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* Or that 90 per cent of all the shampoo units sold in India are single-serve — in that they are available in sachets — compared to the global average of 20 to 30 per cent?
* Does it surprise you that Indian celebrities endorse an average of 15 brands — sometimes more — in a given year compared to the average four brands that one celebrity endorses in a year in the West?
* Or that Indian brands have period- or occasion-based discounts (mostly off-season and around Diwali, Independence Day, Republic Day, etc) while most Western markets offer round-the-year sales to get rid of dated inventory?
* And that an average Indian shopper rakes up about 1,000-1,500 loyalty points a year compared to the average 35,000 that a US consumer does?
Positioning guru Jack Trout called India “The land of non-standard marketing” (Differentiate or Die: Survival in Our Era of Killer Competition; published 2000). For all the talk about the promise of the Indian market, it remains an extremely difficult challenge for companies that are mostly used to marketing strategies born in the West. Marketing strategy templates that serve global markets efficiently often need to be tweaked, modified or even prepared from scratch to serve the Indian consumers’ needs. The scale- and volume-driven market influences the communication strategy, which in turn affects how marketers sell and market their products here.
We look at seven unique characteristics of marketing in India.
SMALL IS BIG BUSINESS
Harminder Sahni, founder and managing director, Wazir Advisors, a management consulting firm, says, “The Great Indian Marketing story is different because it is a volume-driven — not margin-driven — market. So, most companies, especially those in the FMCG business, sell their products in low-unit packs, which allows the consumer to connect with the brand and experience it too.” According to Ficci estimates, to this day, as much as 40 per cent of the total FMCG market sales of Rs 28,700 crore in India is driven by low unit packs. In the West, it’s not more than 20 per cent even though companies like Unilever are experimenting with the strategy in developed markets.
Even liquor brands are putting their brands in smaller, convenience packs to facilitate sampling. Bacardi Black, Royal Challenge and Teacher’s Whiskey are among those pushing smaller bottles —60ml and 90 ml — into the market. Abhishek Malhotra, partner with Booz & Company (India), a management consultant firm, says the Indian market offers a wide swing — where both a Rs 5 sachet of Garnier shampoo and Rs 250 bottle of the same shampoo can be available at the same outlet. “Family packs may be more popular in the West but in India, the smaller sizes work better because a huge chunk of consumers purchases on a daily basis,” he adds.
Agrees Samit Sinha, managing partner, Alchemist Brand Consul-tants. “In most global markets, consumers go out once or twice a month and bring back purchases in large packs. But the Indian consumer simply gets the local kirana store person to deliver as and when she wants.” There are many reasons for this behaviour — say, even if you have a refrigerator, you may not have electricity 24x7 to keep food items fresh.
Interestingly, a survey done last year by Nielsen, The 2011 Global Shopping and Saving Strategies, shows that compared to 60 per cent of North American consumers who made monthly trips to the grocery stores to stock up on items, only 18 per cent of consumers in Asia Pacific, including India, made stock-up trips, preferring frequent quick trips instead.
“Companies should understand that the SEC A consumer of Delhi and Chennai is different,” says Abraham Koshy, professor of marketing, Indian Institute of Management, Ahmedabad. “India has several Indias within its fold with each consumer unique.”
MISPLACED LOYALTY
Vijay Bobba, chief executive and managing director of Payback, one of the biggest players in the loyalty programme segment, says, “The Indian market with its several languages, cultures, and multifaceted consumers, is complex when compared to other developed markets.” The reason why loyalty programmes are still trying to find a firm foothold, he says, is that the Indian marketers are thinking about scale, volumes, profit, in that order.
In most developed markets, loyalty programmes work because margins are fatter and so, the givebacks are higher. In India, margins are tight and competition intense. According to MS Ashok, COO, Accentiv, a loyalty programme provider, givebacks in the West range between 15-20 per cent, but in India, it’s 5 per cent. So, the Indian consumer’s potential value point earning is lower than her Western counterpart’s. “When the margins are low, the givebacks are low and hence, the ability to earn points is low,” says Ashok.
Loyalty points in the West have ‘aspirational redemption’ compared to the Indian market, where it is marketed on ‘necessity redemption’, he adds. While consumers in the West redeem points against air tickets and travel, India consumers use it for free parking, free fuel, or discounts on groceries and movie tickets at the most. The communication is challenging, says Bobba, adding that unlike Germany, where the strategy of ‘point at every step’ is the norm, in India, given the complexities, the strategy is structured on the premise of ‘shopping is rewarding.’
REFERENCES AREN’T RESPONSIVE
When Delhi-based housewife Yogeshwari Singh, 27, bought her medical insurance policy from a financial services company, she was asked to refer five names to the company and thereby avail of a discount. The trade-off seemed fine (the discount of 15 per cent was to reflect in her next credit card statement) and she gave names of a few family members and friends. The next month she found she had got no discount because none of her “referrals” had bothered to apply for the insurance policy. Some refused, some didn’t pick up the call from the company’s employee, and one called her back, asking —rather firmly — not to share her ‘personal details’ with strangers.
“We find that referral programmes don’t always work because unlike in the West, people in India don’t understand ‘how’ to refer the right people. In fact, I had a case where, for an IT job, a person had referred a friend who had a background in sales. Clearly, this person wanted the bonus based on his referral but it backfired, not just for the friend who didn’t get the job but on the employee himself,” says the HR head of an online company. Another advertising professional, who has worked closely with a financial services company, says that in most global markets, consumers first “get their hands dirty to know the brand themselves”. He adds, “The evolved consumer has tried out products, brands and only then refers her friend to the company’s referral programme. It’s done with serious thought because the consumer knows exactly what the product is all about.”
MASS PRODUCTION OF CELEBRITIES
In 2010, 60 per cent of all brands advertised on TV used celebrities, according to Ficci, a marked increase from 20 per cent in 2001. Today, nearly 80 per cent of the top 40 brands in India have celebrity-endorsed advertising for television. Advertisers say that typically 40-50 per cent of the total annual marketing budget brand is kept aside for celebrity-led endorsements. And for every four brands that celebrities in the West endorse, the Indian counterparts (mostly sports stars and actors) endorse anywhere between 15-20 brands. David Beckham, the darling of endorsements, has roughly 8-10 brands. Compare this to Indian cricket team captain Mahendra Singh Dhoni who has 21 brands, ranging from cold drinks to watches to real estate.
According to Anirban Blah, MD, Kwan, a celebrity management firm, “In the more developed markets, consumers know the brands but in India, celebrities deliver credibility and trust of brands.”
Philips, the multinational company in the business of lifestyle, lighting and healthcare solutions, has actors Kareena Kapoor and John Abraham as brand ambassadors in India. In most other global markets, the company doesn’t have brand ambassadors. “The consumer in India still needs handholding and an emotional connect to see the value of a brand. Celebrities have an impact here,” says Vivek Sharma, chief marketing officer, India and Indian subcontinent, Philips.
NEW ‘SALES’ PARADIGM
Unlike the West, where most lifestyle stores have bargain racks for apparel and accessories in particular, in India, branded retail stores don’t have not more than two mega sales a year.
‘Discount racks’ as they are called, are excess inventory, a few seasons old, which the retailer liquidates so that it does not interfere with the operations in that part of the store that has the latest products, and do not lead to any misgivings in the consumers’ mind.
In an earlier interview to The Strategist, a Reebok official had explained that in India if consumers come face to face with brands six times in a year, out of which three times the products are on discount, it will (a) erode brand equity, and (b) demolish brand credibility. Consumers will wonder whether something was wrong with the brand.
“Round-the-year sales work abroad because retailers want to get rid of old inventory,” says Sinha of Alchemist. “Customers already know the brand, they trust the purchases. But in India, two seasonal discount sales work. If brands offer sales every quarter, it can backfire and ‘brand dilution’ can happen with the customer wondering just why the retailer is offering sales so often,” says Sinha.
WHY DO IT OURSELVES?
We are a non-‘do-it-yourself’ consumer market,” says Sharma of Philips. Philips has roughly 80 light lounges as part of its lighting solutions in India, a concept alien to the more developed markets where the brand mostly sells online. There the consumer goes online, clicks, gets the product delivered and even installs it herself. “In India, my point of communication is also the intermediaries, including the electricians, interior designers, architects, basically those who will be responsible for installing the product,” says Sharma.
Given this typically Indian “habit”, marketers cannot encourage the self-service concept. “We couldn’t offer a 100 per cent self-service concept when we went in for a revamp a few years ago,” says K Ramakrishnan, president, marketing, Café Coffee Day. “Unlike the consumer in other markets, Indians want to be served,” he adds. So, the concept of home deliveries and dine-ins work better than self-service outlets, unless they are part of malls or multiplexes (even these have started serving food inside the halls).
That explains the success of Domino’s, which has 70 per cent share in the pizza home delivery segment in India (Euro Monitor report 2012). While the 30-minute- or-free-pizza concept was abandoned in markets like the US, in India, according to Ajay Kaul, CEO, Jubilant FoodWorks, the Indian franchisee of Domino’s, it is used very effectively.
‘COD’ OF CONDUCT
Yes, we want to be served, right at our doorstep and we will pay only after we receive delivery. This is why cash on delivery is such a raging success. Sinha of Alchemist says, “One of the biggest reasons for the growth of e-commerce is the simple philosophy of getting everything home delivered and cash-on-delivery. These concepts work very well in India.”
Cash-on-delivery is a foolproof method of establishing credit-worthiness, says Alok Kejriwal, managing director and co-founder, Games2win. So, once your name and home address is in the system, the seller quickly establishes if you have ever defaulted on your payment.
Kejriwal says that e-commerce companies should now think of ways of exploiting this exercise. That’s because cross-selling and delivering samples do not cost anything extra in deliveries; rather it can easily change the fortunes of e-commerce companies who often admit they lose money while executing cash-on-delivery.
Given the myriad goods e-commerce companies ship out, even a failed direct marketing student can build a simple ‘ASL’ or age–sex–location business model offering outside brands to ride on the e-commerce deliveries headed to consumers. For example, if a microwave is headed for Ms Sharma in Noida, the package can surely contain other goodies sponsored by other brands that would happily pay to reach their target audience directly.
Is anyone listening?
