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BW Businessworld

The Next Frontier

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Today it has become obvious that advertising is entering a new era. An era where creativity is no longer the key to success. Today's marketplace is no longer responsive to the kind of advertising that worked in the past. There are just too many products, too many companies, too much marketing noise. Advertising is entering an era where strategy is king." If someone mentioned that these words were written 40 years ago, you would ask them "what were you smoking?".

It was probably a similar situation in a different day and age, when the lines were written in 1972  by a certain Al Ries and his co-author Jack Trout. They penned them for their article-series  in the marketing and media magazine Advertising Age titled, "The Positioning Era Cometh". The rest is history. The concept of ‘positioning' that was articulated by the duo came to occupy pride of place in the marketing lexicon. And these articles were followed by a seminal book, Positioning: The Battle For Your Mind in the early 1980s.

Decades later, one could argue that it is time for both the marketing and advertising functions to be repositioned. Marketers, particularly those in India, are facing too many products, too many companies and too much marketing noise — and this is by no means a suggestion that we trail the West by four decades.

In some ways, India is probably facing a unique situation as the marketing game is witnessing two revolutions: the emergence and growth of modern retail formats and the digital revolution are happening almost simultaneously and, not one after the other, as most western countries have witnessed. That, in turn, changes the way marketers have been looking at product placement and distribution as both formats demand completely different skill sets.

Then, unlike most of the world, digital in India has a significantly higher mobile phone component. Around 250 million phones are estimated to be Internet-enabled. And, Statcounter, a web analytics company, estimates that almost 42.25 per cent of these consumers use their handsets to access the Internet (as of January 2012). That number has shot up from just 18.8 per cent in FY 2010-2011. And this time, India has no global example to follow to craft a marketing strategy — unlike the previous media evolutions from radio to the television era.

In the absence of precedents, it is no surprise then that senior marketers such as Hemant Bakshi, executive director, home and personal care at Hindustan Unilever (HUL), one of the foremost marketing companies in India, think this is a huge opportunity for the marketing industry in India. Referring to the usage of mobile phones as a digital channel for marketing and advertising, he says, "We have an opportunity to create models for marketing and advertising that can be adopted by the rest of the world." China — if at all — is just a few months ahead of India as a benchmark, he adds.

While creating new marketing models, will some of the time-tested ones, like the 4Ps (product, price, placement and promotion) or even positioning, come under the scanner? Some like Larry Light, the former global chief marketing officer of fast food giant McDonalds, and marketing wizard Don Schultz have already questioned whether marketing concepts such as positioning are relevant in current market conditions.

"It does not make sense to ignore principles that worked in the past, just because the environment has become more competitive," argues Ries, in an interview with BW (read interview). His former partner, Jack Trout, had similarly defended his position on this issue in an interview with BW in 2008.

While some would argue that both Ries and Trout had to be defensive, a large number of senior marketers, professors and consultants agree that while the game of marketing is constantly evolving, some of the old rules still hold good.

"Everything has changed. And nothing has changed," says Graham Hales, CEO of Interbrand, London, one of the world's leading brand consultancies. He argues that nothing has changed as far as the principles of marketing are concerned — creating a credible, differentiated and relevant promise to customers that is based on what is driving demand and  meets their future needs. But on the other hand, "everything has changed as the ways to meaningfully deliver that promise have moved on significantly and continue to change constantly," says Hales.

He finds support in Kevin Lane Keller, E.B. Osborn professor of marketing at the Tuck School of Business, who has co-authored recent editions of Marketing Management with marketing guru Philip Kotler. "Some people make it seem as if there is a complete revolution and things are going to become completely different. I do not think that is right. Some of the old rules still apply," says Keller (See: Keller Apps). But that is not to say that there is any dearth of changes both across the world and in India.

Change, The Game
In India, particularly, the pace of change has been several times faster than it has been in the past. Hindustan Unilever's Bakshi lists several inflection points that have changed the game for marketers in India in the past 20-odd years. In the early 1990s, because of liberalisation, a lot of products and categories became accessible to consumers. For example, in shampoos as a category, as tariffs fell, access increased. Then, the sachet boom happened.

Around the same time, satellite television started making inroads into the country. Before that in the mid-1980s, colour televisions entered homes with the Asian Games in Delhi. The first soap operas came to be telecast and sponsored programmes started their affair with television.

Some five years ago, when modern trade  started making its presence felt in India, it provided shoppers the choice and the ability to touch and feel products. For marketers, this was another point of change. "In five years, modern trade will certainly double for us," says Bakshi. Measurement and insights major Nielsen estimates that Indian shoppers are expected to increase spending on fast moving consumer goods (FMCG) at modern retail stores from $1.8 billion to $5 billion by 2015.

Modern trade has also brought along with it changes in pricing models. Now, the elasticity of demand for a product determines whether to mark down prices and, also, to what levels. The end-of-season sales, in the fashion and apparel space, is one example of that. However, in categories like FMCG, which are relatively inelastic, marking down prices may not make sense — though it did not stop the likes of Walmart from executing its famous "Everyday Low Price" strategy.

Then, as Ashok Pratap Arora, professor of marketing at MDI-Gurgaon, points out, "Today customers have access to information
regarding all the sacrifices that they are making. For example, they may find that a product may be cheap to buy, but quite high to maintain. So the marketer will now have to consider the total price of the product rather than just the MRP."

Mobile Phones Could Bring About A Paradigm Shift

Also, modern trade has brought along with it wide choice. That, coupled with consumers' inclination to buy newer product formats, paying a premium where they see value, has changed the playing field.

Digital Dimension
With the onset of digital, there is more change in the offing than anyone bargained for. "The most notable change over the past 10 years is the speed and depth of information access," says Tim Love, vice-chairman of Omnicom Group, the world's second-largest advertising network. His reference is to a post-digital world of 7 billion people, with 5.6 billion individuals connected by mobile phone — half of them connecting to the worldwide web without a laptop, desktop or landline.

According to Love, this makes people (or consumers) the first media today and word-of- mouth the most persuasive method of marketing. "In future, the fundamentals of basic marketing will shift towards closer interaction and iterative-marketing development with consumers, potential triers and with loyal advocates," he says.

The digital revolution has also altered the basis of advertising. As Sam Balsara, chairman and managing director of communications services agency Madison World says, "Conventionally, advertising was always looked upon as one-to-many, with the advertiser talking, if not talking down, to his subjects or prospective and current customers." Therefore, the agency used all kinds of tricks in its armoury to attract attention. With the advent of digital, communication got the power of interactivity and the entire premise of one-to-many communication has been hit for a six.

Bindu Sethi, chief strategy officer, JWT India, feels that while Indian advertising has always been familiar with starting conversations and interacting with consumers, what has changed is the speed of interactivity. "In the early days of radio advertising, there was interactivity where listeners used to write letters. Radio was the challenge in the old days. Then Binaca Geet Mala and Bournvita quiz contest were not commercials, but activations and we still remember them. You always get new tools, new ways of starting a conversation," says Sethi.

But as Sethi accepts, marketers and advertising agencies have to grapple with the speed of the digital medium. "It is about understanding the digital media as human beings rather than as techies. Of course, you should understand the technology, but after that you should get back to how consumers relate to it and thus maximise it. Therefore, the shift from formats that you are comfortable with to formats that are new and challenging," she says.

MDI's Arora agrees that the marketer today is no longer the key puppeteer who holds all the strings. "Even while it was being said that marketing should be customer-oriented, the fact is that the marketer had all the information in the past. But today, there is a horizontal flow of information," he says. As Arora explains, when customers want to buy a new product, particularly big-ticket items, what they did earlier was to scan showrooms or ask around in a trusted circle of friends. If they approached official marketing channels, the marketer controlled how much information he could disclose.

But now there is whole lot of communication between a potential customer and other existing customers. The first thing that many customers do is to scan the Internet for product opinions or ask their large network of friends through the social media. "The processes that a consumer went through to arrive at a decision have all collapsed," agrees Sethi.

Consumer Activism
It is not just exaggerated product claims that face the danger of being exposed, but now, other information that consumers were never privy to in the past, is also made accessible online. For instance, did consumers ever bother about whether the palm oil used in their snacks came from sustainable farming practices, or from a farm that was depleting the rain forests? Earlier, this was something that the marketer could have isolated his function from by passing on the burden to the manufacturing or sourcing department. Arora says, "This cross-customer communication is changing the scene drastically. It creates difficulties operationally as the truth about the product is now discussed by the people who have experienced it themselves."

With products that can potentially cause harm to the environment raising the hackles of online activists and, subsequently, those of the consumers, now marketers are being forced to make such disclosures, or to certify that their products' manufacturing employs sustainable practices. "In our marketing conversation, our consumers want us to become more authentic and more honest," says Bakshi. Over a period of time, brands that have a purpose, talk about a sustainable environment and do things in the right way will become more and more important. Earlier, consumers did not know what was going on. Today consumers have a point of view that they are willing to share.

Communication From One To Many Is No Longer The Norm

Hindustan Unilever, for instance, is aiming for 100 per cent of its sourcing of agro produce to be from sustainable sources by 2020. At present, 60 per cent of tomatoes used in Kissan ketchup is sourced sustainably, according to point-of-purchase displays.

Experts such as Silicon Valley's legendary technology marketer Regis McKenna advocate moving from the concept of ‘time to market' to ‘time to acceptance', a concept that essentially means integrating marketing with design and manufacturing. That is done by involving marketing not at the end of the production cycle but right at the beginning. It also means bringing in potential customers as early as possible into the development process. Even if it does not result in the co-creation of a product, it could at least bring in critical consumer insights. For instance, recently 91Mobiles, an Indian mobile retailer, orchestrated a Twitter trend on what could be the best feature on a mobile phone. That information could be key to someone developing a new handset.

"Today, the belief is that advertising has to become story-telling. You must spend as much time talking to consumers as listening to them. Earlier, there was only one side that was doing the talking. This is a completely new paradigm. It is going to take some time for large advertisers and advertising agencies to not just recognise this phenomenon but also to find a structured way to address this challenge and opportunity in a scalable and cost-effective manner," says Balsara.
But while going the whole hog in digital, veterans like Ries sound a crucial warning. He says that too many companies spend all of their time working on digital tactics and forget the need to first develop a good strategy.

It is crucial to remember that today the consumer is a multi-tasker. That behaviour spills into the overall consumption habits of media content, which according to advertising agency Publicis South Asia's CEO Nakul Chopra "has dramatically changed in the last few years". If you look at how consumers use a personal computer, "now it's not just multiple windows but also multiple screens. The trend of multiple screens and your attention being on multiple things is a socio-cultural phenomena. The power of an idea to jump those screens and to embrace you, whichever screen you are on, is what we call magic," says Chopra.

We say, let the magic begin.