which have been successfully performed in the market. Sony (Aiwa), Jet Airways (JetLite) and P&G (Luv) are such examples. Fighter Brands not only preserves Brand Image, it also helps marketer to keep brand's market share unaffected from competitor brands.

Though there is no sureshot formulae for creating successful brand, and preserving brand value for years, fuighter brands might do well. Also, you have freedom to pull fighter brand back from market whenever you feel to do so. I believe, this strategy should work in today's tough times.

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