The Marketing Challenge in India

[Management Views from IIMB is an exclusive column written every two weeks for the Management page of India.WSJ.com by faculty members of the Indian Institute of Management Bangalore.]

Slumdog Millionaire, the Oscar winning movie may have reinforced certain associations about brand India. Beyond such associations, the country poses unique and complex challenges from the viewpoint of an emerging market.

[iimbrameshkumar]S. Ramesh Kumar

While the commonality of Indian culture is reflected in the rich and ancient culture associated with its religious history and mythology, the cultural diversity manifests itself in the 27 states (geographical territories) of the country through food habits, languages spoken, religious practices within the same religion and the lifestyles of consumers.

The layer of Westernization strongly associated with the urban population and the differences in purchasing power of rural consumers (about 72.2% of the Indians live in over 638,596 hamlets and only 100,000 of these hamlets have a population of more than 3,500) add to the cultural diversity.

Kellogg’s introduced its breakfast cereals (to urge consumers to give up their traditional breakfast habits and change to healthier options) during the eighties and emphasized its crispiness without realizing that Indian consumers were not in the habit of using cold milk and when they added hot milk, the offering was similar to local brands and Kellogg’s was priced far higher than the local brands.

While around 54% of Indians earn less than one dollar per day (with the per capita income at $720), there is a niche of consumers who consume brands like Tag Heuer, Mont Blanc, Mercedes Benz, Louis Vuitton, Baskin-Robbins and Tropicana. Marketers need to build a sound business model after taking into consideration the psychographics and cultural nuances of consumer segments.

The diversity associated with the market gets extended to retailing as well; while there are around 15 million small retail outlets (called as kirana shops which are somewhat equivalent to pop and mom shops) which are a part of the Indian marketing tradition, modern retailing in the form of supermarkets and hypermarkets are steadily growing in major metropolitan cities and tier two cities that have a population between half to one million.

The kirana outlets spread out throughout the length and breadth of the country forms the backbone of retailing with their limited product range and variety. Wal-Mart has already made an entry into the modern retailing domain that addresses target segments in urban cities and towns with its variety and low-prices coupled with sales promotions.

When it comes to lifestyles and preferences, Indian consumers reflect a range of behaviors ranging from price sensitivity-based value expectations to high levels of indulgence show-casing brand symbolism.

The challenge for the marketer is to not only decide on functional or symbolic value associated with brands but also to decide on the timing of such associations to assure a consistent brand association over a period of time. Functional value (associated with mass markets) is strongly associated with what a brand can offer at the lowest price point in terms of stock keeping limits.

For example, such sachets (small servings that are associated with just one or two usage occasions) have created a revolution in terms of enlarging the base of consumers in a country where the penetration levels of branded offerings among consumers are extremely low. Shampoos (including Dove which is a premium brand in India) tea, toothpastes, biscuits, chocolates, hair oil, toothpowders, detergent powders, fairness creams and soaps are available at prices that range between 1% to 25% of a dollar, depending on the specific category. Pepsi and Coke too have such offerings. Mobile phone services that have a subscription of around 400 million consumers have the lowest tariff in the world.

Hindustan Unilever tried to enter the price sensitive lower end of the biscuit market with its Max brand in 2005 and had to withdraw the product. Symbolism is reflected across product categories through the usage of celebrities.

Cricket and films (India produces the maximum number of films annually in the world) are a part of people’s life and the Indian context may perhaps also qualify for the maximum number of celebrities used during the recent times. Tag Heuer, Santro (cars), Cadbury (chocolates), Coke, Pepsi, Lenovo, Compaq and HP (computers), Lux (soaps), Puma, Reebok and Nike, Motorola, Samsung, Nokia (mobiles), Hero Honda (motorcycles), Parker (pens), Colgate (toothpastes) and Timex are some of the brands that have used either a celebrity from the field of films or cricket in the recent times.

Besides these brands, there are also a number of Indian brands that continue to use celebrities drawn from these fields. Most of these brands manage functional and symbolic appeals in such a way that consumers have consistent associations on both functional and symbolic associations.

Symbolic associations based on, aspiration based brand imagery is also a common strategy that is associated with brands in the Indian context. TVS Streak and Pleasure are two wheelers positioned towards young, aspiring, and urban women who associate their lifestyles with freedom and self-reliance. Pleasure even went to position itself as a vehicle for women who were opposed to traditions that have traditionally subjugated women in a generally male dominated society.

Such contemporary values are slowly getting accepted among a cross-section of urban women. But a major chunk of such women also reflect deep respect for strongly entrenched values like family orientation, religious rituals and not being permissible in terms of their lifestyles.

The challenge for marketers is to ensure a judicious mix of traditional values and contemporary thinking for such segments. Symbolic appeals are also important with regard to lower priced brands in several categories.

Besides the low penetration of several product categories, the presence of unorganized sector in several categories has created challenges to marketers at the lower price ranges. An unorganized market is one in which offerings are not branded and are sold within the geographical region around the place of manufacture.

These offerings are aimed at the lower price range in the respective category. The offerings are manufactured by small units and priced considerably lower than the branded offerings. They do not generally have the quality of branded offerings and very often they may just carry a name that does not mean much to consumers. Millions of consumers depend on these offerings for their daily life.

Unfortunately, illegal duplicates are also a part of the unorganized sector in several product categories. Detergents, tea, music cassettes, apparel, computers, air-conditioners, biscuits, molded luggage, automobile components, small house hold electrical appliances like fans and mixers, mineral water, confectionery, cooking utensils, plastic products and edible oil are categories that have a significant presence of unorganized sector.

In categories like watches, foot wear and optical wear the unorganized market is bigger than that of the organized sector. But the flip-side of these offerings is that millions of consumers find them affordable and without these offerings, such consumers will never have an opportunity to try out these product categories. In certain categories like rice, wheat, sugar and jewelry, the branded offerings account for just about one percent to three percent.

Traditionally these offerings have been sold by traders and retailers. Consumers usually buy from these middlemen and develop loyalty to these middlemen over a period of time. These categories therefore cannot be classified along with the typical unorganized sector offerings.

The Indian marketing context is a medley of contemporary lifestyles, and traditional values, marked thriftiness and experiential indulgence. Marketers in developed markets need to develop a specialized knowledge to address this market that also has around 200 million to 215 million urban youth in the age group of 15-25 years!

 

Reference http://www.yahoo.com

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~ by Rithy Pheath on 11/07/2009.

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