Balancing on a tightrope

Recent experiences of Ford, Nestle and Telenor show that when faced with quality concerns or regulatory raps, refocusing on the consumer is the best way out

In an ever-expanding Indian market, companies across industries - from legacy brands to new entrants - can find themselves walking a tightrope when faced with quality issues, customer dissatisfaction or a regulatory rap. In the case of Ford, Nestle and Telenor, whose parent companies are based abroad, recent experiences in India have led them to refocus on people above anything else, reaffirming their faith in the axiom that "the customer is king".

Ford India, for instance, has had to battle customer perceptions of its cars proving costly on the maintenance front and ambiguity over pricing of services. It introduced "Ford's Service Promise" to let the customer know the exact service charge of a car before she enters a dealership.

For Nestle the comeback campaign for Maggi after the ban was designed with the consumer as the centrepiece. Instead of roping in a celebrity to talk about the brand, Maggi released a series of short videos on the internet about a bunch of loyalists who shared tales of their love for the noodle brand. Six ads in all, the videos ended with a miss you message. On its part, Telenor has kept its focus sharply on the consumer and continues to drive process efficiencies to be able to offer affordable voice and data services to its loyal base of mass market customers.

Here we take a look at the key lessons the three brands have learnt from their recent experiences in the country.

Rahul Gautam, vice-president, marketing, Ford India, identifies factors such as transparency and personalised ties between consumer and brand as critical. "With the world's largest youth population, the Indian market continues to be diverse and challenging. Today, one size fits nobody. Some people seek ways to stand out while others simply don't want to get lost in the crowd - and the Indian society is more openly celebrating diverse opinions and interests. As a result, mainstream connections between brands and consumers are fast taking a back seat to more unique, personalised and meaningful ties, driven by transparency and attentiveness."

Second, he adds, no decision on a high-value purchase in India is taken unilaterally, and we continue to be deeply influenced by family and friends. And this is where trust comes in, so that brands with big market shares enjoying higher levels of trust among customers.

"The trust also can be developed through consistent relationships that deliver attentiveness and respect. This kind of trust is often found in their (consumers') dealing with family and close friends. For a company like Ford to earn this trust with consumers, one has to ensure they are always treated like family," says Gautam.

Ford India has also learnt that consumers here are among "the most value-conscious and demanding ones in the world". Gautam explains, "Value, however, cannot be termed as cheap as consumers are well aware of trends and like to keep up with them. Even the best of technologies, if not served as a value, can go unnoticed amongst its target customers."

For Nestle India, the Indian subsidiary of the world's leading food and beverage company, it has been a roller-coaster ride, as its Maggi noodles was banned nationwide by India's food safety regulator last year stating they were unsafe for consumption, leading to a crash in its market share in the country. But after Maggi noodles returned to shop shelves, it regained the number one spot in the instant noodle category in India.

The ban period, however, had taken its toll on the erstwhile category leader: January 2016 data from Nielsen shows its share of the Rs 2,000-crore instant noodles market dropped to 42 per cent from a commanding 77 per cent in January 2015. During this period, ITC's Yippee! capitalised on Maggi's absence to notch up a 33 per cent share.

For a company that has been in India for more than a century, consumer trust has been the key to its staying power. Suresh Narayanan, chairman and managing director, Nestle India, says a critical lesson for the company is that "quality and safety always win".

He adds: "At Nestle, with a 150-year history globally and 104 years in India, quality and consumer trust are never ever to be compromised. To do so, safety and quality of our products is of paramount importance, and involves considerable investment at our factories, training, discipline and a culture of compliance where these are never compromised. Consumer loyalty towards a product depends directly on the trust they have in us."

Through the company's quality control system, Nestle ensures appropriate controls are in place at every step, from the sourcing of raw materials, manufacturing and warehousing till the brands reach consumers, he says.

The second important lesson, Narayanan points out, is the "power of durable partnerships". He says, "We have learnt that strong partnerships are the key to a sustainable business model. We have long engagements with partners, be it suppliers, farmers, distributors, vendors and agencies, in some cases for over three generations, in some parts of India. This only happens when the partnerships are based on integrity, transparency, sincerity of purpose, mutual respect and honesty and with a clear objective that quality and food safety are key reasons for consumer choice of Nestle brands."

The loyalty and testimony of partners can be a buffer when fingers are pointed regarding quality of products. Narayanan claims Nestle has kept things transparent with its partners "by providing technology and best practices that help farmers and suppliers upgrade their product quality to international levels".

Another mantra for Nestle is consumer-centric innovation and renovation. Narayanan stresses, "We believe that the most important person is the 'consumer' and satisfying her needs and choice determines the sustenance of a company like Nestle. Our strong belief is that consumers seek both value and quality products without compromising on nutrition, health and wellness. Consumer preferences are also evolving and hence it is imperative that we have product offerings that cater to varying age groups."

Unlike Nestle or Ford, Telenor (formerly Uninor, a joint venture between Unitech Group and Telenor Group) is a late entrant that came to India in the middle of a telecom boom. In 2008, the tele-density was less than 30 per cent with the rural market largely untapped. The Norwegian state-owned multinational was a technology leader in Europe, with an understanding of Asian markets such as Bangladesh, Thailand and Malaysia. India then was a voice-centric market, with a price war around it and mobile Internet knocking on the doors.

Uninor launched in eight circles in 2009, after completing one of the world's largest GSM Greenfield launches which was also one of the fastest telecom roll-outs ever in India. In 2012, after the 2G scam came into the open, the company suffered a setback as the Supreme Court revoked all the mobile licences allocated to Uninor by the central government in 2008.

According to CEO of Telenor (India) Communications (the company was rebranded Telenor last year, Unitech exited in 2012) Sharad Mehrotra, the challenges helped the company to persist and emerge as a specialist in mass market mobile telephony. An important lesson was to take one step at a time. "Long-term strategies gave direction but the winning everyday mantra was to be focused on today and not get distracted by thinking what was to come tomorrow. For example, while everyone is talking about data services and 4G, Telenor has been working on making its customers understand the benefits of internet and how to be safe while surfing through initiatives like Grahak Shiksha Kendras or Webwise workshops for schoolchildren," he says.

Secondly, he adds, the challenges were converted into simple strategies - best in basic services, mass market distribution and low-cost operations. Lastly, the company gave a thrust on efficiency in operations to deliver affordable services. "Efficiency became the buzzword. If Telenor has to continue offering affordable voice and data services to the mass market customers, it has to maximise its assets - whether it is infrastructure or manpower. As part of its network modernisation programme, Telenor has managed to reduce its power consumption by up to 25 per cent and increased its spectral efficiency by nearly 20 per cent by swapping the legacy network with new state-of-the-art equipment. This has increased coverage and reduced congestion to improve voice quality and give higher data speeds."

Telenor recently posted huge operating losses for its India telecom business and also reportedly threatened to exit if it fails to procure fourth generation spectrum at reasonable rates. Yet, it is also vying to become a preferred partner in the digital journey of customers. "By combining conventional products like insurance with mobile technology to bring benefits of financial security to the masses free of cost, Telenor has already aligned itself with Digital India," Mehrotra says. The key to connecting with consumers will be "keeping its fundamentals right and building on the learnings from the past".

Ajay Modi, Arnab Dutta & Mansi Taneja contributed to this report