Storm the Norm

by Anisha Motwani

  Flexi Europe packages: MakeMyTrip also launched an exclusive travel option of Flexi Europe travel for both group tours and individual travellers. These packages offered customers the opportunity to see Europe without a pre-fixed itinerary. MakeMyTrip’s Flexi Group Tours operate across twenty-two cities in Europe and offer city modules where a traveller can choose as many cities as he/she wishes to visit, with a minimum requirement of at least three cities. One of the finest innovations in holidays in Europe, Flexi Group Tour packages address key concerns of fixed itineraries, food preferences and assistance—i.e. aspects that form the bulk of concern areas for Indian travellers during an international tour.

  Technology: The heart of MakeMyTrip

  MakeMyTrip is leading the category with innovations in technology and user interface that have transformed the travel purchase process and information consumption related to travel.

  »Innovation on mobile: With penetration of mobile Internet exploding, MakeMyTrip realized that the future of the travel industry lay in m-sales. With a clear strategy of tapping into this, the company used a two-pronged approach to target both ends of the market.

  MakeMyTrip invested in creating differentiators and value-adds for feature phones (used by price-sensitive customers) as well as smartphones (favoured by the tech-savvy traveller).

  MakeMyTrip became the first Indian OTA to launch an iPhone app in July 2012 with features that gave ‘real’ value and benefit and were used uniquely around the mobile platform. Key drivers for this were delivering content around location-based services, minimizing the number of inputs, highlighting and offering selective but important information and local storage (on the device) of frequently used information (such as passenger/traveller details).

  The MMT iPhone app was a huge success in the market and became the most downloaded app on the iTunes India store within a few days of launch. The iPhone App was also ranked as the Top free app on App Store (India) overall as well as in the travel category. The MMT Android app is rated 4.3 out of 5 in the Google Play store. By 2014, MakeMyTrip iPhone and Android apps had received top billings and ratings, and had more than 5 million downloads.

  For feature-phone users, MakeMyTrip pioneered natural language processing (NLP) for SMS-based self-servicing and queries, enabling this technology innovation to solve natural-language ambiguities. NLP allowed the user to ‘query’ in an intuitive (natural) way as opposed to structuring the query in a standard template. To cater to the large segment of users without a data connection, MakeMyTrip built an assortment of value-added travel solutions that are available on SMS including India’s first SMS-based bus-ticket booking service which enabled feature/entry-level phone users to harness the power of ‘mobile’.

  »RoutePlanner: This app enabled faster and easier trip-planning between any two destinations in India. RoutePlanner leveraged a highly scalable technology architecture that sifted through 1 billion possible routes and over 20 billion possible schedules in a matter of milliseconds, to give the best possible combinations to travel from one city to another. Post route selection, RoutePlanner displayed the best transport combinations down to the specific flight number, train name or bus operator with approximate fares and allowed the user to book the route, in a remarkably simple interface.

  »Inspire: The tool helped users research and explore holiday destinations based on a variety of parameters such as interest areas, flight intersections and budget.

  »Tripalong: In 2012, the company launched ‘Tripalong’, the world’s first multi-airline social-seating app that allows users to share their itinerary within their social networks and plan ‘intersections’ (meetings) with their friends at airport-lounges and the city of travel and (if they are booked on the same flight) get seats together while checking-in.

  Success, rightfully deserved

  As of December 2014, MakeMyTrip’s market-share was nearly 50 per cent of the online travel market in India (according to Phocuswright). In the third quarter of 2015, its hotels and packages transactions increased by nearly 47 per cent year-on-year and recorded 43.5 per cent growth in revenue less service costs, on a constant currency basis.

  Awards and accolades

  MakeMyTrip has received numerous accolades for providing best-in-class services to travellers. Over the last few years, the brand has been recognized by industry bodies and through various customer surveys as the best-in-class travel service provider.

  Key wins

  »Phocuswright Travel Innovation Summit Award 2013 for the innovative travel product—RoutePlanner.

  »Lonely Planet Travel Best OTA Award for 2013.

  »Top five Best Companies to Work For in India by the Great Place to Work® Institute 2010–2013.

  »Lonely Planet Travel Best Travel Facilitator (Indian) Award 2012.

  »Outlook Traveller Travel Best OTA Award 2012.

  »Eyefortravel Award for the Best Mobile Strategy and Best Mobile Solution 2012.

  »Safari India National Tourism Best Online Tour Company Award 2012.

  »Franchise India Awards Retailer of the Year 2012.

  »Times Travel Honours Best Domestic Tour Operator 2011.

  »CNBC Travel Award 2009.

  »Consumer Superbrands India-Superbrand 2009.

  »Most-preferred Full-service Online Travel Agency in India in a user survey conducted by TravelBiz Monitor 2008.

  »Galileo-Express Travel World Best OTA Award 2007.

  MakeMyTrip has also won the Porter prize 2012 for Industry Architecture Shift and was recognized for ‘outstanding performance in the industry’ and ‘redefining the industry structure by challenging the very basis of competition, creating new business models, challenging the status quo and exploiting change’.

  The way ahead

  Today, MakeMyTrip enjoys the reputation of being technology-forward and innovative and delighting customers with service and value-based offerings, moving from the proposition of ‘customer satisfaction’ to ‘customer delight’. Another factor that has been a major contributor to the success story of MakeMyTrip has been its focus on suppliers. With more people planning and booking their travel themselves, India is at an edge of another boom in the online travel industry. This time it will be fuelled by hotels. In the coming years, MakeMyTrip will be focused on growing the share of the hotels and packages business in its overall revenue mix. Mobile apps will become an important point of sale for the company in the near future. MakeMyTrip will continue to use its core strength of technology to innovate with products and provide best-in-class service and be recognized for providing customer delight. The company aims to continue to be the primary consultant of the Indian customer for the entire basket of travel-related needs.

  THE MIRCHI STORY

  ‘It’s Hot!’

  This is the story not just of a brand called Mirchi, but of the rebirth of a category called radio.

  It’s as much a business story as it is a marketing and an advertising story.

  The company behind brand Mirchi, Entertainment Network (India) Limited, ENIL in short, was born in 1999 into the house of Bennett Coleman & Company Ltd (BCCL), known as ‘The Times Group’. The Times Group had already been operating a small radio ‘business’ from 1995 to 1999 when it produced content for a few hours a day to be aired on All India Radio (AIR). The content was offered under the brand name Times FM. In those early days, the company focused on English content and targeted a ‘yuppie’ crowd. Many in India still remember Times FM for its effervescent programming and innovative packaging and marketing. For the first time, drive-time audiences had something entertaining to look forward to, even as they stayed stuck in the pathetic traffic in their cities. Bolstered by its early success, and enthused by the vibrancy and vigour of the medium, the company decided to participate in the first round of auctions that took place in early 2000. In the meanwhile, the AIR slots had to be surrendered, and the Times FM business had to be shut down.

  Spicing up the airwaves: The first wave of FM radio privatizati
on

  The year 2000 is perhaps best known for the dotcom bust that happened towards the end of the year. However, for radio broadcasters, it was the year in which FM radio privatization started. With privatization slowly spreading to all sectors after 1991, private FM finally had its ‘eureka moment’ in February 2000 when the government conducted auctions now known as ‘Phase-1’ auctions. Since auctions happened before the dotcom bust, and at a time when the stock markets were scaling new highs, the auctions attracted many groups from within the media and outside. Many of these surrendered their licences later, after winning, when their stock market-induced enthusiasm dropped. Since BCCL was a private limited company (and remains one), and since it had had excellent prior experience with radio, it decided to trudge on in what was clearly a very difficult policy regime.

  The Phase-1 policy was based on the ‘tender’ form of auctions. The bidding was for the ‘first year license fee’. The tender terms stated that starting from this in the first year, the licence fee would increase by 15 per cent every year. In hindsight, this 15 per cent annual hike was ridiculously high, but in those heady days, bidders went ahead nonetheless. Even the auction methodology was faulty, given the fact that winners could walk away with hardly any financial penalty being imposed, while leaving other, more serious players stranded at a much higher licensing figure. All of this, coupled with the effervescent stock market-fuelled froth, led to very high licence fees from the first year onwards.

  In any case, at the end of the auctions, BCCL had twelve licences, including Mumbai, Delhi, Kolkata, Chennai, Ahmedabad, Pune, Hyderabad, Lucknow, Bhubaneshwar, Cuttack, Indore and Kanpur. The one big exception was Bangalore, where it didn’t demonstrate the aggression that it later did in other cities. With a good network under its belt, it was ready to roll out its operations. BCCL was the only company to offer the ‘four metros’, even though Bangalore had already started replacing Chennai as the southern hub. It also had the strongest ‘western’ package including the four biggest cities (Bombay, Ahmedabad, Pune and Indore). The main competitors were Music Broadcast (Radio City) with four stations including the vaunted Bangalore, along with Mumbai, Delhi and Lucknow; Sun TV (Suryan FM) with stations in Chennai, Tirunelveli, Vizag and Trichy; the India Today group (then Red FM) with Delhi, Mumbai and Kolkata; the Zee group with eight stations (which it did not operationalize) and even the Reliance group (then still the combined entity) which did not operationalize its stations. Almost all stations played Hindi music, with the exception of Mid-Day group’s Go FM, which offered English programming. There were also some passionate and committed individuals like Gautam Radia (Win FM in Mumbai and Delhi) in the fray. All in all, it was a motley mix of committed media professionals, rich corporates who wanted in on the media glitz and passionate individuals who could add chutzpah to the young medium.

  Solving for early challenges

  The biggest challenge was to get people to listen

  People had grown up on a three-hours-a-day diet of TV. India was perhaps the only country in the world where private FM came a good ten years after private TV. In those ten years, private TV had made enormous strides with the launch of Zee TV in 1992 followed by Star TV that offered English programming. There were also a few notable news channels including New Delhi Television (NDTV) and Aaj Tak. The state broadcaster too experimented with Doordarshan (DD)2, run privately. This is also the period of time when cricket had already become dominant and sports channels like ESPN-Star Sports were in the thick of the action. In a scenario like this, getting people to even consider radio was a challenge.

  So far, radio had suffered from a legacy of neglect from the times when AIR was the sole broadcaster. The medium best known for its youth quotient, innovative programming, irreverent stand on issues and nonstop spontaneity, was wanting on ‘programming strategy’. Social objectives dictated content production, with every language segment getting a ‘slot’. Whether people wanted these programmes or not was not important.

  However, this deficit of good entertainment for people ‘on the move’ turned out to be a blessing and ensured that FM radio in its private version picked up really fast. The earliest consumers were the youth, who found radio ‘cool’. Radio jockeys became aspirational (this was before they started getting mocked for their jabbering). Suddenly, being seen with headphones stuck in the ears was the identity card for the ‘arrived’ segment. Around the same time, the iPod was launched globally, and music itself got a big lift.

  The fact that Hindi music wasn’t considered ‘chic’ was another barrier. The youth preferred to be caught humming English music and it was still considered passé to hear Hindi music. This was one reason why most radio jockeys spoke in English; some even pretended not to know Hindi at all! It’s thanks to the work done by radio stations and jockeys after their launch that slowly but surely Hindi music became hip…giving a huge fillip to the Hindi music and film industries.

  Post launch communication

  Incidentally, because of the perception of Hindi music being uncool, Mirchi’s programming at the time of its launch in Mumbai featured English music in the two drive-times (7–11 a.m.; 5–9 p.m.). The underlying logic was that the ‘professional’ crowd in Mumbai consumed English music. It was only after competition launched an entirely Hindi station and started closing in rapidly on Mirchi, that Mirchi decided to tone the English down and in a couple of months got to a 100 per cent Hindi music format.

  The second and more significant business challenge was to get advertisers on board

  Just like lay consumers, the marketing folk in the corporate sector had grown up on a diet of TV. Ditto the creative folk at ad agencies. No one wanted to make ‘cheap’ radio ads because they didn’t find it ‘sexy’. Radio work was delegated to the lowest person at the agency and client ends. There was also no research data available to make number-crunching media planners support the medium.

  However, what everyone knew was that radio was a ‘fun’ medium, a medium that catered to the youth, and one that was largely irreverent, all important attributes for making a brand cool. The early experimenters used radio largely for these qualitative reasons, not for any serious media delivery. It was good to have a small radio campaign, even if it was only leftovers that were thrown at it. But starting from this small patronage, radio grew rapidly.

  Mirchi played a very crucial role in these early days. When it launched in Indore, it got the station inaugurated by Bollywood actor Akshaye Khanna. It launched with a young, contemporary, and irreverent programming style, belting out the latest—and only the latest—Hindi hits. The jockeys were handpicked to give the brand a youthful feel. How these jockeys were recruited is a story in itself. Very soon, Mirchi had set the airwaves on fire.

  Identifying the right talent for this nascent yet effervescent industry was the next hurdle

  One of the jockeys was a front-desk manager at the Taj where the Mirchi team was staying. Two others were news anchors on a local cable news channel. One woman came to the Mirchi office and started singing. The programming head was hired in an interview conducted in a car the team was driving to the airport. The promo producer used to work in the church, mixing gospel music for the faithful. The station head came from a fast-moving consumer goods (FMCG) company, and was picked up partly because he loved music. In short, no one knew what to look for in a radio station employee. It’s in that context that the station’s success with its first hires needs is to be seen. Many of these employees were still there at the tenth anniversary celebrations of Mirchi in 2012.

  Another tough one was the issue of music royalties

  The relationship between music labels and radio broadcasters had never been smooth anywhere in the world, but issues were usually resolved with some give and take. In India, the music labels appeared to be there only to take. The ask for music royalties was exorbitant; to the extent that most broadcasters would have to pay 100–500 per cent of their revenues as royalties. Labels were organized as an influential and
savvy association (Phonographic Performance Limited—PPL) which filed criminal cases even in cases of minor infringement. But most importantly, it was simply not willing to negotiate. The matter went to the courts; an interim rate order was passed in 2002. The order was onerous for radio broadcasters and it was supposed to be reviewed after two years. However, legal cases ensured that the matter stayed stuck in the courts, unresolved until August 2010. For this entire first decade, private radio suffered enormous financial damage. On the one hand were enormous licence fees payable to the Government of India as Phase-1; and on the other hand were even more humongous music royalties.

  A bleeding industry

  In just five years of operations, Mirchi ran up accumulated losses of ₹102 crore. Since debt was not easy to come by, this was entirely funded by the promoters through equity, and later through a private equity placement Mirchi was able to manage. Canadian pension fund CDPQ, Mirchi’s private equity (PE) partners, not just provided funding but also introduced experts from around the world who helped shape Mirchi’s professional management culture.

  The fact that all broadcasters were bleeding was leveraged by Mirchi as an opportunity. Being one of the earliest to advertise itself, brand Mirchi became synonymous with radio. Cheap ‘pen radios’ from China were being sold for ₹50 a piece all around the country under the name of Mirchi. Various restaurants came up proudly flashing the Mirchi name and logo. Phillips radio even released ads in papers in cities where Mirchi was to launch, welcoming Mirchi even as it sold its wares. In a short span of time, Mirchi became the heart-throb of the nation.