7 Levers Marketers are Pulling in this Slowdown ET 170913

Kala Vijayraghavan and Lijee Philip

BY HIS OWN ADMISSION, MAYANK Pareek, who is responsible for ensuring that cars keep moving out of
Maruti Suzuki showrooms at a faster pace than never, says he has no personal life today. Cars are not
moving at Indias biggest carmaker like they used to. I am working seven days a week, says Pareek,
chief marketing officer. Tough times call for tough measures. We cant be selling cars sitting in the
office.
In August, Maruti organised about 26,000 events aimed at the consumer, including exchange melas,
camps for financing and AC check-ups. The idea is to reach every potential consumer and convert them
into a buyer, he says. Its a challenge for every chief marketing officer (CMO) in this slowdown, and its
not an easy one to overcome. There are no homogenous customers, says Sunil Kataria, CMO at Godrej
Consumer Products.
In the first two quarters, the Indian economy has grown at a tepid 4.8% and 4.4%, respectively. And the
forecast for the entire year is only mildly better5.3%, according to a panel advising the prime minister
last week. High prices and job insecurity, in the face of economic uncertainty, has upset consumer
confidence, with spends on electronics and automobiles dropping for eight months in a row. Yet,
Kishore Biyani, who knows a thing or two about the Indian consumer, feels this is not the time for
companies to be defensive. It is the time to be aggressive, he says. If marketers keep quiet, the
consumer will keep quiet. One has to behave normally during such times. Not CMOs, though,
who are having to deal with reluctant consumers, tighter budgets, and a competitive and changing
marketplace. Even as they pull these six levers to beat the slowdown, theres a seventh one they cannot
afford to let go off.
1. Find New Niches
Alongside marketing campaigns aimed at the consumer in general, some companies are targeting niches
for growth that is more visible, is easier to record and comes at a lower cost. For Maruti, this thinking
has seen it pinpoint and drive into settlements, with a need and purchasing power, like priests in Tamil
Nadu and turmeric growers in Nashik. So, its not mass marketing, but niche marketing, says Pareek,
the carmakers CMO. Having a widespread network helps as such campaigns become just incremental
work for a sales team. They can make a catch and return to their bread-and-butter. More recently, adds
Pareek, Maruti has been adopting a similar strategy in Jamnagar, Gujarat, where groundnut and cotton
farmers have seen a kicker in their incomes following a good crop and higher prices. Elsewhere in the
state, its sales executives, pitching its Eeco as a cost-efficient mode of transportation, recently sold 40
vans to restaurant or motel owners on the highways of Ahmedabad and Baroda.
Similarly, earlier this year, Vodafone launched a campaign for migrant workers in mid-town Mumbai to
teach them how to use a mobile application of the Indian Railways to book train tickets. A number of
these workers have entry-level phones, says Vivek Mathur, chief commercial officer, Vodafone India.
With an application, they see the utility of a data connection against MBs or GBs of a data plan. Godrej
Consumer found new consumers for its room and car fresheners, Aer, through a new distribution
channel. In the first five months of launch, Godrej was selling Aer as an FMCG product, moving it
through traditional and modern trade. After its consumer research showed home care and car care to
be different segments. Car buyers are very passionate about what they use in their car and spend time
in car accessory shops, says Kataria of Godrej. We quickly appointed separate distributors for car
accessory shops.
2. Get Out Of The Offi ce
It took several consumer interactions for Godrej realised its folly on how to distribute Aer. But those
consumer interactions were not by default, but by design. This June, Godrej kicked off an initiative called
conquest, whose objective is to have five employees meet 100 consumers in a week, gather
information, process it scientifically and embed it into decision-making. The mid-course change in how
Aer was to be distributed was one example of Conquest at work. The main idea behind Conquest is to
pick consumer knowledge first hand and work on it swiftly, says Kataria. In regular research, there is a
transition loss that tends to happen as research agencies moderate and diagnose data. Most
companies, in their own way, are strengthening their efforts to reach the consumer. In early-2013,
mobile service provider Idea Cellular started participating in haatslocal markets, typically organised
on a weekly basis, both in rural and urban areas. Idea now sets up a permanent stall in haats in 450-500
districts, with each market serving a population of 2,500. According to Himanshu Kapania, chief
executive of Idea, 60% of the companys customers are in rural areas.
Elsewhere, Axis Bank is also promoting more field initiatives to win new business. One such initiative
aims to get more senior citizens to open accounts with the bank. Its product, called Senior Citizen
Privileged Account, offers health checks, bill payment facilities, an ID card for medical emergencies and a
CD of old movie songs. Banking is not an acquisition business like FMCG, says Manish Lath, head of
marketing, retail liabilities & electronic banking, Axis Bank. It is really a relationship business.
3. Engage More With Sellers
Consumers are one touch-point of such outreach exercises. The other is the links between the
company and the consumer: dealers and retailers. Increasingly, CMOs acknowledge, it is in their interest
to do so as these two sets are influencing sales in a bigger way; they are no longer dormant channels
and, today, have the power to convince consumers to choose a particular brand.
According to Nilesh Gupta, director of consumer durables retail chain Vijay Sales, Apple is the only brand
that has the differentiation for a marketer to call the shots, and even that is under question today.
There is no brand or product differentiation in the market today, he says, in the context of consumer
durables. Usually, the dealer may have the final say in the brand choice picked up by the consumer.
So, companies are offering incentives. This April, Aircel launched a reward scheme for its retailers,
targeting their wives: the wife whose husband sold the highest number of Aircel connections got a
Hyundai Santro car, the runner-up got to meet MS Dhoni, captain of the Indian cricket team.
If its not incentives, its meetings. It is important in a downturn, and amid killing competition, to have
your trade channels back you solidly, says Salil Kapoor, CMO of Dish TV. We have been
directly meeting our top-performing 7,000 dealers of our 48,000 dealerships in the last few days to
solve on-the-ground issues and motivate them.
You manage dealer problems and they will manage yours, says Chandu Virani, managing director of
Balaji Wafers. For many years now, Virani has been holding an annual meeting of 25-50 dealers, of
Balajis 800-plus dealers; he is now increasing their frequency. There is no talk of sales. Instead, Virani
listens to the problems of dealers and tries to offer immediate solutions.
4. Make A Rural Push
In todays skidding market, the top-of-the-mind concern for dealers and companies alike is growth.
Kapoor of Dish TV says market trends in India, especially in urban areas, is a partial repeat of 2008, when
a feeling of gloom pervaded over India following a financial crisis in the west.
Concerns on job losses, a declining rupee and mortgages is an urban phenomenon, adds Kapoor. Half of
the problem is sentiment-driven, he says. But the villages are not affected by this gloom talk.
Harvests in general have been good, yielding higher incomes for farmers, and this likely to see them
spend more. Dabur expects growth in rural India to be 30-40% higher than urban markets.
Pareek of Maruti says the company has identified about 300 rural niches in recent years, which account
for 10% of its domestic revenues.
These include potato growers in West Benga l, blue -p ot ter y m a ker s i n Jaipur, timber merchants
in Gujarat, turmeric growers in Tamil Nadu, granite p ol i shers i n Hyderabad, painters in Madhubani in
Bihar, and manufacturers of nuts and bolts in Sonepat. An August 2013 study by Nielsen, titled India:
Boom or Bust, validates the rural push of companies. The report says that of the 400,000 new stores set
up in India in 2012, more than 70% were in rural areas. CMOs expect companies to stay this course, not
just in terms of where all they are but also in terms of what products they offer.
So, for example, Emami, Dabur, LG and Videocon are looking to go beyond small packs and entry-level
products, with larger packs and mid-range products, in the belief that consumers in rural areas will start
upgrading. LG plans to ship more smartphones and flat-screen TVs to villages and smaller towns in this
festive season.
5. Entice with the Price
The Nielsen report cited above says the companies that did well are those that were not so aggressive
on pricethey recognised the pressures on the consumer. The report says that in 2012, the five fastest-
growing FMCG companies in increased product prices by an average of 8.2%, against 11% in 2011. By
comparison, the bottom five companies raised prices by a greater amount 12.5% in 2012, against 9.3%
in 2011. In this slowdown, price has emerged as an important lever, both as perception and as real
value. The auto industry, which is reeling under eight consecutive months of declining sales, leads the
way, with price cuts and hefty discounts. For example, Hyundai pitched its Grand i10 Rs 50,000-80,000
cheaper than Maruti Swift; Ford launched its new and improved Figo at its previous-generation price, of
Rs 3.99 lakh; manufacturers sought to disrupt the market with aggressive pricing of brand new models
like Ford EcoSport (Rs 5.99 lakh) and Honda Amaze (Rs 4.99 lakh).
In the FMCG space, bundling, promotions and discounts are galore on soaps, shampoos and laundry. So,
for example, Hindustan Unilever is offering a discount on its premium detergent brand Surf Excel Matic,
while P&G is offering 15% extra shampoo on its Rs 3 sachets. It helps them the cost of crude oil and
palm oil, key ingredients for soaps and detergents, have declined 7% and 3%, respectively, in the past
few months.
6. Keep Innovating
Even as they play defence and keep a check on prices, the slowdown winners also turn on the offence
and keep innovating, observes the Nielsen report. More importantly, they support these new launches.
The new launches made in 2011 by the five fastest-growing FMCG companies grew five times in value
terms in 2012, against two times for the bottom five companies in the set.
Devendra Chawla, president, Food Bazaar, a modern retailer, says FMCG companies have dared to take
big bets with new product and category launches in 2013. The list of new product launchesnot
refreshesin this slowdown is long and formidable. So, for example, with its whitening toothpaste,
Colgate launched a new category, pricing its product at a 50% premium to other products in the market.
P&G launched its big toothpaste brand Oral B in India a month back.
Theres also HULs hair care brand Tresemme, Maricos Saffola Masala Oats, Engage Deo by ITC, Park
Avenue Beer shampoo, Instant Chinese noodles by ITC, Dettol Kitchen by Reckitt Benckiser, Odonil gel
from Dabur, Alpino chocolates by Nestle. The consumption economy is definitely leading to consumers
willing to pay for differentiated products, says Kataria of Godrej, which has launched two new products
and two product variants in the last 10 months.
At Big Bazaar, for example, olive oil sells more than Maricos Saffola. Chawla says modern trade has
helped companies drive sales in new categories: while its contribution in overall sales growth has been
7-8%, its been 35-50% in new-age categories such as anti-aging creams, health foods like oats and toilet
cleaners. In a way, it is a new marketing leverfocusing from general to specific, and with a long-term
strategy, he says.
7. Keep Thinking Long Term
Rajiv Bajaj, managing director of Bajaj Auto, has a different thinking on offering too many brands. The
marketing principle is that the width of the brand portfolio must be inversely proportional to the
breadth of the markets that one seeks to address, he says. Unfortunately, most marketers lead their
companies to offer more and more brands as they seek to enter more and more markets. Thats usually
the beginning of the misadventure to
a sorry end. In the domestic market, Bajaj has just two
brands: Pulsar and Discover.
K Ramakrishnan, president marketing of Caf Coffee Day, also
stresses on holding on to the basics as a guiding force. Life
(for a SMO) has always been full of complications
and changes, and we have to accept that, he says. If there
is primary focus on the value offered by the brand, I think, one
is on safe ground.
Its why Bajaj feels marketers should think less about the world
and more about their brand. When there are too many
competitors and not enough customers, CMOs need to heed
(marketing guru) Jack Trouts advise, differentiate or die, and
reorient their organisations from being manufacturers and
sellers of products to becoming an engineer of categories and
a marketer of brands. Marketing consultant Suman Srivastava
feels marketers are probably making little headway in
unconventional ways to reach the consumer because the
marketing tools being used today are primarily for FMCG
products and evolved in the 1960s, for a different consumer.
Today, FMCG is just one of the various product categories,
says Srivastava, founder of Marketing Unplugged. The world
has changed and the CMO has to change dramatically too.
Their immediate instinct is to control the communication to
the consumer like speaking from a podium; they are not having
a conversation with them.
With Deepali Gupta and Writankar Mukherjee