Marketing Myopia-those two words of wisdom said by the management guru Theodore Levitt

seem to reckon the Mutual Industry. Reason-the industry like any other is facing several dilemmas
and the consequent lack of action or in some cases even unwilling action.

-Whether to go retail or not?

-Whether to go rural or not
-To what level to increase the penetration,
-Whether reach is the job of Asset Management companies or distributors or the Regulators/Govt.?

Where does Marketing Myopia come in? What have the above doubts got to do with out of box
thinking or doing things differently? That’s where indeed the answer lies.

A small hint- FMCG marketers started realizing that there competition lay not only amongst the
FMCG players but with that EMI culture which picked fast when every household-urban or rural is
paying EMIs towards a TV/Refrigerator/Vehicle etc. The share of the wallet that was enjoyed by
FMCG category was getting squeezed by the same.
So- if an individual in a remote village can buy a Scooter/TV/Refrigerator/Tractor on an EMI, why
can’t the same person invest in MF schemes through an SIP(systematic investment plan).
The moment we find a Delivery Mechanism that makes business sense in the long term-the MF
industry will come of age.

However if we take a look at the macro figures so many insights can still be deciphered.

The average Indian spent Rs. 5,745 in 1992-93 while the figure in 2002-03 was Rs.15, 082-a
CAGR of 10.13% at current prices

The above statement holds even more significance in the light of the fact as to what are the
changes in the spending patterns. The share spent on food and beverages has declined from 54% in
1992-93 to 44.8% in 2002-03.While medical and healthcare spending has increased from 3.50% to
8.06%.
The above makes it amply clear that the challenges are Multifold,

Reach, Distribution & Awareness

All these have their own significance and are strongly inter-related having a rub off effect on each
other. Reach will be facilitated if Awareness is generated and vice versa.

We have seen in one of our markets how one can expand the market. With a simple analysis of the
Retail Distribution force we noticed that the profile of most was retired/VRS people from banks
etc. and with an average age of 50+. I would read this as an encouraging sign as well as a lesson.
In slightly remote and conservative markets, these are the people who can act as the torchbearers.
They carry knowledge/trust and confidence of masses in their respective pockets of areas. They
have to be taken on board through the Sales and Marketing teams.
At the same time, the gap exists because the young and risk taking youth is not present-which
means there is immense scope to create awareness there and make them take up this opportunity to
market financial products. And with hordes of MBAs being churned out-if inculcated properly
these people can really do well by unleashing their Entrepreneurial spirit. But these areas will have
to be worked on, by meeting the said groups of people and encouraging them to take the challenge.

Taking cue from the Self Help Groups of companies like HLL/ITC etc., why not pick up a
Sarpanch, a retired banker from each village, an Academician sharing a drive, and make them
partners in the whole initiative? If HLL could create a need for sanitation and hygiene in
remote/illiterate villagers-we are fortunate enough to be in an industry where there is a genuine
need for investment for the retail masses-with thousands of crores lying in Untouchable deposits-
being eroded by Inflation etc.

Working closely with such companies who have already done some work in this area-might be
from FMCG or even from the financial services sector-like Mobile ATMs/Mobile Branches etc
being carried out by banks like SBI-ICICI.
We, at Reliance Mutual Fund have driven Managers to act like Change Agents and experiment
with ideas that are cost effective and could potentially change the way marketing happens-if not
new things then maybe same things in a different manner.
Work with NGOs or even in some cases the District Administration-genuinely involved in efforts
to make people self empowered. And this is not easy but we have taken the initiative.

Change in Outlook/Mindset
The solution lies in not just ideas but implementation-wherein the companies will have to cultivate
a culture of nurturing catalysts as employees/sharing a zeal for change, where investors are not
seen as contributors to profit mere. And one will have to look for delivery channels beyond the
traditional ones as telemarketing, banks, other institutional distributors and individuals working as
financial intermediaries.
Talking of culture within the organizations, reminds me of the late Sumantra Ghoshal who in his
book “Bias For Action” differentiates between Motivation and Passion holding the latter several
notches above the former in terms of desirability and referring to it as the tool for success. The
challenge is for organizations to identify this drive among employees and establish Project
Development-Execution Officers. This could even be included as part of the Performance
Evaluation System.

Profitable or non-profitable proposition

A rupee spent in Mumbai might be worth 10 p for its recall value getting lost in the glut of
advertisers, however 10 p spent in a village with a base of rich NRIs might be worth its weight n
gold. As the same investor shall be more comfortable investing with someone who is there right in
the backyard of his house and not in the alien roads of Dubai or elsewhere.

Cost of promotion is not that high. It’s long term/sticky money as seen in the case of Reliance
Mutual Fund Story in Goa. No churning happening unlike the metros wherein every other AMC is
cornering to glory in one NFO after another but the market unfortunately is not expanding.

Despite so many NFO’s, innovations on the Product side, and so much boost from the
governments and to top it all the booming markets-we still seem to be lost when it comes to
growth in the industry. Its not that awareness has not grown, not only has that happened but also
more and more people have started investing in MF schemes and surely the industry has evolved in
terms of better checks, products, client interaction, quality manpower in fund management as well
as distribution. And these are just a few statistics that make a compelling case for AMC’s and
Distributors to reach out to more locations.

- In 2002-03, LIC sold 505 of its policies in Rural India

- 50% of BSNL’s mobile connections are in small towns and villages
- 30 million Kisan Credit Cards –as against 30 million in Urban India.

Lets take a look at a simple perspective. As we all know a lot of event based marketing is taking
place in the form of road shows in prominent market places, commercial areas etc., but if we
should be self-critical have we ever thought of taking mileage of the following facts?

- Close to 7,000 mandis and over 25,000 melas held in Rural India
- Average sales in a mela-143 lakhs, average number of outlets in a mela number around 850
- Average daily sales in a Haat close to 2.25 lakhs.

If not setting up base in these places, have we ever cared to create awareness in such places.
Answers better left to ourselves only.

Distribution Model

Taking cue from FMCG companies, giving them a bundle of products-that’s where the role of a
mature and a visionary distributor shall come in. A model that offers training, scalability and
feasibility. An offering of Life Insurance/Postal deposits/Mutual Funds etc.
This is an inflection point in the industry wherein AMC’s/Regualtors and Distribution Houses-
including banks, will have to work closely. The resource to be invested here is not just money but
committed time and effort in quenching the thirst for knowledge & awareness of the people in
these areas.
The AMCs have to show the willingness to support Distribution Houses to go to more and more
locations. And to reciprocate the distribution houses have to get over the parochial approach of
merely the P & L A/C.This is an open admission that all big Financial Services players are going
to be more of one stop shop henceforth. So before taking any initiative every distributor has to
keep in mind to be either a specialist in that product or be a complete financial solution provider.
Something that will make their business more stable, sustainable and profitable.

Because the real risk in investment as we always refer to is not just market related but in
Ignorance.

Realizing this, we at reliance have started off with a unique initiative called Reliance Knowledge
Series, an attempt to develop and create a bigger and maturer market, to nurture partnership with
various groups as Professionals as CA’s/Doctors/Other opinion makers and so on. The key here is
not just to promote Reliance Mutual Fund brand but to share a platform to share knowledge and
wisdom on any subject. It could be region specific as Tourism in Goa or on Budget Expectations,
Forex markets etc.
ITC has started off with e-chaupals and if the same forum could be covered under initiatives like
Reliance Knowledge Series, the much-needed awareness and most important-Involvement and
participation of masses can be ensured. Who knows when commodities related schemes are
launched by MF players, there might be a large number of takers from these towns/semi-urban
locations only.
Selling the India Growth Story shall be as easy to sell to villagers- that now have the latest TV
channels, latest car models to drive, international and national calls at a button’s distance away-as
it would be to those privileged to attend Fund Managers meets in 5-Star Ballrooms.

As our CEO Mr.Amitabh Chaturvedi likes to put it.

“We are in a Business of Wealth Management. And we all agree that in today’s world Knowledge
is Wealth. So to be good Wealth Managers we have to be good Knowledge Managers.”

Experimentation
Pharma cos in R & D, others in Market Research, are we going to have customer insight and then
come out with products that suit the needs of these people residing in the heart of India?
A simple example could be schemes meant for purely semi urban-rural markets with minimum of
say as low asRs.500/- rather than 1000 or 5000 that is prevailing as of now for most schemes.
Or even FMPs meant primarily for Retail-with a low minimum investment. If chit funds could take
investors for a ride, the trusted players in the market whether its Reliance or any other-could surely
make a difference in expanding the market by strategic use of such products.
And experimentation is not to be confined just to Product side-equally important is going to be the
distribution channels-whether its along with other players through mobile ATMs, through Self
Help Groups on which work has already started off or even things like what ITC has done through
e-choupals.

Conclusion

In a market where Product/Service/Returns based differentiation is becoming tougher day-by-day

what will be most critical for success in the long run will be a Bias for Action and a willingness to
experiment, falter and learn.

This is a typical INFLECTION point in the industry when the markets are booming, FIIs are
flowing in, scams seem a thing of past, growth seems pervasive.

Future shall belong to those who capture this opportunity to spread awareness, reach out to more
locations to attain mind share as later the same is going to not only cost more but also with the
juice in the market already being dried out.

Whether it’s the NRI rich villages of Goa or Kerala or the rich industrial towns like Gobindgarh in
Punjab, potential is immense-but to realize that we first need to look inside us for the answers.