Maggi Crisis - Will Marketers Win Again?

Maggi and the Lead Crisis seems to be going out-of-hand for Nestle. I have written earlier about Maggi and is one of my favourite examples to wake-up students in the class, so felt obliged to share my view on the crisis. I have few die-hard fans at home too…

Historically we have seen brands go this kind of challenge, once with the Cadbury's worms issue and the Pesticide Issues with the Colas drinks, and they have recovered fairly well from the crisis, so the same prognosis goes for Maggi too. But yes, a lot needs to be done before the recovery would happen. I am going a little ahead of time, as the worst of the crisis is yet to come, and that would happen over the next couple of months, with more reports coming in and the media having a gala time, debating the issue on the prime time :)

The reasons why I say that Maggi would make a come-back, (though in the process some other brands would be able to gain market-shares which they would have never dreamt earlier) is the loyalty it has developed over the years and the loyal Maggi eaters would eat it anyway, good or bad. The second reason is marketing, they have had very good marketing brains working for the brand and that has been the reason for its success and they would fall back on the same people to help them revive the brand. My guess is that the strategy would already be getting ready in the boardrooms and mid-night oil must have been burnt reading the experience of coke and Cadbury’s..

But interestingly one challenge which I see is winning back the “Mother", though most of the communications have mother at the centre, but she has not been very happy with serving Maggi to her children all along.  I overheard this conversation between a mother and her seven year old daughter, where the child was asking the mother about MSG and the problems with it, and the mother extended it to even pizzas saying that even they were not good. Over the years the typical mother has been grudgingly let the child eat the quota of Maggi without being able to do much, now here she sees a window of opportunity. She will try and use this crisis to wean the child away from Maggi. But my hunch is that the marketers will use more powerful tricks to win both of them back, for the child is the taste and mother the convenience…

I have used the word "Quota" in Maggi consciously, ideally it should be 'rationing' as the child is not allowed to eat Maggi whenever he or she wants....

Indian Consumer buying Habits 2 - Aversion to Credit

Again this is also more of a cultural issue, we have been told since our childhood days "one should spend only within his/her means", so we have had a general aversion to credit and more focus is one savings, as can be seen from our high savings rate.


Now this has changed with the younger consumers, the generation which has started working after liberalisation is more open to idea of taking credit to buy TV, Fridge, Homes. And marketing has also contributed to this shift in consumer habit, with credit card companies and banks aggressively promoting the 'spend today and pay later" philosophy. But if one were to appreciate the values the older generation still holds against the idea of credit one needs to flash the plastic in front of their parents and ................

Though just when one thought the days of being conservative with the use of plastic were gone, the slowdown in the economy has again brought this issue back into focus. The stories of how many consumers took up large loans to buy flats and cars and are now struggling with their repayments either because of pink slips or salary reduction. This would force many consumers into their shells and become more cautious in availing credit and so though not back to square one but atleast a small step back....

Indian Consumer Buying Habits 1

As Indian's we hold a lot of value for the 'old', maybe it is also culturally driven where we have been asked to respect 'old' rather than look for new. Though this is changing very fast especially among the younger generation of consumers, but it will take a lot of time before we actually catch up with our western counter parts. And it is even questionable whether such a transition is a good one. Anyway without getting into 'consumerism' debate I will like to look into this aspect in detail from a marketer's perspective.

Most of us have an uncle who would proudly show of his old watch, " I have been using this watch for the last 30 years , this was gifted to me when I was in class 10" . This is a nightmare come true for a marketer, if every consumer were to use his watch for eternity then ......

Similarly most housewives collect the used containers of flour, ghee ,,, which she would clean and use it to store cereals , and other items in the kitchen and so on till it is sold to the scrap dealer . Companies like Pilot , when they launched their Pilot pens in India, were surprised by the demand from consumers that they wanted a refill for their pens. This was unheard of in the Japaneses market as the pens were designed as 'use and throw' . The local partner of the company had to produce inks locally which could be used to refill the pens.

This value which we hold for anything old in our house has been quite successfully exploited by many marketers. Their solution to this issue is offer an 'exchange' scheme' to the consumer. By doing so the company is giving some value to the consumers in return for the old. Most successful was Akai and it's exchange scheme which ended up changing the face the TV market in India. Even Bajaj use to bank on this value for a long time, its ads use to exclusively talk about the money one would get when it is sold later.

A more recent example is the annual "The Great Exchange Offer" by BigBazaar, with an offer to buy all the old scrap material (Kabaad) at prices much higher than what prevails in the open market, like Rs 25 per kilo of newspapers , old tires at Rs 50 and so on. The condition being that one has shop four times the value of the old scrap which they sell there to able to redeem the value of exchange.

There are many more unique consumer buying habits which i would try and cover in my later posts, but will look forward to suggestions and observations from readers...

Santoor Soaps - Overtakes Lux in South India

When one talks about 'Wipro', the first thing people think of is about their IT business. The fact is that IT is a relatively new business for Wipro and they have been into others businesses which are much older, like lighting and consumer care . In fact they started their business in the vegetable oil business. These older divisions have for a long time been under the shadow of their larger younger cousin software, but of late the consumer business is coming to age, last three years it is one the fastest growing FMCG companies in the country.

The flagship brand of the consumer care division is 'Santoor'. Since its launch in 1986 the brand has been doing quite well in the fiercely competitive soap business dominated by HUL. The industry estimates the brand to be worth more than Rs 500 crore. But the big news is that it has become No 2 brand in the south edging out Lux. (It is the largest selling brand of soap in Andhra). Nielsen data shows that it has 15.6% market share in south versus 12.4% of Lux. The fact that it has overtaken Lux is something which is commendable, looking at the history and support which a brand like Lux receives with Prinka chopra and Ashiwarya Rai being the brand ambassadors for Lux. Wipro plans to leverage the brand by extending the brand into new categories like creams, moisturizers, body sprays and washes, after the relaunch of the brand.

The company website describes the brand as "a truly unique soap that combines the goodness of natural ingredients - Sandal, Turmeric and natural Skin Softeners". The long standing positioning of the brand has been - a skin that is so healthy and beautiful, it lies about your actual age !. The product is available in three variants, Santoor (Sandal & Turmeric), Santoor White (Sandal & Almond milk) and Santoor Chandan. They have extended the brand into talc, face wash and fairness cream.

For me santoor is an addition to my list of sucessful Indian brands which have done well against competition from much larger multinational companies. And as a marketer it is obviously interesting to find out more about how the brand become number two overtaking Lux which obviously has spending more money on ad and promotions. A successful case of low cost marketing....

More on the success story, catalyst analysis, link

Subhiksha Retail - Indian Brand in trouble?

In my quest to document Indian brands I had made a list of those which i would like to write about and there were quite a few retail brands in that (one of the reasons could be that retail is not still open fully to foreign players). Kishore Biyani's - Pantaloons and Big Bazaar are on top of the list.  They have contributed to Indian retail by being pioneers and reshaping the retail landscape in the country by adapting to conditions in the country. But the post is not about BigBazzar, which would deserve a separate post but on Subhiksha, largest retailer in the country. But unfortunately the post was triggered by the news that the retail slow down is forcing them to close down half of their 1600 outlets. More about that later, first on what Subhiska offers to the Indian consumer.

Subhiskha evolved a model of retail which is unique to India or as Mr R Subramanian would like to put it the  'Indian Format of Retailing'. They did not try and ape the international retail model, of having larger stores  with air conditioning and other extra frills. Their typical shops are much smaller in size and in a prime localities in a city with no air conditioning and fancy shelves and designer lights.

The value proposition that Subhiskha offers to the typical India consumers is load and clear, first convenience - by locating them in key locations within the city they are actually more accessible than there larger cousins , so no need to drive and reach them. And the consumer can afford to buy in smaller quantities and more frequently. The second value to the customer was in terms of savings , most of the products sold in Subshikha would be sold on discount . As any one who would have bought at Subhiska would have observed the clear price advantage that they would get.

Only thing which went against them that was that one could not be  get all brands that they wanted in their outlets; essentially the choice was limited. It could have been driven by strategy of stocking a few brands on which they were able to get a good offer from the manufactures or supply chain bottlenecks. So there would be many consumers who would come and buy a few products from them and go on to buy the others from another retailer.

The Subhiska story has been highlighted in the media as a success, link  . Story of R Subramanian of Subhiskha is one which inspires many of us, a first generation entrepreneur who went on to build the largest retail chain in India. More can be read about him in the book 'Stay hungry and Foolish' which documents the stories of 25 entrepreneurs from IIMA. 

Coming back to the current crisis which they are supposedly going through, could be the  result of a multitude of factors; the overall slow down in retail sales, the rapid expansion that they have done in the last year or so, which would be leading to operational issues. My opinion is that Subhishka is not new to difficult times and in the past gone through them successfully and come out stronger , hopefully this around also the story would be same, though the current issues seem more challenging....

Thumps Up the No 1 Cola Brand in India

Whenever I ask the question which is the No 1 cola brand in the country, many people assume it is either Pepsi or Coca Cola, but it is Thums Up. Though it was sold off by the Chauhan brothers to Coca Cola in 1993 , I would still classify it as an Indian brand which has been around since 1977. Initially when the Chauhan's sold it off for $60 million, many analysts thought that it was a good deal because many believed that the brand would anyway disappear in a short time, but the story was not supposed to be so simple.

Coca Cola bought the brand and with it the access to the its bottling and distribution network, which they saw as a effective way of countering Pepsi which has a few years of head start in the country. Initially Coca Cola wanted wanted to kill the brand slowly , as they were sure that most of the consumers would shift over to to Coca Cola , so they decided to stop all promo support of the brand and waited for it to die, but it took them some years to realise that the brand was not going to die and was infact doing well in spite of almost zero support from the company. It was then that they realised that they would have to actually manage two brands in the country. 

Then the company moved to the second level of trying to use it as a flanker brand against Pepsi. They started using Thums Up to attack Pepsi openly by challenging them on a blind taste challenge and so on. Obviously they have slowly realised that they are under utilising the brand as just a flanker and there was more value which could be extracted out of the brand and thus today brand Thums Up accounts for the largest share of its promotional budget and gets the attention it deserves as a separate brand. 

The case of Thums Up highlights the myopic view with which many multinational companies operate in the country, they assume that brands which have a a very strong following in their home grounds would have similar following in India, which is not necessarily true. Though Coke has learnt through their experiences and are adapting and changing their branding strategies according to the needs of the local market. 

In fact even with the lemon based drink Limca there is a similar story in India. The brand has its own set of loyal customers in the marketplace, and they still prefer it over many other lemons based offerings in the market.  I have heard that coca cola has to struggle with its bottlers to free up lines for other brands in summers when they want to use it for Limca.

Seasons in Indian Market

Seasonality is an interesting dimension of Indian markets, as is the case with any large market. Each marketer defines seasons according to the product-market one operates in. A marketers of ready made snacks like Haldirams prefers to define the seasonality of the market on the festivals, which is similar to what a consumer durable marketer does. If you are in the jewelery business you would want to define seasonality according to the marriage season, which is driven by astrology. And for a soft drink marketer defining seasons is easier he would go by the simple bifurcation of summer and winter.

Marketing strategies of many of these companies would be driven by the changing seasons (as per their definitions), the off season sale of apparels, and planning for their summer collections begin with this change, similarly the cokes and Pepsi's also chalk out their plans for summers now itself....

Marketers also tend to struggle with seasons because at one end they would like to control seasonality by reducing the peaks and troughs in sales but then also want to capitalise in them to increase sales.....

"Made for India" Tag 1

"Made for India" is increasingly becoming a coveted tag these days. This is a far cry from the early days of liberalisation when many companies came in with their older (often discontinued ) models with a misplaced confidence that Indian consumers were just waiting to lap it up . But a rude shock awaited them with them the harsh truth that Indian consumers were as discerning as their counterparts in the other parts of the world . Even luxury brands like Merc have learnt their lessons and today their product portfolio has their latest offering, learning from their hard experience of consumer rejecting the initial model which was being used mostly as a taxi in New york, though it will be a long time before they start thinking about making cars for specifically Indians.

This interest of developing products specifically for Indian market has been around for some years now, though with the global financial turmoil we might be one of those few countries with any growth left. One company which has done this seriously is and achieved substantial success in India is Nokia. Nokia 1100 was one of its first mobiles to designed exclusively for Indian markets. The torch light , unique grip were introduced specifically to cater to the specific needs of Indian consumers, weather and usage. The latest is the proposed introduction of ' Nokia Life Tools' service would be an additional service with focus on e-mail, agriculture and education which would enhance its standing in the Indian market.

Coming back to automobiles, we have been waiting for a long time for the Toyota Indian car, but the company is taking its own time to come up with it. Latest is MUL which says it will come up with a its first made in India car by 2010-11 and ford has also been planning to come up with a small car for both Indian as well as export markets. And Nano has brought a lot of interest in low cost cars and many companies want to develop such cars for the Indian market.

We have come a full circle of days when people spoke about only global products to localisation to developing products exclusively for a market, in the next part we will look at a few more examples of MNCs which had to develop products exclusively for Indian markets...

Indian Marketing Sucess Stories Series- Intro

When we talk about success stories or cases studies, we have always been fed with examples of what happened in the developed market context. But one feels that the success stories at home have not been appreciated and documented well enough. As an attempt in this direction I thought an attempt could be made to try and trace out marketing success stories of companies and brands in India, without limiting myself to Indian companies only.
On various success stories which can possibly be traced out . am making a tentative list which hopefully would keep growing
1. Nirma
2. Marketing of Kerala as a Tourism Destination
3. Nokia
4. HUL and various brands- Lifebouy, Fair&Lovely
5. Tata- Indica

6. Peter England
7. Marico - Parachute & Safola
8. Britannia Tiger
9. Thumps Up
10. Cavin Kare
11. Haldirams
12. MTR
13. Waghbakri Tea
14. Mahindra and Mahindra Scorpio
15.........................
Looking forward to suggestions from readers to this list

Online Book on Marketing in India

The initial idea behind writing the blog was to specifically look at issues which are relevant to marketing in India and act as an window to current issues of importance in Indian markets. I have personally believed that Marketing is context specific and one needs to be able to specify the context well enough to actually make sense. Though the basic conceptual issues might remain the same.

I have decided to take the next logical step of trying to write a online book on Marketing in India, as there are very few of them written specifically for Indian market . The idea is to write regular posts which would go into the book.

The advantage of using this forum would be it can incorporate feedback and insights from people interested in marketing and can be kept updated on a continuous basis as should happen with any book on marketing..

I would like to invite suggestions on my proposed list of topics which should be covered in a online book on marketing in India...

1. Understanding the Heterogeneity of Indian market.
- Urban and Rural India
- Regional Differences
- Differences based on Religion , Caste and other
- Demographic Changes and linked differences
.........................................
2. Indian Consumer
- The cultural moorings of the Indian consumer and impact on buying
- Influences of festivals and other religious events
- Value system of Indian consumers
...................................................
3. Retail Structure and Challenges
- Traditional Mass and Wholesale Retail Versus Mass Retail
- Emergence of Organized retail
- Rural Retail

4. Search for the Right Price Value Equation
- To understand pricing in terms of VFM philosophy
- Trading up and Down among Indian Consumers

5. Sales and Distribution Management in India
- Sales force management issues
- Channel partners selection retention and growth
- Strong presence of wholesale

6. Changes in the Indian Economy
- High growth market
- Increasing penetration of internet and other technologies
- Influence of globalization
............................................

This is the first idea of the kind of topics which should be covered in the book, and look forward to more suggestions ....................