Coke's Vikas Gupta: "Our market doesn't exist beyond 500 million people"

Guess what ace marketers say when they get into the confession booth? No, they don't talk about all the slick but wily ads with which they woo consumers or even how they might be stiffing them on one product or another. What they say is something far simpler: "We just don't know who our real consumer is." Don't believe us? Hear it from the experts: "Today's consumers are quite evolved economically and empowered socially. Traditional consumer insight models are insufficient to gauge their attitude and predilections at a micro level," says B.V. Pradeep, President, Market Research Society of India (MRSI). Adds Christophe Bezu, Adidas CEO, Asia-Pacific: "There is a lack of qualitative data on consumers in India. Hence, marketing of niche products that ought to be extremely targeted, remains mass led."

Cracking this most fundamental marketing riddle was never such a thorny issue as it is today. That's because until the early 90s, India remained a mass market, where classifying consumers on the basis of their gender, geography, demography and social attitudes was fairly easy. Besides, how many skus (read: product varieties) did we have until organised retailing took off in the mid-90s? But not anymore. "The prosperity following the recent economic resurgence, the changed demography and media explosion have transformed the Indian market," says Srikanth Srinivasa Madhavan, Head, Consumer and Market Insight, HLL.

For instance, urban markets today house over 50 million consumers with global tastes and outlook. Then, there is another set of 300 million consumers broadly classified as middle-class. But as Ravinder Zutshi, Deputy Managing Director, Samsung India, says, "These could further be divided into most affluent, middle-affluent and affluent categories. This set of consumers is extremely diverse in its traits, ambitions and consumption habits." In other words, this consumer could physically be in Bangalore, aspirationally in California, and economically somewhere between the per capita indices of the two cities. Therefore, her spend patterns could show much more complex algorithms.

Ravinder Zutshi of Samsung India says consumers could be divided into most affluent, middle-affluent and affluent categories. This set of consumers is extremely diverse in its traits, ambitions and consumption habits.

Then, adding to the stratification of the market, there exists another class that is at the subsistence level. To understand the extent of fragmentation in the Indian market, Harish Bijoor Consults, a Bangalore-based marketing consultancy, recently conducted a study across Cincinnati, Boston, New York, Delhi and Bangalore. "We found as many as 26 variants of consumer attitude sets in New York, 14 in Cincinnati, 17 in Boston and on average 297 in Delhi and Bangalore," says the CEO, Harish Bijoor. In such a diverse market, traditional marketing wisdom does not work anymore. Marketers are unanimous that the lowest-denominator formula of yore can't deliver goods today. Says Sandeep Tiwari, Head of Product Marketing at LG India: "Marketing is no more about creating awareness at a mass level. It is about reaching out to the right consumer with the right product at the right time and through a right medium." For this, a deeper penetration into the new consumers' psyche is a pre-requisite. And that is where the problems begin.

Arvind Mediratta of Yum International says the consumers' ability to buy and propensity to spend is a complex process. Linking it with their education alone can't explain it.

Know Your Consumer; How?

It is quite amazing that the market that generates sales of several billions and in which around Rs 50,000 crore is spent every year on various marketing, advertising and communication initiatives, doesn't have a basic contemporary consumer classification model. All consumer research in India, whether at the end of research or media buying agencies or marketers, is based on a Socio-Economic Classification, or sec as it is popularly called. SEC was devised in 1988 by the MRSI, set up the same year by the country's top corporates and media research users.

Under sec, a grid was created that classified consumers on the basis of their education and occupation. "These variables were chosen because these remain constant through the life of a consumer, whereas affluence keeps changing," says MRSI's Pradeep, who till recently was with HLL and now is moving to Unilever, UK, as Vice President, Consumer and Market Insight, Home and Personal Care Division. It was then presumed that the more educated consumers would be more resourceful and in a rather homogeneous market, they would have similar consumption habits. Incomes were not taken into account because of different standards of living across the country.

But marketers and research bodies agree that these assumptions don't reflect today's realities at all. "Consumers' ability to buy and propensity to spend is a much more complex process today. Linking it with their education and occupation alone can't explain it." says Arvind Mediratta, Chief Marketing Officer, Yum Restaurants. Where would you put a post-graduate clerk in a government office with a much smaller income against a metric pass but fairly prosperous farmer in Punjab, he asks.

Gurmukh Singh of gotocustomer says the results of research could be used for mass marketing, but not for individual clusters of more evolved consumers.

Unfortunately, despite such obvious inconsistencies, marketers have made little attempt to upgrade the current system or even to evolve a new model. "One basic hurdle in consumer research has been the lack of initiative on the part of marketers," says Atul Phadnis, Chief Evangelist, Media e2e. Phadnis, who was spearheading research at Television Audience Measurement (tam) till six months ago, points out that research users themselves have not been forthcoming in making investments in new tools. That explains why, while the us spends over $100 billion (Rs 450,000 crore) a year on market and consumer research, India spends 0.15 per cent of that-around $155 million (Rs 700 crore). The result: Marketers go wrong on basic things like the size of the market. "A lot of marketers have learnt the hard way that the dream of one billion population is all but a sham," says CVL Srinivas, CEO, Maxus, a top media buying house. Indeed, Coke and Pepsi's rural market debacle and HLL and P&G's price wars are all but examples of wrong perceptions of the market size and consumer attitude. Agrees Coke's Vice President Marketing, Vikas Gupta: "We learnt it the hard way that our market doesn't exist beyond 500 million people."

Sandeep Tiwari of LG believes that marketing is about reaching out to the right consumer with the right product at the right time and through a right medium.

New Challenges

The vagueness of the sec template notwithstanding, most marketers and research bodies have gone ahead and built new research models based on sec itself (See The New New Thing). Be it the Household Purchase Panel or Target Group Index of IMRB or 3d of Maxus and Mindshare, Living Standard Measurement of HLL, all use sec grid to get a better understanding of their consumers. "Linking sec with niche research yields disparate set of information and if one links all the dots it provides, one can identify some broad consumer trends," says Punita Lal, Executive Director, Marketing, Pepsi. But Gurmukh Singh, CEO of gotocustomer argues that such research would still be indicative and not definite. "The results could be used for mass marketing, but not for individual clusters of consumers," says Singh, who provides niche marketing solutions to new-age marketers like Nokia, Airtel, Microsoft and Samsung.

Penetrating into the mind-space of all the 297 types may be the only way to crack this riddle. Apparently, MRSI has already got the cue. It is working on a new model that will track a larger set of variables like "affluence, economic buying power, willingness to spend, ownership of products and valuables etc," says Pradeep. Perhaps that will give the marketers a better clue as to who their real consumer is.