If you really want to woo the shareholder, should your balance-sheet be opaque, dismissive, and ill-informed? Bowing to the demands of the ultimate stakeholder, companies like Infosys Technologies, Reliance Industries, Dr Reddy's Laboratories, and a host of others are presenting transparent and total pictures of themselves through the New Globalised Balance Sheet. An audit.

By Pareena Kawatra

These are the rules for reversing the recession. For running down the resistance to spending. For building brands that offer even greater value. For securing marketshares and growth when the market is standing still. Drafted and practised by a charmed circle of companies, they're showing the way to subjugating the slump instead of succumbing to it. These rules don't come from painstakingly-compiled electronic databases of consumer profiles and their behaviour traits. They come from the real-life battlefield of the recession-scarred marketplace, where getting up close and personal to the buyer is irrelevant if she cannot be convinced to loosen her purse-strings in the first place.

For the last 27 months, the country's consumers have been steadily slamming on the brakes on their purchases of products and services, exposing marketers in dozens of categories to their first-ever recession in post-liberalisation India. The spluttering engine of the economy, palpably evident in shrinking production levels in virtually every sector of industry, has translated into decelerating growth across consumer product categories: from 22.50 per cent to 8 per cent for refrigerators, from 22 per cent to 8 per cent for washing machines, from 25 per cent to 9 per cent for air-conditioners, from 25 per cent to -1 per cent for high-end automobiles. And behind these statistics of stagnancy lies an even starker truth.

It's a suddenly-transformed customer whom the recession marketer has to delight today. And her purchase and product-usage behaviour is displaying a single-minded attempt to stretch her shopping rupee as far as it will go. Says Kamini Banga, 36, Managing Director, Dimensions Consultancy & Qualitative Research: ''Every penny she spends counts, and she is not willing to make any trade-offs for quality either.'' The specific dangers that the customer is confronting the marketer with:

• She will stop using the product altogether, willing to do without the benefit rather than spend money on it.
• She is switching to a substitute, attracted by a lower price, even if the benefits do not match entirely.
• She has abandoned brands, falling back on buying the product in generic or commodity form.
• She is using price as the primary basis of choice, putting discounts and freebies ahead of brand loyalty.

Sums up Asit Mehra, 39, International Client Director, Ammirati Puris Lintas (1997-98 billings: Rs 451-crore): ''This is the time when consumers start to cut down on essentials or downgrade to cheaper brands.'' Against this backdrop, marketers have no choice but to rewrite their priorities. Says Nabi Gupta, 49, the Vice-President (Sales & Marketing) of the Rs 2,481-crore Videocon Group: ''The consumers need a very strong pull before moving a product into or up on their shopping shortlist.'' That has left marketers with unique recession-dictated objectives.

• Advance the consumer's purchasing decision, which she is postponing for a time when she is comfortable about spending her cash instead of saving it.
• Convince the consumer to maintain-and, if possible, increase-her consumption levels of not just the product, but also the specific brand.
• Persuade non-users to use the brand, overcoming their natural barriers against experimentation when budgets have to be protected.
• Retain the customer's loyalty to the brand even if its price is higher than those of competitors or substitute products.

To achieve these objectives, marketers have used-and, mostly, used up-the first level of demand-boosting strategies. They've built discounts and freebies into their retailing on a virtually permanent basis, using new-for-old exchange schemes to further prune the buyer's effective money outgo. Following the lead of consumer durable marketers, the Rs 1,007.45-crore Madura Coats is using the exchange mechanism for its already budget-priced Peter England shirts, offering Rs 100 off on old shirts. Why, even industrial marketers like the Rs 522-crore Thermax are offering boilers on barter. Admits Abhay Nalawade, 48, Managing Director, Thermax: ''When the capital markets are down and no new projects are coming up, we have to generate demand from existing projects.''

Others have created new price segments to accommodate customers looking to move below their present price-levels. The Rs 8,574.90-crore Hindustan Lever, for instance, created a sub-premium niche with Lifebuoy Gold for buyers who may find the premium slot too expensive in a recession. Says Dimensions' Banga: ''The idea is to keep the customer with the company by offering an alternative price-band.'' And in a bid to access the consumer at a lower price-point without taking on the image of a discount label, companies like the Rs 671.80-crore Bata India, Duckback, Woodlands Shoes, and Levi Strauss India are extending the reach of the seconds stores. Likewise, all 4 airlines with domestic operations-the Rs 2,869.81-crore Indian Airlines, Alliance Air, the Rs 988-crore Jet Airways, and Sahara Airlines-are devising new price-value pay-offs, ranging from cheaper tickets for night flights to free overnight hotel accommodation.

Some are trying to secure long-term relationships with customers, reasoning that assured business, even if it has to be traded off against a high premium, can offer strong protection from the unpredictability that marks purchase decisions in a recession. That's the route being followed by, inter alia, industrial manufacturers: the Rs 13,759-crore Reliance Industries, for instance, is trying to tie down polyester-users like the Rs 1,448-crore Indo Rama as long-term buyers at preferential prices. Another tactic for convincing consumers that the recession marketers are pressing into service: converting planned purchases into impulse buys. How? By thrusting the opportunity to make the purchase literally under her nose, far removed from the normal context of the acquisition. Coca-Cola India, for instance, is sending out roving scouts who accost people on the road with an invitation to buy a Coke, quick.

And, in a last-ditch effort to leverage the festive season, marketers are piling on the freebies and price-offs: the Rs 643-crore Godrej-ge Appliances is offering cash discounts of Rs 1,234 and a free cordless phone with its refrigerators, and a free vip Elanza suitcase with its washing machines. The Rs 3,000-crore BPL is trumpeting chunky discounts with all its products, while the Rs 250-crore Samsung Electronics India is throwing in a camera with its range. However, as growth continues to dry up across consumer product categories, a second wave of strategies to combat the downturn is emerging. Conspicuous for their innovation quotient, and deployed with the specific objectives of beating sales stagnancy and breaking down the barriers to spending, they are notching up growth rates far higher than the market averages for those who have wielded them. These are the strategies that stand revealed in BT's Rulebook Of Recession Marketing.

TARGET THE RIVAL'S CUSTOMERS. When the market isn't growing, recession marketers shift their focus from taking new customers out to lunch to eating their competitors' lunch. For, they can take advantage of the classic consumer response to bad times-shopping for a better deal-to grab marketshares from competitors. The method? Primarily, an attack on the rival's weak-holds, executed with a high dose of speed and surprise, catching him unawares. Says Rajiv Karwal, 39, the Vice-President (Sales & Marketing) of the Rs 400-crore LG Electronics: ''By maintaining a breakneck speed of moving into new product segments and markets, you can catch competitors off-guard.'' After all, sales that already belong to a player, or have been committed to him by the customer, are easier to turn in your favour.

With the Rs 4,000-crore scooter market growing at barely 7 per cent per annum, the Rs 754-crore LML concluded that its growth could only come from poaching portions of the Rs 3,513-crore Bajaj Auto's marketshare. Scanning the figures, Marketing Director R.K. Caprihan identified Madhya Pradesh and Rajasthan as the two markets where Bajaj Auto's grip was relatively loose. The execution strategy that the company chose: launching a blitzkrieg of convenient buying opportunities so that the consumer's awareness of the brand-created through intensive promotions-could be translated into instant sales without the price proving to be a barrier.

So, LML orchestrated fairs over a period of 3 months across these states, offering exchange schemes, financing options, test-drives, and demos. Every night, its salesforce prowled parking lots, especially outside cinema-halls and restaurants-after all, people frequenting these places were obvious targets-putting stickers on the parked scooters advertising the schemes. Says Ashok Ananthram, 53, the Vice-President (Marketing) of the Rs 145.49-crore ITC Hotels: ''Even though the strategic intent continues to be expanding your target audience, the action intent must involve looking at other segments, using tools like conversion marketing.'' In 1997, LML sold an additional 32,000 scooters in these markets. Proactive strategies have increased the company's marketshare from 11 per cent in 1992 to 24 per cent in 1998, compared to Bajaj Auto's slip from 77 to 64 per cent. Says LML's Caprihan: ''When times are good, you can sell from your chair. But now, you need to go out in the field and target your customer aggressively.''

OFFER EMOTIONAL VALUE. In the past 2 years, Citibank, the market-leader in the country's 2-million-consumer-strong credit cards business, has launched 11 cards: 5 are co-branded cards, and the other 6, affinity cards. The objective: create consumer segments along unique dimensions, and give members of each segment a reason to become a credit-card customer, breaking down the hesitation that marks any commitment towards new expenses in a recession. Thus, each of the 5 co-branded cards-in association with the Rs 62,933.78-crore Indian Oil Corporation, the $14,191 million British Airways, the Rs 756-crore Times Group, Vysya Bank (1997-98 income: Rs 740-crore, and the Oriental Bank of Commerce (1997-98 income: Rs 1,596 crore)-offers the extra benefit of hefty discounts on products from the respective companies, the perfect kind of value-addition to appeal to consumers in a recession. As for the affinity cards, their benefits are relatively intangible, but no less persuasive. They work by carving out a group of potential consumers united with one another over a qualitative dimension. Says M.N. Murali, 36, Marketing Head (Bankcards), Citibank (1997-98 income: Rs 1,607 crore): ''While co-branded cards offer a tangible benefit, affinity cards have an emotional appeal.''

Thus, Citibank's affinity cards, targeted at the alumni of Doon School, Modern School, and Shriram School, Delhi, were appealing to former students who grabbed the chance to display their allegiance, particularly since the company pledged 0.1 per cent of the spendings on the cards to the respective alumni associations. The cards targeted at cricket-lovers, wildlife-lovers, and the armed forces operated along the same lines, giving consumers a chance to contribute to their favourite cause. And the affinity card exclusively for women went even further, offering benefits like an insurance cover of Rs 25,000 against jewellery-snatching, medical insurance for pregnant women, and the contribution of 0.1 per cent of billings to empowerment programmes for women by voluntary organisations. The proof of Citibank's success: 10 per cent of its customers signed up through 1 of these 11 cards, and the proportion is slated to rise to 30 per cent by 1999. Says Citibank's Murali: ''Credit-card spending from the self-employed segment of the market has definitely fallen under the impact of the state of the economy. The only option is to continuously create and target new segments to keep increasing the customer-base.''

Crucially, new customers cannot be attracted in a recession with the same benefits as in good times. For, the resistance to experiment, whether with a new product or a new brand, is much higher-unless, that is, the benefit can mow down the barrier. Says Ammirati Puris Lintas' Mehra: ''Consumers look for safe choices during a recession. This is not the time for new brands to come in, unless their attributes are very strong.'' The route: first, identify benefits that will appeal to a consumer in spite of-or even because of-a recession. For instance, an emotional hook or an easier financing scheme. Then, use these benefits to segment the consumer-base, and design a product to appeal to the specific benefit in each case. In other words, make your customer an offer she can't refuse, and have an offer for every niche

SURPRISE WITH THE PRICE. ''Stating the price upfront can lower the consumer's expectation from a brand,'' warns Siddhartha 'Shunu' Sen, 59, the CEO of Quadra Advisory Services. Merely riding the best price in the product category isn't the surest way of cracking a recession market. Sure, other things being equal, a lower price offers a better equation when consumer budgets are under pressure. But unless she is convinced of the value connotation of your brand, the customer will still use the more expensive, but more trusted, product, albeit sparingly-in smaller quantity or on fewer occasions-than before to protect her budget. The solution for price-warriors? Lead with the proposition, making it either qualitatively different or quantitatively superior to the competition. And then slip in the lower price to seal the deal.

Communicating the differentiation in two stages will enable you to register twice in the consumer's perception. The prize: a double advantage which is of great importance in a recession, when every purchase decision is a considered one, and impulse-buying is ruled out. By using this principle, the Mumbai-based Rs 300-crore Enkay Texofoods, the country's largest exporter of fruit-juice concentrate, made a hit with its Onjus brand of orange juice. The obstacles in its path were formidable. For starters, fruit juice is not a recession-friendly product, being low on the priority list of most buyers. Moreover, Enkay was not the first to enter the fray since the Rs 811.36-crore Dabur had already launched its Real range of fruit juices. Even so, Onjus overcame both buyer antipathy, outselling Real 4:1.

How? Onjus entered the market on two price advantages. Its 1-litre pack was priced at Rs 35, versus Real's Rs 50. And it also had a 100-ml ready-to-sip package, priced at Rs 9, which had no competition from Dabur. However, the brand did not choose price as its differentiator. Says Tulsi Goyal, 47, CEO, Enkay Texofoods: ''We consciously did not play a price-warrior's role. The stress was on establishing superior quality, and ensuring that the consumer discovered the price-differential as a pleasant surprise.'' Thus, the communication focused on the naturalness of the product, which was reinforced by ensuring an orange colour-even though packaged orange juice is usually yellow. And by eschewing a premium positioning strategy, despite the essentially luxury connotations of packaged orange juice, the marketers tried to overcome the resistance of recession consumers against luxury products. Importantly, the pricing decision worked on the consumer's willingness to pay. So, factoring in the premium of Re 1 that retailers charge for a chilled drink, Enkay Texofoods priced the 100-ml tetrapack at Rs 9. That offered a third incentive, carving out an immediate association for the brand with both thrift and quality.

Many marketers consider recession a time for price-defence, to prevent customers from dropping out. The threat is a real one, but a handful have managed to turn the consumer's renewed price-consciousness to their advantage. By devising new price-points in acknowledgement of lower spending budgets, they have succeeded in making their products affordable not just to the existing customer but also to the new customer for whom the earlier price had proved an entry-barrier. That's what the Rs 333-crore NIIT has done with its swift (Short Work Programmes in Information Technology) brand of computer courses. By setting a price-tag of just Rs 499 a month for what is perceived as a high-priced product-so that the recession does not pose a barrier-NIIT has effectively widened its net to include home-makers, non-computer professionals, retired people et al. Likewise, when the Rs 425-crore Johnson & Johnson launched its Stayfree Secure brand of feminine hygiene products priced at Rs 20 for a pack of 10-39 per cent lower than the average price-it not only provided an alternative to those looking to spend less, but also opened up the market by attracting users of non-branded or home-made products. Says Jagdeep Kapoor, 43, CEO, Samsika Marketing Consultants: ''Pricing strategy can bring a product within the aspiring consumer's reach despite a recession.''

More

Issue Contents  Write to us   Subscriptions   Syndication 

INDIA TODAY |  INDIA TODAY PLUS | COMPUTERS TODAY
TEENS TODAY | NEWS TODAY | MUSIC TODAY | ART TODAY

© Living Media India Ltd