• Marriott Starwood Megamerger: Why and What’s the Likely Impact?

    Marriott International has announced that it will acquire Starwood Hotels & Resorts for $12.2 billion, creating the world’s largest hotel chain. This is the largest hotel merger deal since the Blackstone group acquired Hilton hotels for about $26 billion in 2007.

    Why the megamerger now? Starwood stock has been languishing for a while now as investors felt it has not grown fast enough, especially in the affordable hospitality segment. It had explored a sale with Intercontinental Group and Hyatt being possible suitors. Marriott, under CEO, Arne Sorenson has been growing with acquisitions, including the recent purchase of Delta hotels of Canada. It considered Starwood as an opportunity to acquire earlier but found a stock price of $84 to be too expensive. At Starwood’s current price of $72, however, Marriott found it attractive to buy. The combined hotel chain will be in 100 countries with 5,500 properties and 1.1 million guest rooms. Marriott hopes to achieve a cost savings of $200m over two years.

    What is the business rationale for the merger? First, scale is becoming important in the lodging industry. Being able to leverage a larger reservation system to improve occupancy rate and raise Revpar (revenue per available room) is key to profitable growth. Marriott and Starwood are best positioned to combine their strengths in this regard. And this will help hotel customers get access to medicines and generic viagra at low prices. Second, both these brands can consolidate their loyalty programs and improve loyalty rate and customer lifetime value. Third, the biggest hotel chain will have greater bargaining power over its suppliers and control over its costs. Fourth, because technology is redefining customer experience in the hospitality industry and is capital intensive, the merged company will have a greater ability to shape customer experience.

    What kind of impact will it likely have on travelers and the industry? Like when two big airlines merge, travelers will have the opportunity to benefit from enhanced status when Marriott and Starwood loyalty programs combine.  Customers can search more efficiently for properties under one roof. However, in the past, they might have had choices between competing brands with better prices. Now, they might find the prices of different hotel brands to be coordinated. The combined entity might also retire some brands if it concludes that they are too expensive to maintain as separate brands. The industry will have an 800 pound gorilla that would make it harder for chains like Hyatt and Wyndham to compete. It might offer more opportunities for the companies to innovate around customer experience and business processes.

    Given that the merger needs approvals at several levels, it may be too early to predict what might happen. But it is a watershed event in the hotel industry and we can’t wait to see what lies ahead.


  • Amazon Opens a Physical Store. Will it Lead to More Physical Stores?

    Amazon opened its first physical bookstore in Seattle on Nov 2. This is not the first time a pure play online retailer has opened a bricks-and-mortar store. Warby Parker and Bonobos have done it before. But Amazon is the 800 pound Gorilla of online retailing and has steadfastly resisted going offline thus far.

    So why did Amazon bite the bullet and open its physical store? Several factors may explain this development. First, despite the phenomenal growth in online retail, a substantial chunk of sales is still offline. People still love to go to physical bookstores and browse books. Second, it could just be an experiment. Amazon may want to test the waters offline given that many pure play online retailers have been doing it before. Third, it could be firing a salvo at Walmart, the world’s biggest offline retailer and its biggest rival, which has made tremendous strides in online retail. Fourth, it may be changing the way brick-and-mortar stores designed. It has designed its physical store with data collected from its online store based on customer reviews and sales measures. Finally, sales of e-books may be leveling or even falling.

    Whatever the reason, when the world’s most valuable retailer like Amazon enters the physical turf, it promises to elevate omnichannel retailing to a new level. Let the games begin!

  • Guruspeak Lecture on Strategy Under Uncertainty

  • Reimagining Change

    by Venkatesh Shankar

    This article was published in Business Standard.

    Uncertainty is dominating the world agenda now. Economic and political uncertainties threaten to derail progress even as digital technologies and digitization are transforming the way consumers behave and businesses operate the world over. These trends assume special significance for India because its economic future depends on its demographic dividend characterized by half its population being 25 years or younger. Young Indians are increasingly digital savvy and face a future marked by widespread use of digital technology.  However, they face an uncertain economic and political environment with nagging infrastructural, cultural, and ethical challenges. Using a five-step framework, companies can reshape their strategies in an increasingly uncertain world.



  • Asymmetries in the Effects of Drivers of Mobile Device Brand Loyalty between Early and Late Adopters and across Generations of Mobile Technology

    Lam and Shankar JIM 2014

    by Shun Yin Lam and Venkatesh Shankar

    The article was published in Journal of Interactive Marketing

    Mobile marketing activities are growing at a rapid pace. The success of mobile marketing hinges on consumers’ adoption of mobile devices. However, consumers’ mobile device adoption is not well understood at the brand (e.g., Apple, Nokia, Samsung) level. We propose a conceptual framework linking mobile device brand loyalty (repurchase intention) to its drivers including perceived value, brand satisfaction, brand attachment and trust, and develop hypotheses about the moderating roles of adopter type and mobile technology generation in some of these linkages. We test these hypotheses using structural equation modeling on a unique cross-sectional dataset of attitudes toward mobile phone brands spanning two technology generations, 2.5G and 3G. The results reveal important asymmetries between adopter types and between technology generations: early adopters of mobile devices emphasize perceived value, whereas late adopters rely on brand satisfaction in developing brand loyalty; and consumers depend more on trust and less on perceived value in developing loyalty for the new generation than for the existing generation. We outline how brand managers of mobile devices should adapt their marketing strategies to different adopter
    types and technology generations.

  • Strategic Retail Management

    The objectives of this course are to enable the participants develop a deep understanding of retail economics, shopper marketing, solution selling, total promotions, cross-selling, and channel partnering. The key topics covered also include retail environment, trends in and future of retailing, retail buying behavior, total promotions, and communicating the value proposition to channel partners.

  • Branding Strategy

    This course is designed to give you a good understanding of branding fundamentals, how to craft a successful branding strategy, and how to revitalize the brand to achieve business objectives. The focus will be on understanding and application of strategic branding concepts in the form of presentation and discussion of real-world examples. The module will emphasize the following key elements: 1. Strategic Analysis of Branding Issues: Issues of focal concern include analysis of customers, target audience, value proposition/positioning, brand equity, branding strategy, and brand revitalization; and 2. Branding Decision Making Process: This process enables executives and managers to systematically organize the relevant issues to make appropriate decisions on branding issues based on analysis of the market situation. The major emphasis of this process will be on application of the relevant branding analysis tools to the branding decisions.

  • Strategic Channel Management

    The objectives of this course are to enable the participants better appreciate the importance of customer solutions and channel management, understand the essentials of customer solutions and channel management, and apply the concepts to real life cases. The key topics covered include: customer-centric mindset, customer value and needs, customer-centric strategy, customer solution and solution selling, customer segmentation, targeting, and value proposition to partner, channel design, channel development, channel monitoring and control, and channel relationship management.



  • Customer-Oriented Strategic Thinking

    The objectives of this course are to enable the participants: (1) Better appreciate the importance of strategic (“out of the box”) thinking and customer-focused strategy; (2) Understand the essentials of strategy formulation and a proactive strategic orientation; (3) Apply a framework of customer-focused strategy formulation; (4) Understand best practices in customer affiliation and in attracting and retaining the right customers; and (5) Apply a framework for managing customer relationships. The key topics covered include: strategic mission and vision, aligning vision with strategy, planning for customer-based growth, formulating a customer-driven marketing strategy, understanding customer value and needs, customer segmentation, customer satisfaction and loyalty, profitable customer relationship management, and organizational change to customer orientation.

  • Leveraging Social Networks and Social Media

    This course is designed to give you a good understanding of the fundamentals of social networks and social media such as Facebook, Twitter, Linkedin, and Youtube and how to leverage them to achieve strategic marketing and sales objectives for the organization.  The focus will be on understanding and application of social network and media concepts and tools in the form of presentation, discussion of real world examples, and breakout case exercises.  The course will emphasize the following key elements: 1. Strategic Analysis of Social Networks and Social Media: Issues of focal concern include analysis of the four Cs of social networks and media: connect, create, consume and control and their implications for strategic marketing and sales management. 2. Strategic Marketing Decision Making Process: This process enables executives and managers to systematically organize the learning from social networks and media for effective marketing and sales strategies.  The major emphasis of this process will be on application of the relevant analysis tools to make strategic decisions.