Dheeraj Sinha's Blog, page 2

Calling the bluff of the emerging-market stereotype

I was recently on a panel at Cannes Lions 2015 to discuss the future of strategy. The panel discussed several roles that strategy plays in this fast evolving, tech and data driven world. There are many asks from strategists in today’s world. There’s the classical role of strategy to sift through everything and bring radical clarity. Add to it the challenges of the new world where one needs to be comfortable with a solution that may not be perfect, because in the tech world, the cost of not doing is higher than the cost of doing it not-so-well. Then there’s a need for the strategists to be collaborative, a function that was hitherto about a rather lonely pursuit of a solution, now requires multiple heads, not only to generate an insight but also to chisel a solution.

 

These are all very important and sometimes daunting roles that strategy needs to play today. But to my mind, there’s another role that’s fast gaining importance, especially when you wear an emerging market hat. The role is to call the bluff of the emerging-market stereotype. The gold rush for the emerging markets such as India has created its own lexicon. There is a slum-dog-millionaire view of these markets – a billion people waiting to lap up all the stripped down products that the world can create through frugal innovation. Indeed, terminologies such as the bottom-of-the pyramid, frugal innovation, are not well understood and being used out of context.

For instance, I am fascinated by the idea of Baba Ramdev. A Yoga guru who sells spiritualism, anti-dandruff shampoo and corn flakes in the same breathe. Baba Ramdev’s FMCG business a turnover of $300 million in less than a decade, 4 times that of say, Kelloggs, which has been in India for over two decades. Baba Ramdev’s success busts the Maslow’s hierarchy of needs, which separates the pursuit of self-actualisation from that of the basic needs. In this case, the so-called poor want both spiritualism and consumption from the same brand. Baba Ramdev brings lifestyle and spiritualism together for the masses. He is neither stripping down his products nor the discourses for the Indian masses.

 

Baba Ramdev’s success busts the Maslow’s hierarchy of needs, which separates the pursuit of self-actualisation from that of the basic needs.

 

In my recent visit to my village in Bihar, I saw roadside kiosks, the kinds that sell paan and beedis, just that these kiosks are called ‘Mobile Downloading Centres’. These are shops that sell downloaded content such as movies, latest TV shows and pornography to the villagers, all in 20 rupees. This content is then enjoyed on mobile screens, many of which are larger than what you commonly find in urban areas. This is clear evidence that unlike our beliefs about the bottom-of-the-pyramid, the poor are indeed seeking status, not frugal products. They want access to what you and I have. As it was evident in Reebok branded jholas (carry bag) that were up for sale in the shops nearby.

These and many such examples bust the popular assumptions that businesses make about the emerging markets in general and India in specific. When asked, what’s the key role that strategy needs to play in this part of the world, I dare say, it’s about bunking these myths and calling the bluff of the emerging market stereotypes.

*Image: Courtesy Economic Times

The Luxury Market in India: Maharajas to Masses

Chapter Excerpts

 

India is not new to luxury. It has a rich tradition of luxury since the times of maharajas. In fact, the royalty and their tales, influence many cultural ideals of luxury. Even today, the palaces of Rajasthan, now converted to heritage hotels like the Udaivilas, serve as fine examples of Indian luxury. Most of the religious text such as the Mahabharata are set in the times of prosperity and describe a rather opulent lifestyle.

 

What’s new to India, however, is the market for luxury. In the last two decades, the political, cultural and financial scenario in India has been dominated by the mainstream, middle class consumers. All the attention and resources have been focused on understanding the mass market. While India has always had a millionaires club, most of these people have traditionally shopped on their trips abroad or depended on the informal import channel.

 

India is currently a huge mass of consumers, constantly upgrading their lifestyle. Malls and multiplexes have brought together people of varied classes who would otherwise never rub shoulders with each other. The need for luxury here is also the need for the well heeled to signal the distance from the mainstream. For instance, the High Street Phoenix in Mumbai, which was once a premium shopping and entertainment destination, has now been rendered mainstream by the Palladium, which is geographically adjacent to it. Palladium is the destination in Mumbai that separates the rich from the mainstream with its lineup of brands such as Burberry, Hugo Boss, Canali and others.

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PRAISE FOR The Luxury Market In India

A well grounded and fascinating journey into the key challenges posed by the Indian luxury market, from consumer segmentation to retailing and communication.

- Stefania Saviolo, Bocconi University, Milan, Italy

Fascinating reading. Well-researched... It is full of unique insight and extensive source material for anyone interested in truly understanding contemporary India, its high-end consumers and their relation to luxury.

- Claus Lindorff, Euro RSCG Worldwide

With a surging economy and such evolving mindsets, India has never been more ready for luxury than it is now. But with it comes challenges and their answers in unique strategies. This book addresses these very issues and demystifies the Indian luxury story impressively.

- JJ Valaya, Valaya Luxury Holdings P. Limited

Successful luxury branding involves understanding how to position your provenance… their team of professional contributors eschew the simplistic one-size-fits-all global branding approaches of yesterday to describe the nuances of customer-centric segmentation necessary to delight the subcontinent's luxury demanding market.

- Rohit Deshpande, Harvard Business School

Shopper Marketing – How to Increase Purchase Decisions at the Point of Sale

Chapter Excerpts

 

The idea of retailing that’s socially and economically more meaningful than merely promoting mindless consumption, is a significant one. It gives shopper marketing a larger context and customers a reason for choice beyond just the color and placement of the pack. The stories behind the various products and services and how they have reached us can be compelling for shopper marketing. FabIndia, which prides itself to be an Indian chain retailing garments, furnishings, fabrics and ethnic products handmade by craftsmen across rural India, is a great example of using this story. FabIndia is known for its model of inclusion where they work with local craftsmen for shared market success.

 

The smell of the bakery, the laughter of children and the clinking of baskets is a big part of this shopping experience. The customer is here to explore and discover and not be guided to the checkout in clinical efficiency. In fact, shopping in India is still a part of the larger ritual of ‘going-out’. It’s the occasion for the family to dress-up, visit the mall, may be stop by at the nearby temple and finish off with a dinner. If you are naturally not located in a shopping-temple-dinner kind of a circuit, you need to think how you can build one? Can your shopper marketing initiatives be the hook for such an engagement?

 

Amidst this larger retail foray, the incumbents, known as the kiraanas (neighborhood grocery stores) are stepping up their game and finding a way to complement than compete. Their service orientation, together with their upgraded shelf content has made sure that the Indian homemaker always has them on her shopping list. A market dominated by unorganized retail though, will need reinventing many tenets of shopper marketing, which have been sharpened in markets dominated by organized retail.

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PRAISE FOR Shopper Marketing

Chosen by Soundview Executive Book Summaries as one of the Top 30 Business Books of 2010.

- Soundview Executive Book Summaries

A fantastic read - no matter who you are in the organization

- Darren Marshall, The Coca Cola Company

India Reloaded – Inside India’s Resurgent Consumer Market

Is the India potential indeed captured by its mass markets, as it is largely portrayed? Why do the poorest people in the world not want the cheapest products (read Nano)? Is India indeed as diverse in people motivations as it is made out to be? How long can we flog the ‘ambition’ and ‘success’ card in India before it backfires? Why aren’t there any successful challenger brands in India? Why does the youngest country in the world not have enough brands and businesses targeting them directly? What keeps the India market running despite tentative government policies – will India’s democracy be able to save its economy? These and many more such questions and a quest for their answers is what this book is made of.

 

Brands and businesses from across the globe have tried to leverage the India opportunity, based upon simplistic and widely held assumptions. This book takes a critical look at these myths and contradictions from an inside perspective, presenting a fresh and nuanced perspective on the opportunities that the Indian market offers. It draws upon a wealth of data, from consumer research, market data, macroeconomic research, popular culture and case studies, to provide a thorough and compelling insight into what makes for success in the complex Indian market, based upon two decades of experience.

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List of Chapters

The Trap of Mass-Market Thinking Why Chasing a Billion is a Wrong Strategy

The Poor Want Purpose Why Marketing Needs to be Social in India

Safe Choices Why Do Indians Like Standing in the Longest Queues?

Many Indias Make One India How India’s Unity is More Useful than its Diversity

Success Overdrive Has the Success Narrative Been Overcooked?

Breaking Stereotypes Why Youth Marketing Needs to Go Beyond Risqué Content

Sexy Everything Seeking Titillation in Design, Tastes, and Experiences

Spruce up the Service Why Jugaad is an Enemy of Good Service

New Pockets of Opportunity Looking Beyond the Mainstream

Powered by People, not Policy What Makes India’s Growth Story Sustainable?

PRAISE FOR INDIA RELOADED

Western management thinking often attempts to break up the challenge into parts, into neat compartments to be addressed independently. This makes India look even more difficult market than it is. This book boldly attempts to bring it all together, to see it from an India lens, to see the one-ness in it.

- Dev Amritesh, Dunkin' Donuts, India

Dheeraj brings alive a new India, one that wants to live every moment as a spectacle. India Reloaded cuts through the clichés around emerging markets – it’s a refreshing take.

- Frederique Covington-Corbett, Twitter 

India's diversity often conceals its underlying unity. Dheeraj unpeels the layers to reveal several unifying truths about India’s consumers than its diversity suggests. Truths that can make the difference between success and failure for marketers.

- Ranjan Kapur, WPP India

What can popular culture teach us about business? Everything. Dheeraj makes connections between seemingly disparate socio-cultural and political behaviour of India to explain its consumption culture. This is a must-have for successful businesses - the cultural compass of new India.

- Nirvik Singh, Grey

A fascinating journey into the soul of India. Sinha's original analysis of India's consumer society will inspire innovative thinking in the boardrooms, as well as in the classrooms that are preparing future executives. A compelling and engaging read that uncovers the new reality of a fast-changing nation.

- Glyn Atwal, Burgundy School of Business, France

Segmentation discussions can get overly data based. In "India reloaded" Dheeraj has segmented India without jargon, providing insights on attitudes and aspirations using illustrations from films and music.

- Rajesh Jejurikar, Mahindra & Mahindra

Consumer India – Inside the Indian Mind and Wallet

Today’s India is seeing things it has never seen before – medals in Olympics, cheerleaders in cricket, ready-to-cook pastas, kissing scenes on national television, institutes for airhostesses, fairness creams for men, agricultural tips on sms and marriages arranged on the internet. In Consumer India, Dheeraj Sinha weaves the narrative of a changing India through examples of Bollywood, our cultural conditioning, today’s role models, our behavior as consumers, and the role of brands and marketing amidst all this.

 

How does a culture that has been taught to be wary about money now respond to its abundance—what implications does this have for finance brands? Does Kakaji Namkeen qualify as a brand? It sells the same wafers (well, almost the same) as Lay’s does, gives more value for the money, and spends nothing in advertising. Can a mass brand have a premium offering in India? What is it about caller ringtones that makes them such a success? India is about its large middle-class consumers, but isn’t there a profitable premium segment emerging? In a country where everyone is feeling young, what happens to the real youth?

 

Like everything else in India, marketing too is part logic, part gut. Drawing upon facts, fiction and personal experience, Sinha unravels the interconnections between the mind and the wallet of today’s Indian consumer. A practitioner’s account of what Indian consumer wants—from the playing field, not the sidelines.

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List of Chapters

Transforming the Karma How Cultural Forces Are Shaping Consumption

The Currency of Emotion The Meaning of Money and the Making of Financial Brands

Beauty in Action The Business of Looking Good

Masala Media Entertainment for Taste Buds

Meaningful Technology The Cultural Circuitry of Technology Products

Branding the Bazaar The Logic of Indian Brands and Retailing

Youth versus Youthful Building Youth Brands in a Youthful Country

Seamless Savitris The New Indian Woman and New Market Opportunities

Small is BigThe Trajectory of Small Town and Rural India

Three Generations, One Big Market Opportunities in a New Segmentation of India

PRAISE FOR CONSUMER INDIA

Dheeraj insightfully marries the rapid changes he chronicles with the assimilative fabric of India; where ‘and’ trumps ‘or’. Against the cliché “change is the only constant”, he underlines that in India, change works with the constant. Enjoy the ride on Dheeraj’s time machine!

- Prasad Narasimhan, the brandgym

Dheeraj has done a commendable job in peeling off the layers from the onion - creating frameworks but importantly providing very relatable examples to understand the culture. "Consumer India" is a must read for those who want to understand the cultural evolution of India with its nuances.

- Rajesh Jejurikar, Mahindra & Mahindra

Among the many books I have read on the cultural evolution taking place in India, this is perhaps the most insightful. It does not just map mindset changes; it does so with the certainty of a person who has lived the changes as much as he has witnessed them.

- Ranjan Kapur, WPP

A richly insightful account of one of the most significant transformations in the world today. Dheeraj Sinha’s intelligence vividly illuminates the intersection of culture and commerce in New India.

- Adam Morgan, eatbigfish

It is not a pretentious or posturing analysis made to measure for a PowerPoint presentation, but a logical attempt to trace how the Indian consumer has evolved.

- Business India

The author has adopted the narrative style of a storyteller, which would help the marketers in understanding the socio-cultural issues from an angle of organizational objective.

- The Financial Express

Sinha offers no gyan; he’s a mere observer. He packs in a fair bit. There are anecdotal field accounts and number crunching. The new mindsets, in the end, reveal the true face of the India consumer.

- Times of India

India’s opportunities

It’s been an eventful 12 months for marketing in India. As Narendra Modi and the BJP swept to power, Indian consumers, looking for an upgraded life, rewarded those who promised to take them to the next level. Those who failed to do so were punished, whether brands or politicians. In other news, we continued to play the new medium of digital with traditional and familiar tools – what with the proliferation of long duration TVCs made for YouTube. Ecommerce players were awash with funds and they contributed more than their fair share to the media spends. Did they manage to build their brands? It remains to be seen. There are three recent patterns in consumer marketing worth discussing:

 

The upgrade consumer

For a long time, consultants preached the idea of building products and services to match an affordable price point for the poor Indian consumers. Indian consumers, however, seem to have rejected the stripped-down versions of cars and mobile phones built cheaply for them. The success of brands such as Samsung and Apple in the Indian market point to the fast upgrading Indian consumer. It has helped of course that these brands have made the ‘sexy’ accessible through attractive installment schemes. Apple has run never-before aggressive financing and buyback schemes in India. The pattern that Indian consumers want fully loaded products is apparent across categories such as cars, with compact SUV models such as Renault Duster and Mahindra XUV5OO outdoing stripped down sedans such as Skoda Rapid and Toyota Etios. Similarly, Big Bazaar, which started out on the platform of value – Isse sasta aur achcha aur kahin nahin (no where else is it cheaper and better), adopted the platform of ‘Making India Beautiful’ in 2014.

Indian consumers, looking for an upgraded life, rewarded those who promised to take them to the next level. Those who failed to do so were punished, whether brands or politicians.

Marketing finds a larger purpose

In addition to its role in electing the current Prime Minister, marketing seems to have progressed beyond the narrative of consumption benefits. Brands are attempting a larger socio-cultural stance, going beyond the benefits that their products offer. Reckitt Benckiser and Hindustan Unilever have committed to the cause of ‘clean India’ through both money and marketing initiatives. Many brands such as Nestlé have touched a social chord in their advertising too: remember the Nestlé film that told a story of two little children, one of whom is adopted. Notably, the adopted child had North East Indian features — a subtle message for embracing ethnic diversity. Brands have discovered a social conscience, whether it’s the subject of female empowerment, stories of people with special needs or issues of corruption. These motifs have become a part of brands across categories such as coffee, insurance and even telecom. Nescafé featured a stand-up comedian with a stutter while HDFC Life Insurance told the story of a girl with an artificial limb wanting to become a dancer. Idea Cellular continued its platform of social betterment, the message this time being, if you have the internet, no one can take you for a ride.

 

Being traditional about digital

The desire to tap digital as a medium has been on the rise, but most brands resorted to old tricks. Long format ads were the flavour of the year. Some, by brands such as Gillette, went viral. But brands remained happy with sending messages out rather than sparking conversations. Putting a hashtag in a print headline seemed an easy way to appear digitally savvy. The potential of digital as a conversation generator remained under-leveraged. Indeed it was the long running outdoor campaign by Amul butter, which kept people engaged with its witty takes on topical events. Amul has been a classic case of an offline campaign that generates buzz in the online world too. At the other end, brands from the online space — amazon.com, olx.com, fabfurnish.com, myntra.com — saturated the offline media space. Many ecommerce brands were driven by the need for visibility and staying top-of-mind. Humour and being wacky appeared to be an easy formula to do so. Most ecommerce players pushed generic messaging around variety, convenience of shopping from home, no-questions-asked returns and so on. The differentiation between one ecommerce player and another seemed to come from their merchandise and service rather than the brand. Will they grab the opportunity for building differentiated brands in 2015? We will see.

 

(This article first appeared in CampaignAsia)

Is Mass Market A Trap In India?

India is celebrated for its mass market potential – the promise of 300 million middle class consumers. However, after two decades of economic liberalization, the nature of consumer demand seems to be changing. The entry level consumer of two decades ago is now in the upgrade cycle. Their preference for premium products and services – not necessarily luxury – is apparent in the superior performance of premium brands while the mass market ones slug it out. The apparent opportunity at the premium end of the market, questions the long held assumption that you have to play the mass game to be successful in India.

 

In fact, the blind pursuit of the mass market has proven to be a trap in many ways. It has meant designing the cheapest car (US$2,000), assembling the most affordable mobile phones (US$20) and selling mobile airtime almost free (0.02 cents per second). Huge upfront investments have been made in infrastructure that produces, distributes and markets these products and services. Let’s face it; while tier 2 and 3 towns look good in terms of their potential on paper, it’s not easy building the infrastructure that reaches them. Categories like telecom are reeling under high infrastructure costs (license fee, equipment and network) and declining average revenue per user which is now less than US$2.

Mass would have looked like the only way to go given the nature of the Indian market a couple of decades ago – a huge population of first time consumers and their price sensitivity. But the mass-market strategy did not account for the changing aspirations of the Indian consumer

Pricing for the mass market has meant that products and services are stripped to their basics. While this has helped create entry level demand, it has left little room for innovations or differentiating features between brands. Making it affordable has been celebrated as an innovation in itself – as in the case of Tata Nano. The mass market pursuit has resulted in high-cost setups for low-differentiation products and services. While the wafer thin margins keep profitability at bay, low differentiation means that anybody can eat away your market share.

 

Look at Nokia for instance, which has spent more than a decade in India creating the category of mobile phones, bringing access to the masses through low cost innovations. In March this year, Samsung overtook Nokia with a 34.2% share of mobile phone retail revenue over Nokia’s 33.8%. Samsung’s success has largely come from its dominance of the relatively premium smartphone market. With 19 models in the smartphone range against Nokia’s one, Samsung has a 43% share of this market which is growing at 52% annually. While Nokia is losing out to Samsung in the premium play, it has to contend with indigenous handset brands such as Micromax and Lava which are eating away its share at the mass end.

 

In some capital intensive segments, high cost over low returns has pushed many mass market players out of business. Air Deccan, India’s first low cost airline which sold tickets starting at US$10 ran out of steam (read cash) and sold out to Kingfisher Airlines in 2007. Kingfisher Airlines which started as a premium and differentiated service, extended into low cost through Air Deccan which was christened Kingfisher Red. During the last few months, Kingfisher Airlines has been unable to keep its head above its debts, though not completely out, its services are severely cut down. There are many contributing reasons for the woes of Kingfisher Airlines, yet a premium positioning and better revenues might have helped its case.

 

Future Group which owns India’s largest low-cost hypermarket chain Big Bazaar has been the biggest believer in low-cost mass retailing model for India. Recently, Future Group sought to lessen its debt burden by selling controlling stakes in its rather profitable up-market apparel retail venture – Pantaloons Retail.

 

The lackluster performance at the mass end has its contrast at the premium end. Maruti Suzuki, which dominates the entry and the mid-segment car market in India, reported a 29% decline in its net revenue and 11% decline in volumes over the last year. At the same time Mahindra and Mahindra which sells its utility vehicles (Scorpio, Xylo and XUV500) for the price of a sedan, registered a sales growth of 27% over last year. Similarly, Tata Motors whose net profits declined by 31.4% in 2012 reported a 157% increase in the sales of its luxury brand subsidiary – Jaguar Land Rover.

 

In contrast to the troubles of the mass market retailer Future Group, the Spanish retailer Zara opened its first store in May 2010 in South Delhi, only to record the largest single-day sale by an international retailer in the country. Zara’s prominent outlets in the luxury mall Palladium and DLF Promenade New Delhi are said to be clocking average monthly sales of about a million dollars.

 

Mass would have looked like the only way to go given the nature of the Indian market a couple of decades ago – a huge population of first time consumers and their price sensitivity. But the mass market strategy did not account for the changing aspirations of the Indian consumer. It’s become a trap for many players who are caught between high upfront investment and low returns on mass undifferentiated products and services.

 

The premium play allows brands to do exactly what the mass game didn’t. It allows them to enter the market without establishing a universal, pan-India reach. It allows them to choose their segments and tailor products and services to their taste. Most critically, it allows them to build superior consumer experience and a sense of upgrading which the Indian consumer of today is seeking. While a market like India, will continue to have entry level consumers and a sizable mass market, the good news is that there is now a premium game that brands can play in a more profitable and differentiated way.

Mass Market

Needs setting up large distribution base, high cost of marketing to a large population.
Affordability and accessibility as the key criterion for developing products and services.
Competition from premium players as well as ‘me-too’ ones.
High volume, low margin game leaves little room for strengthening the product or service.












Premium Play

Requires depth of consumer experience rather than width of distribution and marketing.
Differentiation and a sense of upgrading in life as the key principles.
Less cluttered and untapped as a market segment.
Cushion of profitability allows for investing back in the brand, thus starting a propitious cycle.

Making sense of the Indian consumer and its contradictions