The Hindu Business Line : So, what's cooking in yourcompany?

The now profitable company has just demonstrated that any one of 4 Ps - product, price, promotion or place - can guide your brand into winning ways.

A smart move: TTK Prestige's launch of Smart Kitchens turned out to be a defining moment in the brand's life.

Several years ago, TTK Prestige used to have a visible TV commercial with the line "Jo biwi se kare pyar woh kaisa kare inkar?" It was one of those hard-working commercials showing a friendly dealer advising a young couple who is choosing from amongst various brands of pressure cookers. The bottomline was that if you really loved your wife you would buy her a Prestige pressure cooker! Lots of South Indian houses had Prestige pressure cookers (though we do not have conclusive evidence that those husbands loved their wives) as the brand was dominant in this region. Notwithstanding the fact that the brand was well recognised and well patronised, it struggled for both topline and bottomline growth in the Nineties, and the turn of the century saw the company go into the red. The company, it seemed, was at the crossroads. Franklin D. Roosevelt said, "One thing is sure. We have to do something. We have to do the best we know how at the moment ... if it doesn't turn out right, we can modify it as we go along."

The company did something which turned out to be real smart. It came out with a line extension with a difference. It launched Prestige Smart Kitchen. In hindsight, that could be called a defining moment in the brand's life. It was what could be described as "disruptive thinking" which, if not successful, could have sent the company furiously downhill. Today, with over a 100 franchised outlets and a growth of 30 per cent consistently over the last few years, the now profitable company has just demonstrated that any one of 4 Ps - product, price, promotion or place - can guide your brand into winning ways. And the unlikely hero? The 4th P or distribution! Not glamorous advertising. Not mind boggling price-offs. Not amazing product innovations. But the often unrecognised and largely ignored retail outlet where the consumer bought her pressure cooker.

Boxed at the outlet

Brand managers suffer from a couple of maladies. One is the unshakeable belief that their product is the best thing that has ever happened to the human race. The second is the secure belief that they know everything that needs to be known about their consumer. And yet, as a general rule not enough on-going research happens to map changes in consumer's expectations and experiences with their respective products.

Even less research takes place to understand the feelings of the consumer at the dealer outlet. Research done at the pressure cooker outlets suggested that the outlet was hardly anything to write about. The display was unappetising, at best. The dealer's salesman was often untrained and not infrequently, unfriendly. Transactions tended to be conducted without bills and prices varied, leading customers to believe that dealers lacked transparency. Hardly surprising that even though the consumer had the money, she did not have the desire to browse at the dowdy outlet. In fact, the category's share of the consumer's wallet was shrinking.

Companies, if my observation is right, seem to have a love-hate relationship with their own dealers. Publicly, they profess the value of the dealer and the paramount importance of the dealer to their livelihood. Privately, they fume that the dealer has his own agenda and is only interested in incentives and his earnings from the brand.

The truth, as always, is neither here nor there. Both need each other and yet need to keep watching each other with circumspection and often with trepidation. And rarely, if ever, do marketing managers do anything that will upset the dealer or jeopardise this relationship. In fact, the Japanese took this to another level. I remember, at a meet, the company representatives refused to sit on a raised dais as they said that would indicate (even unconsciously) that they were superior to the dealers! Given this scenario, the seemingly controversial decision of the brand to go the franchisee route for the Smart Kitchen must certainly have raised a few eyebrows.

Lowering entry barriers

The pressure cooker industry suffers from low entry barriers. As a consequence, there is the small matter of 250 brands in the market! Interestingly, Prestige has used this same strategy to get franchisees in. It ensured that the initial investment was much lower than other categories which were probably more high-profile, like apparel. The outlets too were much smaller, anywhere between 300 sq ft and 600 sq ft. Franchisees were chosen who would be hands-on, rather than investors. Care was taken to choose people from outside the industry, lest they bring their own pet industry biases and baggage. In order not to upset the dealer (who was already champing at the bit), further franchises were opened in non-traditional outlets away from existing dealer outlets which in turn kept the costs low. The company also remembered that customers did not want to travel more than four km to buy pressure cookers (another research finding)! The prices were MRP at Smart Kitchens, which meant that they were usually higher than at the dealer outlets.

The franchisees and the dealers helped each other's cause and sales albeit unwillingly. The Smart Kitchen outlet was able to display the entire range of Prestige products for which the dealer had neither the inclination nor the space. People browsed at the Smart Kitchen and sometimes ended up actually buying the product at the nearby dealer outlet where the dealer gave them the satisfaction of haggling and bringing the price down. So the company and the dealer were happy. Obviously, the franchisees are happy as well because the payback period for the investment is not too long. The franchisees have now moved to the smaller towns from the metros and from the South to even the distant East. And what seemed to be a move fraught with danger for the company as it seemed sure to upset the dealer's apple cart is now getting grudging acceptance if not muted approval from some of the dealers at least, as they are seeing a business opportunity in becoming franchisees now.

Cooking a meal for rural India

The potential of rural India is well documented and brands that crack this market are those who will make their investors and shareholders happy. And within the category of pressure cookers the reality is that 90 per cent of urban India already owns a pressure cooker whilst barely 22 per cent of rural India owns a pressure cooker.

Whilst the urban market will gain from upgrading, additional pressure cookers and emergence of new households is the great opportunity in rural India. And TTK seems to have a model in place for this vast market. The outlet in rural markets is a scaled-down version of its urban counterpart which will stock other TTK products as well in addition to the kitchenware range. The business model is unique as it involves NGOs and self-help groups. The initial investment will be by the company while the management will be by NGOs. This to me seems an interesting private non-profit partnership as against a few others like public-private partnerships who seem to be having teething problems to put it mildly.

There are a few learnings from this new retail format of TTK that are worth considering.

Are we analysing the "problems" faced by consumers with our brand or at our outlet? Simple observation of consumer behaviour can lead to rewarding insights.

In every consumer problem with the brand lies a marketing opportunity.

Progress cannot happen without change. For change to take place, don't just rely on advertising or the agency. Creativity can do only so much. The change can happen at the distribution point as well.

Sometimes, the fear of consequences can prevent us from action. Problems cannot be brushed under the carpet, nor will they disappear. Calculated actions can and will yield results.

Nothing works like success. It can handle anything. Even criticism!

So, what's cooking in your company?

(Ramanujam Sridhar is the CEO of Brand-comm.)

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