A“symbiotic relationship” is how Sanjeev Chadha, chairman and CEO of PepsiCo India, describes the work that the food and beverage multinational undertakes with thousands of farmers across India. “We help them with progressive farming techniques and they are of huge benefit to us in securing a reliable supply chain,” he says. Some observers would call what Pepsi is doing corporate social responsibility (CSR); others more cynically might say it’s simply another example of multinational corporations (MNCs) trying to figure out how to make inroads in India’s challenging, but potentially lucrative rural market.
Whatever the words used by executives like Chadha for such initiatives, it is impossible to discuss multinational strategies in rural India without mentioning CSR. In its various forms, it is a critical part of their rural growth plans, often out of sheer necessity. Filling the gaps left by government, MNCs have built roads in rural India that help them deliver their goods, provide education and health care for communities whose workforces they rely upon, and implement environmental programs to protect precious natural resources needed to keep supply chains running smoothly.
“In some cases, I am sure CSR activities are mostly rhetoric,” says Harbir Singh, Wharton management
professor and co-author of a new book titled, The India Way: How India’s Top Business Leaders Are Revolutionizing Management. “But CSR is more legitimate in India than in the U.S., where infrastructure has been built and government is seen as addressing societal development agendas,” says Singh.
Yet now there’s a shift in how MNCs look at their entire rural India investments beyond CSR. With growth drying up in developed markets and their center of gravity shifting to emerging markets, MNC businesses in India are under pressure to prove that their rural strategies aren’t just about doing well from a CSR perspective. They also need to show head office that these strategies are doing well from a business perspective. In short, the strategies must start delivering top and bottomline results.
After years of false starts, missed opportunities and flawed strategies, a number of MNCs’ India businesses are getting close. Others already are there and are ramping up their rural investments. None can take that fine balance between doing good and doing business for granted, as Nokia, Coca-Cola and Max New York Life — among the companies profiled in this special report — show. And it’s for that reason that at PepsiCo India, “our rural agenda has been driven by purpose and now is moving into performance,” says Chadha.
SPENDING POWER
For many MNCs, there’s a lot more riding on their rural India performance than there once was as India’s growth story spreads to the heartland. Two-thirds of the country’s one billion consumers live in rural India, where almost half of the national income is generated. A report by Technopak Consultants and the Confederation of Indian Industries, a trade body, estimates that the country’s rural consumer market generated US$425 billionof revenue, up from US$266 billion the previous year.
The big reason for the growth is that India’s rural consumers are steadily gaining more spending power. The number of rural households earning less than US$760 a year is down from 65% to 24% since 1993, while those with an income of US$1,525 have more than doubled from 22% to 46%. Combine these factors with improved roads and other infrastructure in rural India to
help products reach their markets, and it’s easy to see rural India’s attraction.
“We are finally beginning to see that rural India has cash and is able to spend at the same time,” says Vijay Govindarajan, professor of international business at Tuck School of Business at Dartmouth College in New Hampshire, who is also the chief innovation consultant for General Electric. “This is a remarkable combination for companies.”
But any company coming to India for the first time that thinks it will be easy to take advantage of that combination is mistaken. Rural India is hugely complex, not least because of its diverse pace of development. As a recent study from IMRB International, a research company in Mumbai, notes, some markets are big but not as affluent as other markets (Uttar Pradesh, Bihar) while some are affluent but not very large (Himachal Pradesh, Goa). Experts also say that strategies need to take into account the vast number of languages and cultural differences across India’s hinterland, while keeping strategies highly flexible and adaptable.
It can mean developing products and services tailored specifically to the rural market. When LG entered India in the mid-1990s, numerous brands were vying for shelf space with hardly anything to distinguish them from competitors. The South Korean company developed two color television sets for the rural market, Sampoorna (which means “complete” in Hindi) and Cine Plus. At US$65 and US$107 respectively, the sets were priced slightly higher than the black-and-white televisions that other manufacturers were selling in rural markets and that had become obsolete in urban homes. LG was also the first to offer gaming with its cut-price TVs and menus in English and Hindi. Now LG has refrigerators, washing machines and microwave ovens targeted at price-sensitive consumers sold from hundreds of retail and distributor outlets across the hinterland, with rural markets contributing 40% of its revenue.
Much also depends on the sector and products sold. In fast-moving consumer goods, for example, MNC products are capturing a sizable portion of rural consumer spending in a number of areas, with year-onyear increases in rural spending in 2009 on MNC shampoos (70%), washing powder (60%) and toothpaste (112%), say researchers at IMRB. What’s more, they say, the average spending on these products is growing faster in rural than in urban markets.
SOAP OPERAS
In the course of ramping up the performance of their rural strategies, MNCs are applying the lessons already learned. One of those lessons is that the benefits of a first-mover advantage are tough to hang on to as rural Indian consumers’ tastes change rapidly, with questionable brand loyalty.
That applies even to a groundbreaker like Hindustan Unilever, the country’s largest consumer-products company owned by Anglo-Dutch Unilever. It made waves in the hinterland in 2001 when its Shakti Project enlisted self-help groups to develop a network of women — largely from very low-income households — into entrepreneurs, selling baskets of HUL products door to door. In early 2010, there were 42,000 women earning a living by selling HUL products in more than 100,000 villages in 15 states. “India’s rural narrative has been defined by HUL,” notes Pradeep Lokhande, founder of Rural Relations, a Pune-based consumer-relationship management organization.
In the meantime, HUL has embraced other novel distribution strategies, such as selling products like its Sunsilk and Clinic shampoos in small, inexpensive packets for low-income Indians in the hinterland with little spare cash. Thanks to those efforts, the company has one of the most extensive distribution networks in the country, with 6.3 million retail outlets, including one million that it services directly. Rural India currently accounts for nearly half of HUL’s revenue.
But HUL’s lead regularly comes under threat. In December 2009, for example, rival MNC Procter & Gamble launched Tide Naturals, which is a 30% cheaper version of its Tide detergent targeted at rural consumers — a global first for the Cincinnati-based MNC. The launch was part of the parent company’s “purpose-inspired growth strategy” to “touch and improve more consumers’ lives in more parts of the world.” Within weeks of its launch, Tide Naturals shook up India’s US$8 billion detergent market by clinching a 0.6% share of the market, according to AC Nielsen. HUL’s response has been to turn to a local court to contest P&G’s use of the word “naturals” to promote its new product. With neither side backing down, the case continues.
While other MNCs aren’t necessarily going to be airing their competitive grievances in court, they can expect fast, nimble competitors to take them by surprise and grab market share if they don’t stay close to their customers — which is no small feat in a country like India, which has 642,000 villages, some with populations as low as 500.
‘UNCHARTERED WATER’
Nowhere is that more evident than in mobile telephony. Mobile phone penetration in India jumped from 1.4 units per 100 people in 1995 to 51 units currently. In the 12 months to September 2009, the number of mobile subscribers increased 55% to 142 million, according to the Telecommunications Regulatory Authority of India.
Taking a lead in that growth has been Nokia, the US$55 billion Finnish mobile handset maker. As part of a global emerging market focus since 2006, rural India now accounts for 40% of Nokia India’s US$5 billion annual revenue. But it’s a crowded business to be in. Along with Samsung, LG, Sony Ericsson and Motorola, there are a number of handset makers not only from China selling cut-price handsets, but also from India’s homegrown companies that are chipping away at Nokia’s market share lead with hand sets that are cheaper, more practical or both.
Now Nokia, like other handset makers, is branching out and forging alliances with various partners to offer mobile banking and other services along with its handsets. “It’s uncharted water” — as Gerald Faulhaber, a business and public policy professor at Wharton, puts it — one in which “customers are pushing the companies and taking them out of the comfort zone.”
Doing so successfully requires one thing: “listen to people,” states Karishma Kiri, a Seattle-based strategy and product management consultant at The K2 Group, who was a director of Microsoft’s Unlimited Potential initiative which provides computers, software and IT training in emerging markets. “A lot of companies tend not to listen to [what] rural consumers say they need.”
That’s not as clear-cut as MNCs might think. The jury is still out on the mobile services launched by news agency Reuters last year and other service providers to deliver agriculture information to farmers’ mobile phone. According to Rural Relations’ Lokhande, the demand hasn’t been strong. “There’s a perception mismatch between the farmers and the service provider,” he notes. While the companies assert that the service is useful, affordable and personalized, many farmers figure they can get daily rates from their state agriculture marketing boards for two cents, or half the price.
In rural areas, finding the magic price points that don’t eat into margins yet boost volume is an ongoing battle, with a lot hinging on distribution. “We have to build, and are building much deeper ‘go-to-market’ systems in rural India. They have to be extremely cost-efficient, much more so than they are in the urban areas,” says PepsiCo’s Chadha.
The US$43.2 billion MNC has been in India for more than 20 years and now claims to have overtaken Nestle as the top food and beverage company in the country. Overall, India has indeed been treating the company well, even during the downturn. India revenue at its drinks business grew 40% last year, while volume jumped 32%, well outpacing most other countries in PepsiCo’s portfolio.
But it’s not resting easy. In 2009, it invested US$200 million — the most ever in any single year — as part of a US$500 million plan to expand its distribution infrastructure, while increasing R&D and adding four new plants to the 45 it already has in the country.
To make those investments pay off, rural India — which currently accounts for 20% of PepsiCo India’s business — is taking center stage. “Over the next 10 years, I see rural India forming 40% to 50% of our national business, and in the future, growth will be powered by the rural areas,” says Chadha.
Is that a long time to wait? “If any company wants [quick] financial results from the rural initiative, it is seriously mistaken,” says Tuck’s Govindarajan. “You have to look at the next decade and not the next quarter.”
K2 Group’s Kiri agrees. “The rural incubation work of multinationals is part of their business,” she says. “But they need to be less focused on [year-onyear] success and spend more energy on building innovative solutions and business models for this segment. It’s a long haul.”
Wednesday, December 15, 2010
Thursday, November 25, 2010
Special: A metro in your life
As the Metro rolls on connecting more and more points on the map of Delhi, it is leaving in its wake, a change in the mindset of the consumer and businesses.
The Metro is not just changing the way Delhi is looking. It is also changing the way the Delhi resident looks at life, his lifestyle and his environs. Delhiites, who always loved the independence of a personal vehicle, are slowly but surely adapting to the Metro Rail culture.
It has been eight years since the first coaches of the Metro rolled out. However, it is only in the last year or so that the network exploded. From just a 22 km stretch in 2002, the Metro today crisscrosses Delhi, Noida and Gurgaon with approximately 200 km of tracks carrying 1.2 million people. Besides connecting people, the rapidly evolving rail system has - and is in the process of - changing consumer mindsets, media habits and the city itself as a market.
At present, around 10 per cent of Delhi's population commutes by Delhi Metro (owned by the Delhi Metro Rail Corporation - DMRC) everyday. The number might be small as of now, but with the Metro spreading its tentacles across the city and its neighbourhoods, more and more people are expected join the gang. afaqs! explores how much of this has happened already and tries to predict what lies in store ahead.
At present, around 10 per cent of Delhi's population commutes by Delhi Metro (owned by the Delhi Metro Rail Corporation - DMRC) everyday. The number might be small as of now, but with the Metro spreading its tentacles across the city and its neighbourhoods, more and more people are expected join the gang. afaqs! explores how much of this has happened already and tries to predict what lies in store ahead.
Rapid transit
The first big change that the Delhi Metro rail could bring is to unify Delhi as a single market and make it more homogenous. Till recently, its citizens used to look at Delhi as several independent territories - Gurgaon, Faridabad, Noida, Ghaziabad, South Delhi, East Delhi, West Delhi, North Delhi or old Delhi. Each independent territory had a unique identity of its own. If West and old Delhi were the hub of trading activities, South and Central Delhi and Gurgaon became the hub for nightlife, entertainment and offices. With the Metro reaching out everywhere, such labels could be a thing of the past.
 |
The Metro is also expected to lead to a social integration and evoke the feeling of being in 'one city' - a feeling that Kolkata and Mumbai inspire.
This changing landscape will affect the job market in a big way. Firstly, the corporates need not be located mainly in South Delhi, Gurgaon or Noida. Instead, they can have their offices anywhere in the city.
Companies too can now attract talent from anywhere in the city. In fact, till recently, it was almost impossible for a Noida resident to take up a job in Gurgaon, however lucrative the offer. Either he or she, had to shift base or give up the offer.
Companies too can now attract talent from anywhere in the city. In fact, till recently, it was almost impossible for a Noida resident to take up a job in Gurgaon, however lucrative the offer. Either he or she, had to shift base or give up the offer.
Many industry observers believe that Delhi could now emerge as a hot career destination - quite like Singapore, where the Metro system was used to promote the city as a good place to work and attract talent from across the Asia-Pacific.
Entertainment, shopping and eating destinations will come closer and closer to the consumer. For instance, a specialised restaurant in old Delhi could turn out to be the favourite destination for a South Delhi or Gurgaon resident. A specialised music or art teacher in West Delhi is now accessible to students from North and East Delhi.
This will help local brands grow further and increase their area of operations. Popular South Delhi shopping destinations could make way for large malls in the NCR depending on its proximity to the rail route. Functional markets could come up in and around various Metro stations making weekday shopping easier. This is common enough in Mumbai.
Out of the comfort zone
The local brands, which traditionally catered to a radius of three to four kilometres, will have a wider reach now to promote themselves. Their media plan need not rely on just distributing leaflets locally. It can get bigger and include classified advertising in print or OOH. This change would mean more business for media companies.
Consider the OOH industry. The Metro has already had a significant impact. Instead of large hoardings that stick out as complete eyesores in many cities, the new-age backlit screens at Metro stations clearly make one feel that he is walking through any world-class city. Newer outdoor innovations will keep coming up constantly.
The coaches themselves could don brand colours and messages. The Metro itself has provided Rs 60 crore worth of outdoor property inside the stations. The OOH industry in Delhi has grown from Rs 280 crore to Rs 350 crore in the last two years.
The high footfall at Metro stations could also act as a destination for an activation and experience zone for many brand owners. Besides, word of mouth coupled with social media will only multiply the effectiveness of the campaign and become a unique and cost effective way to reach the youth, who are growing up under the shadow of the Metro.
Multi-tasking
Travelling by the Metro would mean great freedom for commuters. Firstly, their hands will be free of motorbike handles and steering wheels. They will also get some free time while travelling. How will they use this?
The earliest assumption was that it would create a market for reading. This was based on the experience in Mumbai's local trains where reading a tabloid while travelling is popular. While tabloids could be the commuter's first choice, he is also likely to engage in other activities - listening to FM radio, CDs or playing games on mobile devices. The assumption about tabloids may not hold true now. When Mumbaikars were first introduced to the tabloid, other engagement options weren't available. Today, just a mobile phone can provide multiple options.
Mumbai's experience inspired media companies to launch three compacts (read tabloids) - Metro Now, Mail Today and Mid-Day. Unfortunately, the first-named, which was launched in the early days of the Metro, was forced to shut shop. It was probably a little ahead of its times.
The Metro could give rise to more experimentation. Free newspaper formats, for instance, could work. Some could be on the lines of Metro Moment, a London-based tabloid that is designed for a 20-minute read. There could also be a market for specialised newspapers on sports, city, entertainment and international events. FM and music are other options, though DMRC bars playing of music inside the metro (for safety reasons). The DMRC could go for in-train and in-station radio services. TV news channels could try out what they do at airports.
As the travel time comes down sharply, people will find themselves with more time on their hands. For instance, a shopkeeper in Chandni Chowk would have taken 90 minutes, in peak hour traffic, to reach his home in South Delhi. His commuting time now may be reduced by 40 minutes. The time saved could be spent in a gym or a spa, on a book, at a music concert, in a coffee shop or just taking a walk. People may visit more relatives and friends from far-flung areas. This could result in more sales for sweets, chocolates and gift items.
Wheels of Change?
The Metro could become the big leveller. It will create a 'public space' shared by all segments of society, becoming a melting pot of sorts. Aspiration could take a upward or downward move. For everyone who adapts a formal dress code imitating others, there would be some going in for a funkier look inspired by the younger generation. However, coming to the million dollar question - will the Metro rail stop people from taking out their cars at the drop of a hat?
Not necessarily. Delhiites love to flaunt their cars and they would continue to do so especially the SEC A segment. Besides, an automobile is a sign of increasing prosperity in any economy. India is no exception. What could change is the number of cars on the road on weekdays. Or, a first-time buyer could delay his purchase by a few years. Those who were planning to shift from a two-wheeler to a car might also delay that gratification. The Metro would seem to be very attractive proposition instead. This could affect the used-car sales or the purchase of a second car.
More stories will emerge. Just as Mumbai's locals inspired filmmakers and authors, the Delhi Metro is on its way to becoming a reference point in ways that are far removed from the tracks on which its trains run.
(Based on interviews with Amitabh Saran, BuzzInTown.com; Anirban Chaudhuri, Dentsu Communications; Anita Nayyar, MPG; Cajetan Vaz, Cajetan Vaz Brand Consultant; Harish Bijoor, Harish Bijoor Consults; Jitender Dabas, JWT; Kishore Chakraborty, McCann Erickson; Naresh Gupta, Dentsu Marcom; Rajeev Gopinath, Madison Platinum and Santosh Desai, Future Brands)
Friday, August 20, 2010
The art of eye-ball grabbing..!!
emotional content encourage viewers to look at them more closely, a
new study has claimed that such commercials make people more
susceptible to sales messages.
In fact, consumers are more likely to scrutinise fact-based adverts so
they can "counter-argue" what they are being told, said the study by
the University of Bath.
It is the likeable, entertainment-based ads that bring our guard down,
making us more relaxed and suggestible to the pitch, researchers
discovered.
That has "serious implications" for certain types of commercials,
particularly those aimed at children and those that may harm our
health, said Dr Robert Heath, who led the study, The Telegraph
reported.
"There has been a lot of research which shows that creative TV ads are
more effective than those which simply deliver information, and it has
always been assumed that it is because viewers pay more attention to
them", he said.
"But in a relaxed situation like TV watching, attention tends to be
used mainly as a defence mechanism. If an ad bombards us with new
information, our natural response is to pay attention so we can
counter-argue what it is telling us."
For their study, the team used an eye-tracking device to measure the
real-time attention paid to a range of adverts with different levels
of emotional content.
The adverts were "embedded" in an episode of the sitcom Frasier and
participants were unaware that advertising was the subject of the
research.
The findings, published in the Journal of Advertising Research, showed
that viewers paid less attention to likeable, creative adverts and
more attention to factual information-giving adverts, even when they
did not like them.
Dr Heath said, "On the other hand, if we feel we like and enjoy an ad,
we tend to be more trustful of it and therefore we don't feel we need
to pay too much attention to it".
"The sting in the tail is that by paying less attention, we are less
able to counter-argue what the ad is communicating. In effect we let
our guard down and leave ourselves more open to the advertiser's
message".
Thursday, August 19, 2010
How Not To Do It
Social media is a great marketing tool. But there are pitfalls one should steer clear of..
Business was sailing on as usual when along came a beast called social media. With a life of its own, it took the globe by storm. In the US, Facebook replaced the unassailable Google as the most visited site. Social media even overtook porn as the No.1 activity on the Internet. In about five years, the online world was swimming with networks of people talking, complaining, recommending, sharing, learning. And guess who was not in charge? Big business.
Soon everything online was coloured social. Ordinary netizens swam to the deep end, but businesses were left gasping and clutching the railings. Suddenly what customers said online outpaced publicity or ad campaigns. Opinion came with photos, videos and voice, and could spread like wild-fire. This was a fad that would not go away. Businesses realised there was no beating the social media; they will have to join it.
Easier said than done. It took radio 38 years to reach an audience of 50 million; television, 13 years; Internet, four years; and the iPod, just three years. If businesses were caught unawares, it is understandable because the social media sites themselves are not quite sure of what they are about. Marketing consultant and CEO of Paul Writer, Jessie Paul, says: “It is early days, but like most other platforms before, social networking is seen as the marketers’ next big leap. Everybody wants to be there but nobody has the winning formula. They wait for the magical thing to open up.”
But there will be no magic. Marketers will have to reorient and reinvent for social media, which doesn’t look like it’s going away anytime soon. So, back in the boardroom, one can tell the men from the boys as they meet this new challenge where every move is nakedly visible to customers. There is no sure-fire winning formula yet for social media but there are several things that organisations definitely should not do.
Just Be There
Starting up accounts and pages on social media sites and leaving them to fend for themselves is the first good way to mess it up. In fact, there’s little to choose between zero presence and mere presence. It’s a clear case of been there, but not done that.
Nirula’s has a Facebook page. While that may be exceedingly cool, don’t imagine that the page is as busy as the old capital-based favourite fast-food joints you’ve always known and loved. The page has the familiar Nirula’s logo, a dump of the Wikipedia entry, and 70-odd fans who have nothing to do after having pressed the ‘like’ button. Much the same goes for the popular Kurkure or Nimbooz. Their ads may be on YouTube because it costs nothing to put them there, but this does not amount to reorienting for social media.
| 5 Popular foreign brands on Facebook Starbucks: 9,382,743 Coca Cola: 6,829,105 Skittles: 6,100,328 Oreo: 5,855,692 Red Bull: 5,665,047 |
| 5 Popular Indian brands on Facebook Vodafone Zoo Zoos: 609,169 Fast track: 301,680 Cafe Coffee day: 160,227 Tata Docomo: 156,888 Kingfisher: 101,828 (Figures are number of fans as of 7 July) |
2 Popular Hate Campaigns |
Hareesh Tibrewala, joint CEO of social media solutions company SocialWavelength, says brand managers are just beginning to wake up and smell the coffee and are figuring out that social media makes for a good place to communicate. Brand managers themselves agree. “In India most of the brands have not reached the desired level. We are still finding a way to get there,” accepts Mohit Beotra, head of brand and media at Airtel. The brand’s Facebook community is liked by a mere 2,262 people — hardly a representative of the number of subscribers it has.
Now, ever so cautiously, companies are getting ready to dip their toes in the water. “A year ago, we needed to sell the concept of social media,” Tibrewala says. “Today, when we meet a brand manager, he seems to be aware and is keen to allocate some nominal budget and try out the medium.” But things move at the speed of thought on social media and brand managers need to come up with quicker game plans. Easy choices: be swamped, survive, or swim very fast.
Not that being swamped is a real choice. Being non-existent on social media says something about a company today. If companies don’t create their own space and presence, someone else will — and not necessarily the way the company would like. “Many brand managers have the ostrich syndrome. They bury their heads and pretend that consumers are not talking,” say Prasanth Mohanachandran and Karl Gomes, co-founders of digital marketing firm AgencyDigi.
On the father of all social networking sites, Facebook, it is often fans, not brand managers, who put up pages for companies. But loyalty can only go so far before these pages begin to look neglected. Fans may use their personal networks to populate the page once, but what after that?
To add to the brand managers’ worries is the ever present possibility of something going wrong and fans putting up hate or cause pages. The Boycott BP page on Facebook has nearly one million followers busy taking potshots at the company for the oil spill off the Gulf of Mexico. Meanwhile, on Twitter, BP Global PR, which has no official connection with the company, has 182,000 followers who are having a field day getting at BP on the impact of the spill on the environment.
Go Social, Minus Plan
Leaving social media to the company geek can be a waste of time at best and a disaster at worst. Coming at it from a different place, the tech savvy fast tracker will magically know how to do it, but not why. With a nebulous awareness of the company’s strategy, business goals, communication philosophy and other heavyweights, typically such a person will not be able to wear the brand manager’s hat and, sooner or later, will end up saying something that doesn’t fit the brand’s image.
In the world of social media, everybody stands an equal chance of being caught with his pants down. And, we are not referring to the Mayor of Leicester here. Personal care brand Dove’s ‘real beauty’ campaign, featuring actual consumers was under scathing attack on blogs in 2008 after someone on the production team of the commercials was quoted in an interview saying he had touched up the images of people in the ads. Consumers angrily criticised Dove for not being truthful after promising to showcase ‘real’ beauty.
In time, the dust settled after Unilever denied that the images were digitally altered. But it’s difficult to wipe away footprints. Dove recently advertised on Craigslist seeking women with ‘flawless skin’ and ‘no scars’ for its next ‘real beauty’ campaign. Consumers instantly pointed out that flawless could hardly be ‘real’ and that Dove seemed to be back to its old tricks.
Dove’s is not an isolated incident. Another famous case doing the rounds on the Net is of 3M, makers of Post-its, which discovered that someone had done a creative job of dressing up a Jaguar car in Post-its and taken a photograph. The company got in touch with the creator and said it would like to use the photograph in an ad, but when he asked for money, 3M decided to create its own Post-It art. This set the blogs on fire and it wasn’t long before 3M found itself in an embarrassing spot.
The danger of going social just to be there multiplies many times when accompanied by the lack of a strategy. Rajesh Lalwani, founder of social media consulting firm Blogworks, points out that there is a bit of science to social media. “Social media must be looked at from a strategic perspective. It’s not a toy; it’s not a game you are playing. Just because everybody is doing something, it’s not a good enough reason for your company to get there too.”
More confusion ensues when a social media strategy doesn’t remotely fit the existing strategy of a company. Says Tibrewala: “Companies are often unable to think of social media as part of an integrated brand communication. Social media platforms need to be connected to the other brand communication initiatives.”
Cadbury does a good job of integrating the message and uses its product packs to point to its online activities, says Tibrewala.
But when the challenge gets too much, brand managers in many companies cut and paste campaigns and activities offline on to a social media platform, whether it is appropriate or not. They even choose their social media platform more by default than by design.
Broadcast Yourself
Youtube’s tagline was probably not meant for brand managers as much as it was for ordinary netizens. Yet, a large number of companies mess it up by pushing out one-sided communication in the name of social media marketing.
Pushkar Sane, global head of social marketing practice at Starcom Mediavest Group, a global media services agency, says brand managers couldn’t do worse than broadcasting on social media: “Marketers love their own voice. It’s all about I, me, myself, the brand; never about consumers. They talk to consumers rather than converse with them, when social media is all about having two-way conversations. How many times did a brand become your friend on Facebook?”
You have only to search for some of the top brands on Twitter to see one-way communication at work. Churning out 140-character information nuggets about products or companies takes neither the time nor the effort that is required to engage customers in conversations or to even listen. Lalwani says it’s important for companies to listen: “The reason social media is so important is because it is a platform where people talk about their lives so freely. Their experiences with products and services are also a part of their lives and they talk about that too.”
Predictably, companies claim they have no time or resources. But things can be done with little resources too. Starbucks uses a relatively small social media team of six and has one of the highest engagement scores among 100 top brands. Toyota, relatively new to the social media arena, launched its YouTube channel in March 2008 and a Twitter profile in April 2008. Yet, with a team of just three people, Toyota was able to achieve an impressive engagement score across multiple channels.
There are rich insights for businesses that care to listen to their customers on social media. Research that would cost a lot and yield very little qualitative information has some competition from the real-life learning that comes directly from customers. Rajesh Lalwani explains how directly useful social media is for the customer and the company. “Facebook and Twitter, for example, are great connection platforms. However, when a customer wants to make a purchase decision, blogs and forums.
often provide the answer. And it is easy enough for brand managers to scour relevant blogs and forums and see what customers are saying about them,” says Lalwani.
Being Too Autocratic
Not so long ago, Nestle apparently posted a request to users asking them not to use variations of its logo as their profile picture. Posts would be deleted, someone from Nestle warned. Users were outraged and asked Nestle not to tell them what to do. The Nestle Facebook managers made things worse by getting outraged themselves and saying it was their page and they set the rules and if users didn’t like it, they could go.
Soon, what started off as a tussle between the food giant and Greenpeace became a free-for-all with consumers jumping into the mix. Greenpeace had created a mock ad of Nestle’s flagship brand, Kit-Kat, alleging that the company’s brands were destroying forests and endangering lives of Orangutans. In reply to this, Nestle asked that its logo not be tampered with, which started the fight.
Nestle recently made a statement saying that it has stopped procuring from suppliers who do not practise sustainable farming. The incident, however, is still a lesson in social media PR and customer communication.
Any company could face negative comments from customers. It is impossible to please everyone all of the time. But handling negativity or criticism by going on the offensive causes more harm than good. Brand managers have quickly learnt that such comments have to be handled with kid gloves. In fact, customers have to often be thanked for giving feedback, not rapped on the knuckles. One of the mandates of the social media consultant or manager within the company, says Lalwani, is to deftly bring the quantum of negative comments down.
4 Indian CEOs Who Are Active On Twitter |
 |
| 1) Anand Mahindra Vice-chairman and MD, Mahindra & Mahindra Following: 35 Followe |
| 2) Swati Piramal Director, Strategic Alliances & Comm., Piramal Healthcare Following: 9 Followers: 1,776 |
| 3) Vijay Mallya Chairman, UB Group Following: 42 Followers: |
| 4) Vineet Nayar CEO, HCL Technologies Following: 15 Fol |
It is not only important to respond, but to respond intelligently and quickly. Kiruba Shankar, CEO of Business Blogging, a company that helps businesses manage their online reputation, says social media is much like running a marathon — it needs to be effectively fast paced.
The speed with which word of mouth can travel on social media has led to the term being rephrased as ‘world of mouth’. A delay in responding to grievances, an apparent sluggishness in addressing a problem, failure to come up with a solution in a transparent manner can all negatively impact a brand today in ways that were never possible before.
Sell, Sell, Sell
Although the ultimate aim of marketers and brand managers is to get more business, they could mess it up by forgetting that people on social media are not merely there to be the recipient of sales. Retail major Shoppers Stop’s page on Facebook looks no different from an e-shopping catalogue.
Tibrewala says that seeing social media as just another marketing tool is a fallacy. “One has to think of it as a communications tool and the brand has to intelligently build its brand communication and weave it into the social fabric of its target market. Instead, brand managers think of it as a campaign.”
We can blame much of the get-rich literature that floods the Internet for colouring everything in shades of marketing. In truth, marketing is just one aspect of the many things that happen on social media — very much like real life. User tolerance for marketing messages has a limit.
One person who handles communication, response, criticism and engagement rather well is the Mahindra Group managing director, Anand Mahindra. With 76,000-plus followers on his Twitter page, he is comfortable and natural while dealing with comments from customers and others. Always responsive and never dismissive, rather than hard selling, he sets just the right tone.
Do One Thing, Say Another
This age of Web 2.0 has brought in a completely new level of transparency. Most consultants agree that social media is going to force companies to be more honest in their campaigns and claims simply because it is so easy for consumers and others to refute their claims.
Well, let us hope so. An unfortunate situation with IT giant HCL, highly acclaimed by the world of management for its unique concept ‘Employee First, Customer Second’, shows how things can go terribly wrong.
Online, employees have ripped apart the tagline and the concept it stands for. A group on Facebook for ‘Employee First Customer Second’ has members trashing the concept. HCL seems to have chosen to remain masterfully silent. “This is a typical example of companies who seem to be happy to respond to the positive but choose to remain silent when there are negative comments,” says Krishna Prasad, chief experience officer at Dentsu Digital.
HCL executives, however, say that such stray incidents do not take away the impact that social media can have. Saurav Adhikari, president and global head of corporate strategy for HCL says that social media has helped in popularising their brand image. “The average age of an HCL employee is 29 years,” says Adhikari. “There was no way of connecting with the young HCL-ite and young IT professionals but through social media. So, yes, social media is very integral for HCL as an organisation that must be connected to the pulse of its increasingly young consumer and employee.”
Language Sprechen Sie Social? |
| Customers are not just talking but talking in a strange new language. Understanding socialese is a whole new challenge and one that has made the new environment online seem more alien than ever. New words are actually being added to dictionaries and style guides like the Associated Press’s Stylebook. In a sense, the jargon keeps many people out, possibly including CEOs and top management of companies who have not had time to grow with social media. Consultants often make a bad situation worse by keeping their clients obfuscated and dependent on them to take any steps in social media. Understandably nervous about saying the wrong thing or looking naïve and technophobic, management may prefer to delegate anything to do with social media to others, often the most tech savvy individual in the company, or to the PR firm. To complicate matters, social media sites all have their own unspoken rules of etiquette. YouTube, for example, is relatively free-for-all and can get outright nasty, while those on Twitter are more careful about how they engage and respond. Facebook also has a variety of styles on its different pages and accounts. LinkedIn, focused on professional networking, has its own rules. These often unspoken norms lend to the site’s atmosphere and environment. Mistakes with these rules can prove costly. |
These and many other incidents have shown that there is little point in being anything but truthful when anyone, particularly a disgruntled employee, can tell it like it is on social
media sites.
Forget The Community
Another way to mess it up is to fail to build or target a community. Gaurav Mishra, CEO of social media consultancy 2020 Social, says, “Companies go wrong when they don’t start with the community. They go wrong when they start with a television commercial and say ‘how do we do social media now?’ If the punch line of a television ad does not connect with the consumer’s lifestyle, passion and interest, it is bound to fail.”
Mishra says that the smarter brand managers start with a community and build around it. “The campaign for Sunsilk Gang of Girls, or the Pepsi Youngistan campaign or Tata Tea’s Jaago Re are all ads that start with a community of young people.”
This year, Pepsi has said it will not do any regular Superbowl television ads (in the US) but will invest in an online project called Refresh, which will be about refreshing the society by providing millions of dollars to fund good ideas, big and small, Mishra adds.
Experts say the danger lies in companies chasing huge numbers but not doing anything to sustain the interest. “There seems to be no longer-term vision,” says Tibrewala.
Mishra points out, however, that Apple is an interesting example of a company not active on social media. “It does not do social media, it does not have a Twitter account, or even a blog. But it does business. It says that the people the company is trying to connect with want creative and high-end designs, and Apple does that with astounding success. The result is the fans are doing the social media marketing for the brand,” says Mishra. Apple, of course, may be an exception and who is to tell what would happen if they were, in fact, active on social media. But perhaps that would be more success than even Apple can handle.
At the end of the day, the one who can tell us all a thing or two about social media is probably Lady Gaga.
With reports from Prasad Sangameshwaran, Sunny Sen, Suneera Tandon and Malabika Sarkar
bweditor at abp dot in
Friday, August 13, 2010
MICROMAX
2008=#20
2010=#3
2012=#_?
Two years back, Micromax was a name heard by few and seen by fewer. Exhibiting a rare example of brilliant innovation combined with common sense, today it rules the world of advertising and has climbed to the number 3 spot in the domestic handset market. What next? by Surbhi Chawla
Of late, the Indian handset market has been flooded with a plethora of indigenous handset brands, which bear the stamp of companies that would have dumbfounded most acclaimed au faits as recently as a year ago. But these so criticised infantile firms have taught the masters of the mobile handset game (read: Nokia, Samsung, Motorola) how to ride the stalking-horse in the face of hell-raising competition. They have been successful in bringing to life the dormant aspirational values of many in the country, offering them “value for money” look-alikes of the best of handsets that the Indian Daddy Warbucks could afford. Their secret — they understand the psyche of the Indian consumer and deliver by “keeping it real fake”.
But as it occurs in many a fairy tale, there are the suitors, but there is just one real prince who walks away with all the glory and honour... and most importantly, wins the hand of the princess! In this race too, there appears to be one real prince for the moment – Micromax. And it is loud about not being a follower of the "keeping it real fake" cult. At present, Micromax offers 34 handsets in the Indian market. According to reports by tech-watchers at IDC, it is the third-largest handset vendor behind Nokia and Samsung. Some rise for a brand in the ghastly cluttered Indian handset market. So far so good. But will this north-bound express train gather greater momentum in the times to come? Some would debate, but considering the pace at which the industry has progressed in the recent past, Micromax may well be on its way to finding its name amongst the top two vendors in the country. According to IDC India, the number of handsets sold in the country touched 100.9 million units during the 12-month period ended June 30, 2009, registering a yoy growth of 6.7%. As the per capita income rises by the day, and as educational reforms make the common Indian more privileged, aspiration levels will rise, thus it will rise the demand for more handsets. In short – Micromax is in for a great ride along with other newbies.
But there is a sharp turn ahead. There’s no denying that Micromax has been the trend-setter in innovations and is well within the range of being considered a contender to grab the silver, but the very economic reason — a high forecast demand leading to natural rise in competition – that apparently guarantees a track-burning growth for the company, may burn its tyres. Says Deepak Kumar, AVP, Research, IDC India: "The number of emerging mobile handset vendors in the Indian market has grown to 26 in Q2 CY2009 and their contribution to overall shipments in terms of units, for the 12-month period ended June 2009, stood at 6.3%. This is in contrast to the count of only 11 emerging vendors, representing a share of 1.2% of overall shipments during the previous twelve-month period (July 2007–June 2008)." Says Vikas Jain, Business Director, Micromax Informatics: “I think our portfolio is nowhere close to being similar to that of any other manufacturer in the market; not even similar to any tier-III manufacturer, forget any tier-I competitor. We have always looked at introducing utility-based elements into the market through our devices and I think the customers are smart enough to understand it. This strategy is the secret to our success.” Adding to the drama, Vishal Sehgal, Co-founder and Director, Lava Mobiles, says: “In a short span of time, our company has captured 6% market share in terms of shipments and has grown so quickly due to the innovation that our products display." Taking innovation one step ahead, Lava recently launched the world's first ABCDE keyboard mobile device (this comes at a time when everyone is hopping onto the QWERTY bandwagon). This clearly gives Lava that "differentiation" edge. Innovation, competition and most importantly, clutter!
Evidently, the market is simply getting over-crowded, especially in the lower and mid-market segments. At the same time, an accelerated evolution of the market is at work, as the rising competition is forcing vendors to offer newer, richer features at attractive price points. Given the situation, the changes we see at Micromax – in order to nullify competitive challenges and retain its spot in the industry – are worth a notable case study and are taken hook, line and sinker out of Igor Ansoff’s product-market expansion strategy matrix. The first is pretty straightforward – trying to sell more products in current markets, through the adoption of a big-bang advertising strategy to drive the brand message through. Micromax has earmarked an advertising budget of Rs.100 crores for 2010. This is humungous by any standards (“We are going to continue to be associated with sports and Bollywood in a big way,” divulges Pratik Seal, Head (Marketing), Micromax, to B&E). The second is to apparently continue to grow in numbers by making the most of the untapped potential of rural India [while strengthening its presence in urban India through the latest product offerings like Q5 Facebook phone, Q7 and even a Windows-based phone, as revealed by company insiders].
The third strategy for long-term dominance adopted by the company is expansion into international markets. In fact, Micromax has already set up shops in Nepal, Sri Lanka and Bangladesh, and is looking forward to launch operations in the Middle-East in August 2010. As company officials say, Africa and Latin America will then follow. Strangely, funding is an issue that is not bothering Micromax at the moment. The company had received funding through the PE route in early 2010, when TA Associates had picked up a little less than 20% stake in Micromax. Naveen Wadhera, Director, TA Associates Advisory, tells B&E: “As a fast-growing, profitable company in a growth industry, Micromax ideally fitted TA’s investment profile. The company’s emergence as a leading mobile handset brand in only 18 months is remarkable. Ours is one of the largest technology investments in India over the past year, and we will provide additional support to ensure the company’s growth." With big ticket overseas organic plans, the funding will sure help.
It is noteworthy that prior to Micromax, Videocon was the only other Indian handset player, which had dared to take a shot at making it big in the international market by bidding for Motorola’s handset division. Though the deal did not materialise, Videocon proved its worth of being called an Indian MNC? Will Micromax too be able to say the same five years down the line?
Going by its track record, this company sure has taken the market by surprise and been a real trendsetter. But then, winning on foreign turf can prove a different ball game altogether. “We had promised to make Micromax a global brand and we will continue to deliver on our promises in the international markets,” avers Rahul Sharma, Executive Director, Micromax.
Amidst tough competition, one aspect that needs attention is how Micromax grew so fast in such a short time. It was not a cake walk. Many are aware that Micromax entered the handset market only two years back, but many don't know that it had already ventured into the distribution business six years before it even thought of betting big on handsets. They already had a B2B business in place, which gave them an automatic exposure to market truths and psychology of the consumers. This helped them understand what the market would desire in their handset. Also, during the time when the four founders – Rajesh Agarwal, Sumeet Arora, Rahul Sharma and Vikas Jain – got together to light the Micromax lamp, there were only five players in the domestic market – Nokia, Motorla, Sony Ericsson, LG and Samsung. "We realised that the mobile market was going to be big and only five players would not be able to address the wants of the entire market," says Sharma of Micromax. Company insiders explain how during one of the meetings, the management was trying to ascertain the mobile eco-system in India. It then realised the chasm — what the consumers wanted and what they were being delivered. For instance, demand for handsets was high in the interior of the country, but lack of electricity supply did not allow the market to accept the product. One of the promoters, during one of his trips to Bihar, learnt that there were areas, which received only 13 hours of electricity supply in an entire month and that people there used LED acid batteries to charge their phones. Agrees Anuj Kumar, Executive Director (South Asia) at Affle: “People in rural India had made a business model out of electricity shortage and would charge people Rs 10 or Rs.20 to charge their handsets.” With these insights, Micromax launched its first device – the X1i, which offered a 30 day battery backup.
At Micromax, the idea, though seemingly clichéd, is to fulfil the unfulfilled by harnessing already available technologies and a little common sense — the remote control mobile device is an example. There was a commercial technology available for manufacturing the universal remote control. Micromax simply used it and integrated into a mobile device. Developing an edge on the distribution front is also what the top honchos at Micromax worked on to succeed in India. The prime reason for this was to reach out to the non-connected rural and smaller locations, which were still untouched by rivals. The company also paid great attention to keep their channel partners pleased, up and running. With the system in place, it was not long when the company entered in the urban market through phones like the Q2, which marked Micromax's entry into the QWERTY category. With an attractive price tag of just Rs.4,000, it became a runaway hit (as at that time Nokia’s QWERTY range started at a price point of Rs.12,000). By changing the rules of the game, Micromax has indeed developed a short term sustainable competitive advantage.
Micromax posted revenues to the tune of Rs.1,600 crores and a net profit of Rs 150 crores in FY2009-10. It plans to increase the sales volume of its handsets from 1 million to 2 million by FY2010-11. It is also working out a plan to increase its distribution presence in the country from 70,000 retail outlets to 100,000 by the end of 2010. Micromax has also set up a manufacturing plant in Baddi in Himachal Pradesh, and is therefore, ready to answer any rule change by the government, which may make manufacturing (by handset vendors) compulsory in India. If innovation and speed-to-market were the only two criteria ruling the industry, one doesn’t need to look far of who has a high probability to takeover the lead in the near future.
Going by its track record, this company sure has taken the market by surprise and been a real trendsetter. But then, winning on foreign turf can prove a different ball game altogether. “We had promised to make Micromax a global brand and we will continue to deliver on our promises in the international markets,” avers Rahul Sharma, Executive Director, Micromax.
Amidst tough competition, one aspect that needs attention is how Micromax grew so fast in such a short time. It was not a cake walk. Many are aware that Micromax entered the handset market only two years back, but many don't know that it had already ventured into the distribution business six years before it even thought of betting big on handsets. They already had a B2B business in place, which gave them an automatic exposure to market truths and psychology of the consumers. This helped them understand what the market would desire in their handset. Also, during the time when the four founders – Rajesh Agarwal, Sumeet Arora, Rahul Sharma and Vikas Jain – got together to light the Micromax lamp, there were only five players in the domestic market – Nokia, Motorla, Sony Ericsson, LG and Samsung. "We realised that the mobile market was going to be big and only five players would not be able to address the wants of the entire market," says Sharma of Micromax. Company insiders explain how during one of the meetings, the management was trying to ascertain the mobile eco-system in India. It then realised the chasm — what the consumers wanted and what they were being delivered. For instance, demand for handsets was high in the interior of the country, but lack of electricity supply did not allow the market to accept the product. One of the promoters, during one of his trips to Bihar, learnt that there were areas, which received only 13 hours of electricity supply in an entire month and that people there used LED acid batteries to charge their phones. Agrees Anuj Kumar, Executive Director (South Asia) at Affle: “People in rural India had made a business model out of electricity shortage and would charge people Rs 10 or Rs.20 to charge their handsets.” With these insights, Micromax launched its first device – the X1i, which offered a 30 day battery backup.
At Micromax, the idea, though seemingly clichéd, is to fulfil the unfulfilled by harnessing already available technologies and a little common sense — the remote control mobile device is an example. There was a commercial technology available for manufacturing the universal remote control. Micromax simply used it and integrated into a mobile device. Developing an edge on the distribution front is also what the top honchos at Micromax worked on to succeed in India. The prime reason for this was to reach out to the non-connected rural and smaller locations, which were still untouched by rivals. The company also paid great attention to keep their channel partners pleased, up and running. With the system in place, it was not long when the company entered in the urban market through phones like the Q2, which marked Micromax's entry into the QWERTY category. With an attractive price tag of just Rs.4,000, it became a runaway hit (as at that time Nokia’s QWERTY range started at a price point of Rs.12,000). By changing the rules of the game, Micromax has indeed developed a short term sustainable competitive advantage.
Micromax posted revenues to the tune of Rs.1,600 crores and a net profit of Rs 150 crores in FY2009-10. It plans to increase the sales volume of its handsets from 1 million to 2 million by FY2010-11. It is also working out a plan to increase its distribution presence in the country from 70,000 retail outlets to 100,000 by the end of 2010. Micromax has also set up a manufacturing plant in Baddi in Himachal Pradesh, and is therefore, ready to answer any rule change by the government, which may make manufacturing (by handset vendors) compulsory in India. If innovation and speed-to-market were the only two criteria ruling the industry, one doesn’t need to look far of who has a high probability to takeover the lead in the near future.
Subscribe to:
Comments (Atom)