A chicken-and-egg conundrum

Harish Bijoor | Updated on December 06, 2012

When the chips are down and the economy grows at 5.2 per cent in GDP terms, what is the marketing impact? How do typical consumers react?

- Raman Bhadra, Hyderabad.

Raman, when the times are tough, the tough get going. The consumer at large is a tough and savvy cookie.

Two trends dominate the FMCG category in typical tough times. The first is frugal use. The eastern mindset of frugality is kicking in with vigour.

Within homes, parents are inculcating the use of less electricity, for a start. The put-off-the-lights-when-you-are-not-there syndrome is big even in relatively affluent middle-class homes. Add to it the trend of using less paste on the toothbrush, making a cake of soap last longer than before, less shampoo per use and sundry attendant points of frugality kick in.

The second trend is a downgrading syndrome. Out here, particularly in the cosmetics category, there is such a syndrome at play when prices are very clearly cheaper. Moving from a Chambor to a Lakme is something that is happening even as you read this. Higher-priced FMCGs are getting bitten by this more than lower-priced categories such as toothpastes. When there is a relatively good and recognised brand that has a price band on offer that is much lower, this tendency kicks in.

When the times are tough, what is the kind of advertising one must use?

- K. C. Mohandas, Thrissoor

Mohan, use aspirational, hope-filled and hope-fuelling pieces of advertising when times are difficult. When the times are tough, one needs positive strokes. These pieces attempt the positive strokes. To an extent I would call it ‘economopause advertising’!

When the economy hits its andropause moment, it needs advertising like this!

What comes first, the product or its retail avatar?

- Shilpa Mehta, Ahmedabad

Shilpa, this is a chicken-and-egg question really.

Times change. Consumers change. Retail formats change. Different things are important at different points of time in the evolution of a market. It is important to remember that the product is the message and the retail format is the medium. The product in many ways is the hero, and the retail format is the way the hero is available to the consumer.

As of today, the product is still the hero in Indian markets. There is, however, a gradual shift of power, especially in modern retail, where the retail format is becoming more and more important than the product. Here, very simply, consumers are moving from brand loyalty to store loyalty.

It works this way: A buyer is actually totally involved with brand Dove. She walks into her big retail outlet and finds it there. This is a perfect match for her. No dissonance here at all. This continues. Till one day when the store decides not to stock Dove, but stocks Palmolive. There is dissonance, but she is unwilling to shift stores just to buy this one missing brand for her shopping basket. She makes a compromise and buys Palmolive. She tries it and is happy. She shifts. The retail outlet has made this happen for Palmolive. The store and the retail chain are, therefore, more important than the brand in this case. This shift is gradual.

As of now it is a game of numbers. Modern retail comprises only 6.7 per cent of total value. As this deepens, the store brand will become more important than the product brand.

Further, marketers who own the product brand are trying to milk the cow that much longer. As long as possible. They too know the importance of the store brand, but they are underplaying it for now. The idea is to milk the power of the product brand as long as possible.

When Indian marketers want to enter overseas markets, what are the dominant hurdles? In the garments sector, for instance.

- Jai Chama, New Delhi

Jai, many hurdles really. Let me list the top three, though. The first one is that of quality. The second is one of consistency. The third is really a belief in brands and the worth of brand labels.

India is a huge country and there are many players in the space of supply. These many players have, over the decades, conveyed a rather “iffy” standard of quality. The yen to meet any price requirement with a product has dealt a deathblow to quality Indian garments. This needs to be corrected first.

In reality, we produce some of the best quality garments in India. But sadly, these come at a price. When a buyer is looking for a lower price, one compromises. This compromise has begun to represent the dominant image of Indian garments’ quality. That's sad. It needs correction.

Consistency is the second big issue. The big complaints are that of the first container load bringing in the best, and the successive ones coming with varying quality and count norms. That's again bad for Indian garments’ brand image. Stringent control of consistency norms is a hurdle to cross again and again and again.

The third key issue is the belief in brands. Brands deliver premiums over time. We need to be ready to invest in brands, at times ahead of the curve of profit delivery. And we need to be patient here. This patience is normally lacking. Another hurdle to cross. And cross fast.

Remember, every year that passes by, and every year that we delay in investing in our own brand names, the process gets more and more expensive.

Cross all these, and you marry Cinderella who is waiting at the other end.

Published on December 06, 2012

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like