The Transient Competitive Landscape- Competing with the UCOs

Marketers need to bring out the telescopes and search for UCOs (Unforeseen Competitors) far beyond their current horizons. Why Unforeseen? Because companies are not likely to know what or who they are searching for. In today’s VUCA world, competition is not solid ground which you can map, study and attack, but it is instead a world of shifting sands where advantages are transient and the opponent unknown. The basis of marketing strategy has always been about defining and understanding your target customers. Today increasingly the basis of survival strategy is also about finding your target competitors. Or at least locating the source of potential competition. But of course this is easier said than done.

In a world where shorter product life cycles and transient competitive advantage are becoming the norm, competitive strategy is no longer a regular game of chess with long standing opponents. It is more like relay chess where you start off with one competitor and a well thought out strategy but suddenly after a few rounds the competitor changes and so do the rules of the game.

Traditionally companies focused on honing their competitive advantage over the long term and using it to satisfy customers better than competition. Today long term competitive advantage could be looked at as an oxymoron in some cases, because in order to have a sustained competitive advantage you may need to keep changing your competitive advantage. Your initial advantage could be bettered by someone else in a short span of time or worse become redundant. Besides being nimble enough to anticipate and counter competitive moves, companies need to be somewhat paranoid and watchful to spot future completion which could turn the whole game around. When they fail to recognize the threat by players outside their own industries/ecosystems, they carve the path for their demise.  A good illustration of this is given by the hard drive manufacturers. While they focused on making better storage products, cloud storage companies like DropBox came and conquered the file storage and sharing business.

  Another oft cited example is Kodak, which for years had an edge in chemical and film technology which it leveraged to dominate the camera and film market but when film itself became redundant being the best in film did not help Kodak survive. That competitive advantage held strong only against film competitors and traditional camera manufacturers. Instead of focusing on the consumer need for capturing storing and sharing images, Kodak focused only on strengthening their original competitive advantage even though the advantage itself was losing relevance. The death blow came from the digital and online players who Kodak had technically not considered their competition.

Today the distinction between industries is even more complex and blurred. So if we look at the smartphone manufacturers, who do you think should perceive them as competition? Certainly all mobile handset manufacturers but also makers of watches, cameras, computers, music players, TV and some more. The mobile handset companies are closely watching each other, the digital camera companies are already too late, and the rest need to add/modify their competitive advantage if they wish to stay in the game.

The concept of defining your market basis customer needs and not on the basis of your product/service is not new. Marketing Myopia propounded by Levitt as far back as the 60’s first brought to the fore this lesson. He highlighted that for companies to ensure continued evolution, they must look for growth opportunities and not growth industries. The basis for strategy has to be customers’ needs and desires and not the presumed longevity of their products.bOther frameworks like Vulnerability analysis also urged companies to identify the key underpinnings of their business and plan for disruptive forces which could alter or shake these underpinnings. More recently Blue ocean strategy focused on redefining industries and recreating the value curves.

Building further on these concepts, Rita Mc Garth brought the spotlight on transient competitive advantage highlighting that in a world where a competitive advantage often evaporates in less than a year, companies can’t afford to spend time crafting a single long-term strategy. To stay ahead, they need to constantly start new strategic initiatives, building and exploiting many transient competitive advantages at once.

If we look at the automobile industry today, competitive threats are emerging from online aggregators like Uber and Ola. They also face competition from alternate vehicles, public transport and car pooling. Recognizing that its focus should be enhancing mobility and convenience for customers rather than selling cars, Volkswagen launched a new digital business division (MOIA) in December 2016, to take on services such as Uber, by catering for customers who prefer to pay for use rather than own a vehicle. It plans to offer on-demand shuttle services in 2017. Earlier in 2016, VW had invested in ride-hailing business Gett. And VW is not the only one to go beyond selling cars. Daimler and BMW had already initiated their own car sharing operations. In a recent article in Fortune.com, VW Chief Executive Matthias Mueller was quoted as saying that even though not everyone will still own a car in future, MOIA can help make everyone a customer of VW in some way or another. Recently there were also talks about a possible VW collaboration with Uber.

So Uber which is not part of the automobile industry and till very recently was not even a dot on the competitive landscape for VW, has now in a short span of time emerged as a key competitor and possibly also a collaborator. Technology firms like Google and Apple are also now an intrinsic part of the competitor/collaborative landscape for automobile companies.

Banks today face competition not only from other financial institutions but also from retailers offering easy payment and financing options, digital wallets/payment apps, and mobile service providers. Airtel Payments Bank launched on the back of the Airtel telecom network in India, plans to develop a pan-India banking network and digital payments ecosystem. Though Payments Banks by definition will have a limited scope of activities, they would still be a challenge for the traditional banks. Given Airtel’s reach, it can serve customers with significantly lower costs, which traditional banks may not be able to compete with.

So banks are doing what Rita Mc Garth has advised, developing multiple transient competitive advantages. State Bank of India (SBI) is taking on mobile wallet player Paytm with their own payment app. Kotak Mahindra bank Ltd. went with the philosophy of ‘when you can’t beat them, join them’, by tying up with Bharti Airtel Ltd. in an 80:20 joint venture to form the Airtel Payments Bank, turning a potential competitor into a collaborator and ramping up their own competitive advantage in the process.

As pointed out by Dawson, Hirt and Scanlan (McKinsey Quarterly, March 2016), companies can no longer survive by relying on existing barriers to entry like infrastructure requirements or regulatory protection. User demand can bring about changes in the regulatory framework, competitors can share expensive infrastructure, or simply sidestep the need by developing alternate means of producing and delivering value to consumers.

To compete successfully in a world of transient competitive advantage firms have to be willing to let go of the advantages which led them to success and discover newer sources of differentiation and value addition to the customer. Clinging onto past strengths when they are no longer relevant will lead to fighting a losing battle. It would be akin to fighting with swords against machine guns. The strategies which led the Mughals to success in conquering large part of India failed against the European invaders. With new competition come new rules and quicker the firms are to adapt and evolve and shed their old skins, the higher would be their chances of success.

A company like Nokia which clung onto its strategy in the mobile handset business for too long, caved in completely and moved from being market leader to a has-been, in virtually no time at all. However, they did eventually change strategy and jettisoned the telecom handset business where they had lost competitive advantage, and focused instead on the telecom network service business. In 2012 Nokia bought back half of Nokia Siemens Networks and subsequently also purchased its competitor Alcatel-Lucent, to become one of the world’s largest telecom network service providers. IBM has over the years transformed from a leader in the computer hardware space to completely focus on software and on demand services. Xerox once synonymous with photocopying has developed into an information management and communications company.

As cited earlier, on demand storage service providers like Dropbox had displaced the hard drive storage companies. The new industry grew rapidly and today it has an estimated 100+ players. However as per Gartner’s Magic Quadrant report (2016), 70% of EFSS (enterprise file synchronization and sharing) vendors will cease to exist by 2018, and the 30% that survive would do so in a new avatar providing providing support to digital workplaces or modernizing corporate data infrastructures.

When the strength of the competitive advantage reduces as competitors catch up, the firm needs to jump ahead by innovating, redesigning or reconfiguring its competitive advantage. In case the competitive advantage becomes redundant then the firm needs to jettison it and move onto focus on alternate sources of value which may or may not be from the same industry.

Successful disruptive entrepreneurs have often opined that just as they spelled the end of some traditional products/services with their innovations, they also expect to be hit in the future by unknown or unforeseen potential competitors. How then do we spot potential competition and redraw our competitive advantage?

Competition can only step in if there are value gaps for the customer. So the best source of spotting potential competition is the customer. You may be vulnerable to competitors from outside your industry/ eco-system when gaps exist in how the consumer buys, consumes and experiences your product/service, or the context/technology /consumer preferences evolve, leading to such gaps. Minor cracks in the customer landscape are sometimes all the signal the marketers are likely to get. It depends on the marketer whether these cracks are papered over, or whether a new foundation is developed to solve the root problem. Cracks could be a result of varying factors like information asymmetry, lack of customized options, cost or time issues due to intermediaries, integration with related products and services, flexibility in usage, etc. If the marketers are in tune with the customer’s pulse, they will be able to anticipate potential gaps and take steps to rejig the value delivery to the customer.

To conclude, marketers definitely need to get out the telescopes and periodically scan the far skies for UCOs (unforeseen competitors) but most importantly they need to keep a magnifying glass on the customer and zero in on any cracks before the UCOs can use them as an entry point.

GI Diaries : 8 steps for Effective GI Branding

Many people in India have heard about Chanderi Sarees, Darjeeling Tea, Bikaneri Bhujiya, Mysores Silk, Jaipur Blue Pottery , Naga Mircha, Channapatna Toys and  Kota Doria sarees. But how many have heard of Bastar Iron Craft,  Kannauj Perfume, Khasi Mandarin, Nanjanagud Banana, Aranmula Kannadi and Kasaragod Sarees? The commonality among these is that all of them are part of the more than 230 Geographical Indication (GI) products registered in India. The difference is that while the first set of products are widely known and purchased beyond their home states and in some cases even outside India, the second list of products languishes in comparative anonymity known mostly in the limited region where these are produced/ manufactured.

Very simply put, Geographical Indications (GI) are signs that aid in the identification of a particular product coming from a specific geographical location possessing certain unique qualities or reputation due to such origin.

India is a country with varied geography and  diverse traditions and skills, as a result of which there is a plethora of geographically unique products across agricultural, handicrafts, manufactured goods and textiles. Protection and promotion of geographical indication products helps nurture and strengthen key skills and traditions while at the same time supporting and developing entire communities.

Over the past decade or so significant steps have been taken to increase awareness for GI amongst producers/ artisans etc, leading to registration of a large number of GIs. However, the logical follow up of leveraging the GI registration as a well thought  out  marketing strategy  has not been done in most cases. Further in many instances the producers and artisans are not well organized and have very little access to information and resources.

While production capacity and market potential vary across the different products, there are some common steps which need to be taken to leverage GI as a branding tool. These are outlined below:

1)      Proper organization structure and control

o   GI enablers should be identified/established for each GI. The GI enablers could be an association comprising representatives from producer groups, traders, government and NGOs, or it could be a government body/ NGO active in that field.

o   Such a body, should be set up as a corporate structure with formal management systems.

o   The GI Enabler cell should function as a coordinating body, channeling all marketing efforts, monitoring quality compliance, helping the community avail relevant government schemes and ensuring speedy registration of all genuine producers/artisans/ farmers under authorised users.

2)      Development of a GI as an Endorser Brand

o   A small seal which says “original” and gives the GI number can be introduced as an easy identification and assurance mark common to all GI products.

o   The GI number on the seal would be the unique number of each authorized user so the product can be traced to its origin. This will also make counterfeiting difficult.

o   A single mark would be easy to communicate at a broader level to educate consumers and create awareness about the GI concept.

3)      Well recognized logos and symbols

o   Create and register logos for selected GI products with moderate to large market potential to provide them a distinct visual identity for easy recognition and differentiation from spurious or competing brands.

o   Strict guidelines need to be specified on use of the logo.

o   Examples- In Kota Doria Sarees the logo is woven at one end of the saree. In Arnamula Kannady mirrors, a hologram for the logo is placed at the bottom, while for Kashmir Pashmina special type of secure authentication fusion labels are attached to the product.

4)      Improving production process

o   Set up Common Facilities Centres (CFC) in each of the hubs for identified GI products, as has already been done in a few cases. CFCs to have space and provision for pre/post processes linked to production. Expensive machines required for certain processes can be provided at CFCs to be used on chargeable basis.

o    Provide technical and other expert assistance to producer groups to improve efficiency, productivity and quality. Examples of such interventions include upgradation in loom designs/ introduction of metal beams at Chanderi, mechanization of pre-processes at Chennapatna, mobile fibre extraction machine for coir and improved variety of organic Navarra rice seeds.

o    Improvements in product/packaging and quality through R&D or interaction with experts

5)      Strict quality control and tracking

o   A well established quality control process should be made a pre-requisite to filing the GI application.

o   Checking quality of production can best be done in the form of self audit by producer groups but in addition a further layer of sample checks should also be added by designated quality team- which could be a body of representatives from producer groups and government and technical experts or only government or 3^rd party certification agencies.

o In exhibitions organized by the government or government bodies, that exhibitors who claim to be selling handloom/ handicraft/ GI products should be verified and documents / certifications checked to prevent misrepresentation of powerloom/machine made products.

6)      Investment in building brand awareness and market expansion

o   Market Development Funds should initially come from the government and later can be supplemented by contributions from producers.

o   Awareness about the GI concept and why consumers should look for the GI seal, needs to be built through offline and online campaigns

o   The GI brand name and logo needs to be registered in key international markets for select products.

o   Database on exporters and producers for specific product categories need to be accessible to international buyers. The tracking system for checking GI holder/authorised user details should  be highlighted for international buyers.

o   Websites for each specific GI product category, need to be created

o   An Umbrella GI Portal should link all individual GI websites.

o   Mass media campaigns should be designed to reach the target segment in identified markets where the GI products have significant and / or growing sales.

o   The State government should identify 1 or 2 GI products for focused promotion for a two year period.

o   Each state should organize one annual GI focused exhibition/ buyer-seller meets for all GI products in their state.

o   State as well as Central Government need to ensure adequate participation of existing GI producers/ authorised users in key National Exhibitions.

7)      Focus on building customer engagement and brand associations in addition to awareness

o   The GI enabler cell needs to develop catalogues for showcasing their range sharing its legacy and giving information about its unique features.

o   Key influencers for different categories can be identified like chefs for agricultural/ food items, top fashion designers/ models/ film stars for handlooms and garments, well-known names for handicrafts sector or big buyers or NGOs or famous artistes of that state could be leveraged to promote the cause of different types of artisans and their craft. This will have a significant impact on the aspirational as well as quality and credibility associations of the GI brand.

o   E-commerce provides needs to be  leveraged much more as it has huge potential to enhance reach and reduce the layers of middlemen.

o   The GI websites and portals should share personal stories of artisans and their families- these could range from human interest stories of overcoming hardships, or stories around the tradition or community.

o   Tags with artisan names and photos can also be added to each product to create interest beyond the functional appeal.

o   Crafts parks can be used for organizing theme based events/ shows/ exhibitions/ workshops and can also be leveraged for tourism.

  

8)      Steps for legal protection

o  Government Circular should be issued from the concerned State Government informing trader and retailers that punitive legal action will be taken against them if they are found to keep and sell any ineligible product under the GI name of the product.

o   Retailer Workshops -small localized workshops need to be conducted with retailers to create awareness about GI and why they should trade only in products made by authorized users.

o   Leaflets and flyers- can be distributed to trade channel members by producer groups informing them abut legal implications of selling a GI product which is not sourced from authorized users or the specified region.

The Big Burn E-Commerce Game- Sustainable Business?

E-commerce is the buzzword today and e-tailers (or the more politically collect marketplace/ aggregators) are the cynosure of all eyes, the darlings of venture capitalists, the public and very often the media. And all for good reason. After all e-commerce is here to stay and grow, penetration of internet and smartphones is at an all time high and still increasing, and people are shopping online like ever before. However this silver cloud does have a black lining! Though one can quibble mathematically and economically how much is too much, the fact remains that the obscenely high valuations and spends of these businesses do not need a management guru to point out that it is multiple times of what would normally be acceptable as per traditional business norms. One may argue that these are disruptive and market driving forces and therefore traditional rules of business would not apply. Fair enough. But there still has to be some sound fundamentals guiding the business strategy.

There are many issues which can lead us to question the sustainability of this whole new game. But the one which is most telling for me is the use of the term “Burn” to connote the marketing expenditure undertaken by the e-tailers/aggregators et al. When these firms undertake a major advertising blitz, they do not call it ad spend or investment in brand building but instead use the terms “TV burn”, “internet burn” etc. When they offer discounts (which is almost all the time) it is not promotional expenditure but “promo burn”! It is very interesting this use of the term burn and is a very telling revelation of what they are actually doing. Not making a sound investment with a certain expectation of returns but merely burning money to create light and smoke and nothing much to expect in return. The bigger the fire the better to outshine competitors with! Remember how in colloquial language we use the term “burn money” to connote sheer wastage!! You may well question then, is advertising/promotional expenditure a wastage? Of course not? But unwarranted, disproportionate advertising or promotions without a commensurate return on expenditure could well be! In the initial stage of the brand life cycle there is definitely a need to create awareness and incur marketing expenditure to build the brand. It helps to create hype and awareness and gain customers and market penetration. The sales will be low in the initial stage and therefore revenue is likely to be less than expenditure with profits non-existent or negative. But sound business also entails that there should be some proportion and time limit to this revenue-expenditure gap. Further not only should results be measured in terms of absolutes of customer acquisition, GMV, etc, but equally importantly the efficiency of spends needs to be tracked along with incremental gain per additional rupee spent.

The next question is that if short term losses can help expand the market and grow the business exponentially then why is it not a good thing? And further if promotions and discounts benefit customers, why should we question it? Sure, short term losses for longer term gain is a valid strategy but then short term needs to be short term and should not become the default business model. Sure, discounts to customers and rock bottom prices are great for customers but is it great for sound business?

Let us go back to the very fundamentals of business and marketing strategy. Businesses need to create value for customers and thereby for the organizations and various stakeholders. If value is only artificially created through price discounts without lowering of costs, this value is not sustainable. Consider the launch of Reliance Mobile which changed the entire game and brought mobile telephony at unheard of price points making it affordable to the masses and expanding the market exponentially in the process. the rock bottom prices offered here were a result of an entirely different sourcing, distribution and marketing approach which combined with the immense scale expectations made the penetrative pricing possible and sustainable.  Now consider Kingfisher Airlines which launched a low cost Airline with low penetrative pricing but high value added services. Low prices without back end strategy to lower costs cannot fly for long and nor did Kingfisher!

The aim of the  e-tailers is to get more and more customers and sell more and more and ramp up their gross merchandise value (GMV), but the more they sell, the more would be the losses they make and that will eventually hurt the business even if is someone else’s money. If the e-tailers are able to bring about greater efficiency through their scale and technology, lower logistics cost, build low cost suppliers, change the value chain by eliminating non value added processes, and then as a result of the savings thus achieved they are able to offer significantly lower prices to the consumers it will be a win-win for all. But otherwise, it is only a distortion of the ecosystem artificially kept alive and in the long run it will be a lose-all because it will impact the viability not only of the e-tailers but also of other competitors and manufacturers.  Combined losses for e-commerce companies such as Flipkart Ltd, Snapdeal (Jasper Infotech Pvt. Ltd) and Paytm (One97 Communications Pvt. Ltd) last year stood at $557 million, as per a recent report released by CII and Deloitte Touche Tohmatsu India LLP (Mint, 25/4/16).

In international business dumping as a pricing strategy is frowned upon and countries can legitimately take steps to block dumping (pricing of goods below cost of production). What the new crop of e-tailers/ aggregators are doing is akin to dumping. The aim seems to be to kill competition so that the firm who can hold out the longest amongst mounting losses may survive and once this bloodbath is over, the profits can start but perhaps only for one or two large firms because the smaller ones would have perhaps gone down under by then. What then happens to free competition and consumer choice?

The fundamental goal of marketing is to provide value to the customer. That has to be the focus of the business- how to truly differentiate and create value in a sustainable manner. Doing it better than competition will help create differentiation and preference but killing competition cannot be the sole aim of a “for profit” business. If the chosen strategy is to be price competitive, then lowering cost and improving efficiency has to be the focus.

The recent government policy preventing aggregators from price interference is perhaps not such a bad idea. If we are advocates of market forces, let the market forces rule. Why use  the “burn money power” to distort the market completely. Of course online aggregators like mall owners in the offline world, need to have some say and free hand in promoting their market place and offering consumer promos to drive footfall, but then this cannot be a disguise for a distorted business model! Ultimately only true long term value creation for the customer, the marketplace and the sellers/manufacturers is what will drive the growth.

Marketing of Festivals- Penetration and Adoption across Cultures

Festivals and traditions can be looked upon as products/concepts which can be marketed. In fact this category has seen rapid penetration and adoption across cultures and geographies.  If we look at the Indian consumer alone, the last few years have seen widespread adoption of a number of festivals/ traditions - those which originated outside India as well as those which originated within India but remained confined to a particular region/religion for a long time.

Let’s start with the simple ones first.  The celebration of various days dedicated to different members of the family aka Fathers Day, Mothers Day, Daughters Day and so on, were really took flight as a result of marketing efforts initially spearheaded by greeting card companies to multiply consumption occasions for their products. Gradually it expanded from merely wishing your loved ones, to gifting them suitable tokens of your love and affection, enthusiastically encouraged by a host of marketers offering their products and services at a special discount for the special occasion.

Next, let’s look at the more traditional festivals. Each region in India has their own traditions and festivals and though all of us studied about these in school, we continued observing our own region/ religion’s traditions and festivals in our homes. At best one would wish a friend or neighbour on their festivals or partake the sweets they sent across. However, today these lines between different traditions are getting blurred, at least in the bigger cities.  Non Christian households also setting up Christmas trees at home, and the concept of Santa giving gifts to children is very popular. Many children of non-Hindu families also enjoy Diwali by bursting crackers. The pre-wedding sangeet ceremony of north India has found its way to most households and is now a must have in the wedding functions list in all parts of India including the more traditionally conservative south. The Navaratri celebrations with Dandiya which were earlier confined to the Gujarati Diaspora are now a reverberating social phenomenon all across India.

The festivals highlighted above are those we were already familiar with and have grown up watching either in our neighbourhoods or in Bollywood movies. But even traditions like Halloween which were not much known in India till very recently, and in fact have very little in common with our culture, have seen a rapid acceptance and marketers have taken to Halloween themed events with a gusto!

If we analyze the adoption of festivals, we will find a few common threads- most of these festivals have lent themselves easily to commercialization, with simple homemade traditions being replaced by glitzy packaged offerings which make the celebrations easier to arrange with added fun and easy scalability. Almost all the festivals which have seen rapid penetration or adoption have one or more elements of fun, music, dance, party and gifting. These are occasions which give us a legitimate reason to enjoy and indulge a little bit. Who doesn’t like to party with friends, and who doesn’t like receiving gifts?

 So as soon as the traditional Punjabi ladies sangeet, where the women of the house sat and sang folk songs upgraded to its new millennial version,  where it is not confined only to women and has little to do with traditional folk numbers, it gained popularity because it offered the same fun as a dance party. In fact today the sangeet function IS a big dance party, where you get to dress in your traditional best, dance to the latest numbers with the blessings of the elders and enjoy the added fun of parents, unclejis and auntyjis all joining in, in gay abandon. As it evolved, marketing opportunities and expenses associated with the sangeet ceremony, increased. So hiring a DJ, booking a dance floor, themed decorations, choreographers for the family members are the minimum everyone does and the more well to do page 3 varieties have the added element of celebrity performance thrown in. While in itself the sangeet ceremony has enough to make it popular, when aided by large scale attractive renditions by Karan Johar and Sooraj Bharjatiya, it is quick to spread its mass appeal. Once the spark is there many marketers of products and services like choreographers, event planners, dress designers and the like, help fan the fire by adding layers to the core product benefit making it an augmented experience.

So it is with Christmas- a chance to party and dress up and open surprise gifts,  and Dandiya- all night fun with social sanction, and Halloween- another excuse to party with a novel theme and an opportunity to indulge in a bit of fantasy and creativity. Nothing wrong with these motives after all festivals are meant to be celebrated and provide a much needed release from the pressures and worries of everyday life. As we say in marketing theory, marketers don’t create the need but can create demand for a particular product/service. The underlying need in this case belong mostly to the category of social needs- the need for love and belonging in relation to family and friends but as the layers add up these festivals also serve the esteem needs of being admired and looked upto by others.  But a key point to be noted here is that the festivals which gain popularity and acceptance are the ones which are centred around the Joie de Vivre. Their key benefits are spreading warmth and good cheer and the joy of togetherness. Those festivals and traditions which are to do with self control or abstinence still remain mostly confined to their respective communities. Christmas is known to almost everyone and now celebrated to some extent by many but awareness of Lent is very limited across the diverse communities in India.

Since festivals are individual and community events, who then markets these festivals? Festivals are not owned by any company or organization. Even the religious affiliation in these cases, have not played a role in their expanding popularity. The interesting thing about the wider adoption is that the festivities and traditions are adopted without their associated cultural or religious significance. So a celebration of Christmas by non Christians, is merely a celebration of the Christmas spirit and has nothing to do with belief in Jesus, and similarity the participation in Dandiya events is a participation in the celebration without a uniform observance of religious significance of Navaratri by all. Those who believe, link their beliefs to the celebrations and those who don’t celebrate simply the spirit of the festival. So we come back to the question of who then markets these festivals, who promotes their penetration and adoption? The answer of course is a multi pronged one. The festival itself is not marketed but products, services, events and icons associated with the festivals are marketed. These in turn add to the appeal and visibility of the festival itself and the festival becomes more popular, the associated activities and scope for commercialization increases and the cycle reinforces itself. There is no organized effort at promotion of the festival per se. No marketing communication is done extolling people to celebrate these festivals, but there is the marketing of related events, shopping extravaganzas, special dresses and gifts, promotion of consumer goods on the  theme of the festival which create and enhance a marketing eco system, enhancing visibility and attractiveness of the festival and helping to increase its adoption across wider consumer segments.

In Brands I Trust......Issues of Ethical and Socially Responsible Brand Behaviour.

Every time there is a major controversy over serious quality issues related to health, safety or performance of well known brands, high decibel debates are triggered on responsible marketing and ethical and legal issues involving consumer interests. The controversies related to lead content of Maggie noodles, Volkswagon emission norms, pesticides in Coke, worms in Cadbury's, Honda and GM car recalls etc being cases in point. These are serious issues with immediate health and safety impact and therefore get highlighted. But if one were to pause and look around at brand activities and communication on an everyday basis one can find many instances of questionable practices being adopted and espoused by marketers. Questionable not so much from the point of view of illegality but questionable in respect of what responsible brand behaviour needs to be.

Well known brands we are familiar with and specially those which are marketed by well established domestic and multi-national companies usually inspire trust from the consumers.  One of the advantages of having a strong brand is the desired associations of trust and belief in the brand. But is this trust liable to misuse? Do brands get tempted to stray outside the bounds of strictly ethical marketing behaviour? Do all marketers consciously look at the consequences of their messaging or communication on sections of society?

Consumers tend to be cautious when dealing with claims made by fly- by- night operators and local brands, often not accepting them at face value and reacting with a healthy dose of scepticism. But when well established brands from reputed companies with enduring and strong customer relationships tread the grey area of unethical behaviour, the consumers are more vulnerable because there is implicit trust in these brands and therefore a more ready acceptance and adoption of their messaging. When brands take advantage of their strong position and reputation to claim something that is not true or to propagate social behaviour which may not be very desirable, it is a serious issue and one which is not often highlighted.

It is not always easy to define what constitutes responsible or ethical behaviour. Ethics is often a grey zone and one that is constantly evolving. Ethical marketing has been defined by The American Marketing Association’s (AMA) as follows-

• Standards of marketing decision making based on "what is right" and "what is wrong," and emanating from our religious heritage and our traditions of social, political, and economic freedom. (legislation definition)

•    The use of moral codes, values, and standards to determine whether marketing actions are good or evil, right or wrong. Often standards are based on professional or association codes of ethics. (environments definition)

Basically marketing ethics can be looked upon as a philosophy or an approach which encompasses honesty, fairness, and responsibility in the context of desired norms of behaviour or social practices.

Since unethical may not be illegal, brands have not been averse to using unethical means to gain/ strengthen their market position. Some of the ways in which brands can be unethical or irresponsible include the following-

1)      Making mis-leading claims

The recent Volkswagon reports of misleading claims and manipulation of emission norms tests, has created a lot of news. Here is a big organization with stellar brands deliberately making false claims to push their products in the market. Consumers across social media commented on how shocked they were – not so much about the fact that such a thing happened but more that it was a brand like Volkswagon which did it!

Another instance is that of Tide Naturals. In 2010, a case was filed against Tide Naturals for making claims that its washing powder contained Lemon and Sandalwood (chandan) when it fact it contained only the fragrance. The first instinctive reaction of a consumer is that Tide is a well known brand from a company like P&G therefore they would not cheat customers. But the tragedy is that, this in fact is what they seem to have set out to do. Well perhaps cheat is too strong a word but one can certainly say that the claims made by the company were misleading. Their advertisement had shots of chandan being ground and slices of lime which all become the pack at the end suggesting that these were key ingredients of the product. The claim made on the Tide pack was “the freshness of lemon and chandan”. The name “Tide Naturals’ also indicates that the product has natural ingredients. Put together these elements clearly implied that the Tide powder contained natural lemon and chandan. The Madras high court then asked Procter and Gamble Home Products Ltd (P&G) to modify its Tide Natural advertisement as it was misleading consumers with the claim that the detergent contains natural ingredients. As a result P&G had to add a disclaimer to the pack stating,” Does Not Contain Lemon and Chandan’! So the legal aspect was resolved. But the bigger concern here is the ethical issue. The company seems to have deliberately created an ad which would lead to an interpretation of natural ingredients in the pack. They did not state freshness like that of lemon and chandan they said freshness of lemon and chandan, the TVC had shots of the actual ingredients and not till the court order forced them to did they state clearly that the product does not contain these ingredients.

 2)      Circumventing laws and guidelines

For years we have seen people in lab coats recommending products ranging from toothpastes and soaps to health drinks, leveraging perceptions of source credibility and expertise to convey the benefits of these products. In India actual doctors are not used in commercials because it is against the law to do so. However Sensodyne from GSK neatly sidestepped the legal provisions and even touted it as a great creative idea. The Sensodyne toothpaste commercial by GSK shows a dentist recommending this brand for sensitive teeth. Since Indian laws do not permit doctors to endorse brands, a young dentist practising in the UK was shown recommending the brand as a solution to sharp pain faced by people with sensitivity issues. Is it illegal? No. At least not in letter of the law, but it is definitely against the spirit of the law and therefore unethical because it is taking advantage of a legal loophole to circumvent a guideline made to safeguard the interests of consumers.

3)      Promoting beliefs/behaviour which is not socially responsible/desirable

Many times in order to promote their points of differentiation or create demand for their product marketers tend to depict social behaviour which may not be very desirable or appropriate or may re-enforce, stereotypical archaic thinking on gender/ familial roles.

Personally I find the Lifebouy advertisement on the theme of “tera sabun slow hai kya?” a little disturbing. Health organizations have worked very hard across the world to educate people that proper washing of hands involves the rubbing action and once must rub soap properly in all directions and then was it off completely. At home mothers try hard to inculcate this habit in children telling them not to rush and to ensure that soap is lathered and rubbed on all sides while washing hands. However the Lifebouy commercial shows a bunch of kids quickly washing their hands in a few seconds and making fun of a little boy who is diligently scrubbing his hands and therefore taking a longer time. They laugh at him asking him if his soap is slow to work? They may have leveraged consumer insight that children look at hand washing as a chore and would rather do it quickly and get away, but is this the right habit we want to inculcate in our children? No matter how good the soap, unless it is properly applied all over, it cannot clean effectively. So why create this push to influence children to wash their hands hurriedly? Can they at this impressionable age determine how quick the wash should be –that it can be just a little quicker than what they do now but not so quick as to not clean properly? To them a quick wash implies a quick wash- take a bit of soap, splash with water and run off!

Another commercial which falls in this category is one of the initial ads for Clinic long and strong ad where a young girl is sad because she cannot have long hair because she has a working mother who cannot spare the time or make the effort for her daughter’s sake! Really? In this day and age, these are the beliefs the brand is propounding? Should little children be brought up believing that their desires will be thwarted if they have working mothers?

These issues may seem trivial at first glance but we must remember that ads while reflecting societal beliefs also play a key role in shaping and influencing these beliefs and therefore brands need to tread very carefully on this terrain. It is understandable that brand managers are under tremendous pressure to deliver results in increasingly competitive markets with they work very hard to gain consumer insights and translate that into competitive advantage. But while they do this it is also important to ensure that the brand stays true and loyal to the consumers interest and does not cross the boundary of ethical and responsible behaviour. A relationship built on false pretensions is likely to be shaken at some point in time.

Global Brands- desi tadka! The localisation route to the Indian consumer market

What comes to mind when you think of Gucci? A Premium Brand? Hi-end fashion? Luxury? Italian? Exclusive? Stylish?

When you visualize a typical Gucci /Armani user- would you think of a rich cool dude/girl  in the city- sophisticated and fashionable?  or would you think of Punjabi rap, small town wanna be cool dudes, and the fields of Punjab as likely setting for the brand imagery? These two pictures will not remain quite so far apart, if you look at what these brands seem to be aiming for, in India.  It’s nice to be a global brand on a pedestal , a brand somewhat alien and out of reach for all but a privileged few. But is it nicer to be an aspirational brand which appeals to a larger number of people? Does it make better business sense to move from being a brand at arms’ length, to a brand which the consumers may want to stretch out for? The latter is the philosophy which many of the luxury brands are now adopting to expand in an emerging market like India.

Search for Gucci or Armani or Audi or Tommy  in You tube and you will find a number of Punjabi rap music  videos.  Among the first to become highly popular was “Gucci Armani” -a new Punjabi song by Simranjeet  Singh (https://www.youtube.com/watch?v=hHmBgWHldO0 ). The lyrics of this song are about a young guy singing about his stylish girlfriend who has expensive shopping habits and is fond of brands like Gucci and Armani. “Gucci Armani De, Kidda De Sonk Marjani De,  Nakhre Us patrani De, Mekya Hun Ta Kudiye Bs Karja”.  (Its Gucci and Armani, look at what she’s prefers, she shows attitude like a queen, I say –Girl! At least stop now!) 

Another popular video “Armani” by Harman Chahal is also notching up the views on youtube and on music channels (https://www.youtube.com/watch?v=6HpUmPaLHAY) . While Simranjeet Singh is shown as a well dressed city guy with an Audi in the background, Harman plays a rural jat farmer (complete with a Sonalika tractor and a tube well in the background) falling for a rich, stylish, modern girl who wears expensive Armani clothes. These videos seem to have worked well making both for the brands as well as the singers  widely popular amongst the Punjabi youth.

 (https://www.youtube.com/watch?v=hHmBgWHldO0 )

(https://www.youtube.com/watch?v=6HpUmPaLHAY)

Italian fashion powerhouses, Giorgio Armani and Gucci are the world’s most coveted designer brands according to a global online survey of 21,000 consumers in 42 countries conducted by ACNielsen in November 2005. Frank Martell, President and CEO, ACNielsen Europe, points out that regardless of where they live, when consumers purchase a Gucci bag or a Giorgio Armani suit they are prepared to pay a premium because they are buying the image the brand represents. (Breaking News, AC Nielsen, March 2006).

So are these brands compromising on their brand image which was their strength and differentiator?

 If we look closely that is not the case at all- At the core, these brands represent exclusive designs, high quality and luxury. None of these are being compromised in an effort to reach a consumer who has the aspirations and the means but possibly lacks the exposure to the Hi fashion brands. Though both the music videos, feature characters which Punjabi youth can relate to, they do not detract from the exclusive and premium association of the brand- since the brand user is shown to be glamourous, and the aspirational aspect for the brand is highlighted. Its not about diluting the brand value and bringing it down on the premium/ style quotient, but about communicating the brand values to the consumer who may have been aware about the brand but did not relate to it and so did not aspire for it. The Nielson report quoted above also states that eleven percent of Indian’s online consumers  already buy  Armani  but 38 percent would buy Armani in the future, if they could afford it. And while nine percent of online Indians already bought Versace, 34 percent aspire to buying Versace in the future (Breaking News, AC Nielsen, March 2006).

While it is relatively easy for multinationals  to tap into an aware  metro consumer more in sync with global consumers in terms of purchase behaviour,  it is the second and third tier cities where the need for localisation based on consumer insight is the highest. Several studies have indicated the growing market potential in the smaller cities and towns. Over the next 15 years, developed economies and emerging-market megacities will account for only one-third of global GDP growth, according to a McKinsey Global Institute report- Urban world: Mapping the economic power of cities. Around 230 of second tier cities not presently among the top 600 urban centers by GDP, will make that list in 2025 (Navigating Asia’s new urban landscape, Mc Kinsey Quarterly, April 2011).  As income and exposure increases in the smaller towns and cities, these consumers are becoming more open to embracing new types of food, fashion and lifestyle products/ services and with a little effort marketers can build long lasting relationships with these consumers.

How should the brand be made to look appealing is more a question of fitting the brand in the socio-cultural context of the target consumer. Should brand appeal be about transcending diverse cultures or should it be about adapting to different cultures? Much has been written about the debate on standardization vs customization of branding strategy. Different brands depending on their brand recognisability and the nature of their product category, adopt varying degrees of customisation. While some brands like Apple are more standardized in all aspects of branding strategy, others like Nestle, follow a more customised approach with local teams having a high degree of functional autonomy on decisions ranging from product development to communication.

The standardized approach does have its benefits especially with a view to maintaining the global brand image and equity, and ensuring transferability of strategies across geographies, to say nothing of the economies of scale which can be better leveraged. Still, it needs to be highlighted that increasingly marketers are finding that the key to moving from acceptability to emotional bonding lies in customisation for the local markets. It’s the local tadka which makes the consumer say “I’m lovin’ it”. It’s the identification and affinity with the brand which can make the difference between a brand user and a brand advocate!

So would a global brand still be global, if we keep adapting and localising our strategy?

That is an important question and one which brand managers need to carefully evaluate while finalising their strategy. While the brand core has to remain the same, the positioning may be tweaked a little, if the stage of development of the market or socio-cultural contexts are very different. Even so, the positioning cannot stray from the core values of the brand. Product development and R&D can follow largely global norms but there must be flexibility in the system to incorporate local market views and sensibilities, and allow for adaptation. Even more important is not to block new product ideas and innovations which stem from the local market conditions, as it is these which very often help the brand to surpass local competition and lead to faster and deeper brand penetration. The other elements of the marketing mix are easier to localize, and these have been effectively used by many brands. The underlying principle behind all such customisations is simply that the brand as defined by its core identity needs to deliver value and become relevant for the local consumer.  MNCs are increasingly recognising the need to have more flexible and entrepreneurial brand teams in emerging markets.

Product adaptations to suit local tastes have proven successful in the fast food segment, with many global brands like Mc Donald’s, Domino’s and Pizza Hut, adding spicy variants, Indian ingredients and  vegetarian options to their Indian menu. But more than taste, brands also have to work at fitting themselves into the consumer lifestyle and consumption habits. Ready to eat packaged frozen foods have adopted the tack of highlighting the variety and fun quotient rather than the convenience to the housewife because that would make her appear to be a lazy caregiver for her family. Pepsi and all its brands have since the very beginning worked hard at establishing a local connect. All said and done even the urban, globally exposed Indian youth connects to a desi “yeh dil maange more” and “thanda matlab coca cola” much more than the universal “Always Coca-cola” or “It’s the real thing”. Sure “Always Coca cola” can be understood across geographies and open happiness is celebrating a universal emotion so these are good examples of communication which can work across diverse cultures. But if it is acceptable and meaningful it does not necessarily make it lovable. Think about it, which of these taglines connected more with you? Which got adapted into everyday usage faster? Which had the greater potential to appeal to the many different India’s within India.

When MTV launched in India in the mid nineties, it’s positioning  and programme content were in tune with the global brand and that seemed to be a sensible approach. After all, the target group for MTV was the global urban Indian Youth who followed western music and many of them were aware of MTV either through their friends and relatives or through travels abroad. MTV was positioned as the cool brand which the westernized Indian could relate to. But was this sufficient for the brand to tap into the potential of the Indian Market? This audience was limited in size and even this limited audience was not tuned to western music at all times. Bollywood was still a big part of their music/ entertainment choices. After all even the early adopters who know all about trance music will jump up to shake a leg when they hears the first strains of a popular bollywood number or the beats of a bhangra.  For MTV it was not only the choice of music, but the all English programming which further limited the appeal of the channel. It was thought that the market size for an English music channel was only so much and that it would take time to grow. But why did MTV need to position itself as an English music channel was not a question asked at that time. It was the success of small localisation attempts by MTVs competitor Channel V which prompted MTV to switch gears and relook at their brand relevance for the Indian market.

The channel decided to focus on the mantra ‘Indianize, Humanize and Humorize” (Jocelyn Cullity

The Global Desi: Cultural Nationalism on MTV India, Journal of Communication Inquiry, October 2002).  Hindi music videos and film clippings, were brought in to constitute the major part of the programming content with English music being retained in largely non prime slots. VJs dropped their foreign accents and interspersed their English with liberal doses of hindi and local slang.

 By drawing on, rather than competing with,  an existing popular culture, MTV India made the global seem like a natural extension of the local instead of a threat to it (Jocelyn Cullity, The Global Desi, October 2002).  Did the brand depart from is global values? No. It was still positioned as a music led, somewhat irreverent entertainment channel for the youth but the shape it took was derived from local culture and entertainment choices.

As Quelch has pointed out that standardisation vs customisation is not an either /or choice. A tailored approach is required towards each element of the business system and marketing program (customizing Global Marketing, HBR, May-June 1986). And when global brands look at building their equity in emerging markets like India, it becomes all the more important to Think globally,Compete locally and Sell personally.