What branding means to Internet parlors

Out of 12,000 odd parlors in India, around 700 are under the brands Junction

96, Satyam Iway and Dishnet. The number is increasing. Branded Internet parlors

seem to be an exciting marketing exercise for some, and a "redundance of

effort" for others. BPLNet, Zeenext, ITSpace intending to start a branded

chain have abandoned the idea halfway. BPL said, "The returns were not

worth the efforts."

Sustaining costs

With infrastructure costs going up by the day and competition forcing charges

to go down by the hour, the biggest challenge is to create a brand, develop it

into a chain and incur profitable growth.

Satyam Infoway vice president, public Internet access V V Kannan said,

"The costs cannot go down beyond a point. Also, in time, the branded chains

will have additional revenue streams. The brand does not have a spiraling

infrastructure cost because real estate and premises is taken care of by the

franchisee."

Junction 96 manager, marketing communication M L Sridhar voiced the same.

"For us the Internet parlor business is the core business but we see it as

a multiple marketing channel. Our revenue will not only come from surfing; the

premises, the real estate and the brand will fetch us more money."

He wants to create an opportunity and in turn make money by allowing other

brands in various consumer segments to exercise their power. "A cyber cafe

is the most effective point of one-to-one contact for any brand and the result

is instantaneous because the demography of consumers is very clear for any given

brand. A small shop cannot give another brand such a credible database,"

Sridhar said.

Brand practice

Though the accounts of costs and revenue are a thin red line, it is no

dampener for the brand players. Junction 96, the only non-ISP player in the

parlor business is well practicing the typical brand game of putting up bright

yellow name boards at all their parlors that are strategically located

"only on ground floors". They also seem to be leading in brand image

building.

Sridhar said, "We have consciously gone for locations on the ground

floor because of visibility and accessibility. Our boards are very bright and

hit the eye fast." They have 125 outlets, primarily in Bangalore and

Calcutta, and intend to open 300 more in 25 cities by March 2002. Their target:

1000 parlors in three years.

Similarly, Satyam Iway has the red and blue combination with red dominating

the eye. Satyam has over 400 centers operating in five main cities — Delhi,

Mumbai, Chennai, Bangalore and Hyderabad. According to Kannan, "Majority of

Internet users are likely to be concentrated in the top 16-20 cities of India.

Our expansion focus will therefore be on these cities to start with."

Dishnet’s parlour — HUB, though growing fast, is yet to be establish as a

brand and the company is juggling the idea with their ISP business along with

Satyam. BPLNet has just two dromes, both located in Bangalore under the

franchise model. According to Ramesh R, marketing head, "We had started the

practice of branded parlors on an experiment basis six months ago but have

completely abandoned the idea now, though we understand that there is a very

good market for branded chain of Internet parlors." They had planned to

have 25 outlets in the initial phase.

Franchise model of business seems to be the top on the priority list. And

leading the market is ISP major Satyam Iway and Junction 96. "We have a

predominantly franchise run chain with a subscriber based model," said

Kannan. He added, "We are a branded chain of Internet browsing centers that

are networked thus enabling a roaming facility for members; ie the ability to

log onto the Net from any of its centers with same user ID and password. We have

a proprietary billing and subscription software which bills members on a ‘pay

by minute basis’, unlike the industry practice to charge in slots of 30

minutes or an hour."

Sridhar of Junction 96 said, "We operate 70 centers directly and 55 are

our affiliates." There is a daily collection of Rs one-two lakh on an

average from all the centers in the country, he informed. Junction 96 has over 180 employees under its rolls across the country.

The other means of branding has been sponsoring national and international

events. Junction 96 recently sponsored the Star Hunt contest conducted by the

Indiatimes group. This apart, inviting celebrity to a cyber café and partnering

with popular consumer brands, etc is a common practice. Hosting contest is also

on the hot list. Junction 96 claims to have had 20,000 contestants participating

over a period of two weeks in their cyber cafes recently.

The trend

But the trend seems to be to convert the parlor real estate into more and

more service oriented social gathering hub.

BPLNet franchisee and managing director of i-finet solutions, M N Nanda

Kishore, has turned his parlor — BPLNet Drome -- into a youth hangout in

Koramangala. A swanky two-storeyed parlour is more spacious than a surfing

center. Designed in a futuristic manner, which had been done by BPLNet itself,

the parlor is a coffee shop too with Hot Breads displaying their bakery

products. It has an open section also where one can just sit and enjoy his

coffee without even remotely being near to a browser. There is a small

conference hall for 10-15 people that Nanda Kishore wants to let out for company

meetings, conferences and classrooms for housewives to learn basics of

computers. He also intends to bring in video conferencing facility. There is

also an ICICI ATM outlet in his parlor.

Started in May this year, Nanda Kishore already has 60 per cent occupancy and

earns Rs 3000-4000 a day only from surfing. He says, "I intend to recover

my investment with profits within the next 36 months, otherwise it doesn’t

make sense." He charges Rs 25 for an hour. How does he intend to break

even? "By bringing in more and more services and building a brand which

would mean a popular hangout, a pastime outlet, value-added service, high

browsing speed, easy access to a browsing cubicle, charming ambience, adequate

privacy and value for money."

But the question remains…with nearly 90 per cent of the industry still

dominated by the individual mom-and-pop shops that are giving an abysmally low

rate for surfing, will people go to the branded outlets?

Need for branding

"Not that the unorganized sector of small timers is dying, it is

shrinking. But the big brands are not wary of them because customers’ demands

are increasing. They want ambience, speed of connectivity, immediate access to a

PC, more value for money and cheap rate," said Sridhar.

According to him, "A typical roadside parlor brings out an image of a

men’s hangout with shady, dark place where porn dominates the browser’s

choice. Moreover, there is a lack of family ambience where women hesitate to

step in." He claims that Junction 96 has been able to create a family

atmosphere where even women feel comfortable surfing. According to him,

Junction 96 has a 7:3 ratio of men and women visiting his parlors and the ratio

is narrowing, as against 9:1 in the unorganized segment. A Junction 96 parlor

gets 100-125 customers per day.

Kannan of Satyam said, "The need for a better service and experience has

always been there across product categories, e.g. The automobile, shopping, etc.

Why didn’t we stay on with the ambassadors and fiats or continue with local

grocery or kirana shops! Branded chains will obviously be able to bring in newer

products and services, and an experience that goes beyond today’s usage."

An Iway parlor gets 100-150 customers per day.

Earlier this year, speaking to a business newspaper, Satyam had expressed its

intention to take all the private parlor operators into its fold. An official

was quoted saying, "We are open to take the existing private cyber cafes

into our fold by offering better services, best connectivity, pay card system,

huge margin apart from brand identity." Satyam had already invested more

than Rs 60 million in the cyber cafe business.

Evolution

"From an Indian context, the Internet browsing centers will evolve very

rapidly for the simple reason of ‘high inclination and need for the Net’

among the exploding Internet users community and the ‘lack of an

affordable/low cost at home option’ to get onto the net," believes both

Kannan and Sridhar.