The Hindu Business Line : Go beyond FMCG, learn real marketing

Marketers of the future would do well to forget the artificial distinctions between the real marketing-oriented categories and sales-driven ones, and perhaps even the traditional compartments of durables, soft goods and services.

ALTHOUGH the `Not Invented Here' syndrome is still strong, the value of learning from those dissimilar to you is dawning on some managers. If it were not so, there would be no case for the interest in management success stories on a global scale, nor would case histories or cases be a vehicle for conveying concepts as well as practices.

For example, the fountainhead of knowledge in the discipline of marketing has always been assumed to be the consumer of repeat-purchase goods, popularly known as `FMCG.' One reason for this is the sheer power and visibility of brands in our everyday lives. Brands are clearly the building blocks of marketing supremacy and profits, arising from the premium charged over competition. Another reason is the ever-present force of advertising that reminds and coaxes us to consume more — a process that is often the envy of industrial goods marketers, who wish they too could find the magic "pull factor" for their products and brands. Pricing and promotional tactics are also a well-known and frequent part of the marketers' stock-in-trade, so that one might well conclude that classical, textbook marketing only applies fully in the consumer soft goods. In my view, this is a misunderstanding, and arises from a view of the world seen from the marketer's lenses — not the consumer's. Paradoxical as it may seem, it is in these original professional marketing spaces that we find professors and professionals rediscovering the consumer and the myopia Ted Levitt wrote about 40 years ago.

The market has become so much more complicated in the past 15 years that the mental landscape of the marketing manager has altered irreversibly. Gone are the days of easy, derivative or repetitive solutions to sales and marketing issues, based on one's own past successes, or borrowed from the experience of another company elsewhere. The Holy Grail was then with the household and personal consumer product companies. Their methods were held up as examples and followed even in fields as far away as ceramics and paints and cement. The time has come to understand exactly where these examples are useful and where they are not, especially as technologies have evolved and many new ones have emerged.

Consider the following: where do we find the most direct meetings between the ultimate user and the manufacturer? In which categories do we see the maximum scope for direct user feedback on the product, readily and forcefully given, in its actual use conditions? Where, above all, do we find the customer arguing every benefit offered by the product and balancing it with alternatives as well as the value derived — and arrive at the price for a single transaction or a short period? In which products is the cycle from ascertaining the single customer's needs and fulfilling them (or not as the case may be) so short as a few days? Where do we see most instances of worldwide interactive buying and auction pricing amongst suppliers and customers? Where does the customer's experience of the product drive the next level of innovation, and even collaborate in its evolution or formulation? In other words, where do we see the value spiral at its most active? Where do we find key account management, consumer intimacy and relationship building as the most powerful and provable success factors? A couple of minutes spent pondering over these issues would be instructive. It turns out that the answer common to all the above questions is: services and intermediate or producer goods — and definitely not packaged supermarket products, in food and beverages, household cleaning or personal care!

Reflect for a moment on the latter set. The contact between provider and consumer is remote, at two or three removes. It is sporadic and discontinuous, and mediated by the channels of distribution and information. Most important of all, it is impersonal and deals with the "consumer in the aggregate," a composite, conceptual creature, and a statistical average family with 1.8 children and living in a household with 2.5 rooms and so on! Every choice that the marketer makes based on the information derived from such a field is bound to be an approximation, using the lowest common denominator of preference or taste, and ignoring niches unless they are in themselves large enough to be economically worth pursuing. Consider the fate of the textile manufacturer who has to work through a tailor in between and can never keep track of what would be in fashion amongst garment buyers, except by guesswork and experience.

The monumental contribution of FMCG to marketing practice has been through low-cost methods of wide and deep re-distribution through stockists, who were regularly fed in turn by depots. This model is appropriate for almost any other category where the future is clearly in volumes, in wider availability and in reaching out to the consumer where she happened to be.

In this respect whether you were marketing clothes, footwear, wristwatches or fertiliser, the imperatives are similar. One has to contend with a continental size market, over 3,000 towns and half-a-million plus villages, with potential distributed unevenly across geographies and town classes — and states. Strangely enough the answer to such mind-boggling diversity was to simplify the processes to the utmost. One sold and distributed one's products via an existing trade channel. Instead of trying to foist an alien set of rules and procedures, one succeeded by using its innate dynamism, resourcefulness, dependability, informal credit appraisal and collection methods and often an oral or unwritten system of keeping track of things.

Today such methods are often questioned or dismissed as primitive and unprofessional. Everything has to be keyed into a computer or a hand-held device and centrally processed. This deluge of data requires specialists to warehouse them and mine them before anything sensible can be deciphered by the line manager.

The consumer too has changed: in a backlash against mass stereotyping, she is getting away from the big brands. Increasingly it is beginning to look as though the very averaging process and safety of forecasting very large numbers, adopted by the professional marketing giants, is proving counter-productive.

Hence, in my view, the popularity of smaller, niche brands tailored to suit preferences of regional and ethnic groups is emerging all over the world. Possibly, she no longer needs the lightweight, low-involvement products for her peak experiences and can turn her attention to nutrition, fitness and health, hygiene, family and hobbies and other interests. Maybe she is at last beginning to see the choice between two brands of washing powder or lipstick as trivial and not worth labouring over. Perhaps the spread of the eco-friendly movements and the fair trade practice activism, which consciously tries to provide a living wage to, say, the poor farmer in Kenya or Brazil out of the proceeds of the packaged goods sold in the UK or elsewhere, also has had some effect. It might even be that the visible muscle and vocal power of the multinational food grocery store brands is beginning to put off the intelligent consumer.

Discernment is not really a function of college degrees, and once the typical working class consumer also begins to suspect manipulation by the behemoths, the reaction can be swift and telling. After all, she would argue, if these big guys are able to slash prices suddenly by 40-50 per cent and still stay in business, surely this is evidence that they have been ripping us off all the while?

The point to note therefore is that marketing scholars of the future would do well to forget the artificial distinctions between the real marketing-oriented categories and sales driven ones, and perhaps even the traditional compartments of durables, soft goods and services. They all share characteristics that are more obvious in the services and in producer goods, and which all categories will come to share in the years to come, as we deal with an increasingly enlightened and sceptical post-modern consumer.

(The writer is Director, Institute for Financial Management and Research, Chennai)

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