Cover Story: Recession Marketing, A Radical Manisfesto, Pg 2

CHASE NEW MARKETS. If your core consumer isn't responding, take your product elsewhere. Identifying non-recessionary segments and niches within a recessionary market offers a steady route to both sales and margins. The critical issue, however, is whether to abandon your existing-and, probably, loyal-customer-base altogether, or whether to use a brand variant or extension, either for the new segment or for the present one.

For today's urban-centric marketer, one way to beat the recession is to tune into rural markets instead. Agrees Kartik Raina, 46, Vice-President (Sales & Marketing), Dabur: ''The recession is a very urban phenomenon. There is no agri-based recession in the interiors of Rajasthan and Punjab, where the consumers are not feeling the pinch at all.'' That leaves recession marketers with two choices: either to expand with their urban brands into rural markets, or to shift their attention to those brands that are directed at rural buyers. Says Quadra's Sen: ''The appeal of a product to rural markets has a direct impact on its growth rate.''

A focused exponent of the first strategy today is the Videocon Group. With its consumer electronics products under attack from foreign brands and the onset of a price-war, the company moved into semi-urban and rural markets, relentlessly pursuing volumes from towns with population of 1 lakh and below, and raising the number of its dealers by 700, from 4,300 to 5,000. ''Our target is to grab at least 80 per cent of these markets,'' says Videocon's Gupta. It's not just its TV sets that it has stripped off the frills in order to create a price-point-starting at Rs 6,000-that semi-urban buyers can relate to. Videocon has also launched a washing machine priced at Rs 3,000 for this market. The second strategy is being adopted by Dabur. The recession is hurting the fortunes of the new food products that it launched in 1996-cooking pastes, sauces, and a lemon-juice concentrate-as consumers cut down on experimentation with untried products. So, the company has shifted its marketing investments to its rural products, pumping in money to rebuild its brands and strengthen its distribution network in the villages. The result: sales of Pudin Hara Pearls in rural India have climbed by 11 per cent in the past 2 years. Sums up Ravi Nookala, 37, the Senior Vice-President (Marketing) of the Rs 400-crore Sony India: ''Designing products exclusively to cater to the needs of the semi-urban or rural consumers will drive growth even for premium brands.''

MAKE COMPARISONS IMPOSSIBLE. Till August, 1997, cellular telephone services were marketed as power tools for the affluent, with more than a hint of a status symbol thrown in. That month, however, Hutchison Max changed the rules of the game dramatically, responding to its readings of how the consumer behaves in a recession. The company introduced a branded SIM card-ace-the device that gives a cellphone its identity, in the form of a phone number. Cleverly, Hutchison Max tucked a pre-paid card, equivalent to a certain amount of air-time, into the product, taking away the entire cumbersome process of receiving bills and paying them. Even more cleverly, the company made the Rs 2,100-product-Rs 1,500 worth of air-time, and Rs 600 SIM card processing charge-available, packaged like a consumer product, at over 2,500 retail outlets in Mumbai, including departmental stores, chemists, stationers, and even paan-shops. Says Sandip Das, 40, Chief Operating Officer, Hutchison Max: ''We looked at the consumer who is seeking convenience.''

And even as the recession took its toll on cellular services, with both the subscriber-base and usage-levels across the country refusing to grow, Hutchison Max boosted its share of the 2-player Mumbai market to 60 per cent, with ace alone contributing 25 percentage points. The secret? Realising that no price-equation, if it was to make money for the company, could find acceptance among non-users. For, they always had the option of using the far-cheaper land telephone service, the company shifted the framework of reference for the product. With its packaging and distribution identifying it as a consumer product, it was repositioned in the consumer's mind as an off-the-shelf communications solution. And that piled up the convenience factor so high that the comparisons-and, therefore, the choice-were no longer made on the basis of price. Or, as Hutchison Max's Das puts it: ''The value overcame the price factor.''

The trick is in identifying the factors that consumers use to decide not to buy a product, and in repositioning the value of your brand away from those parameters. Thus, where tangible benefits are a basis of choice, rule-changing recession marketers can harp on emotional value. Where technology counts, they can tout the durability of their product. Where price is the issue, they can play on reliability. By shifting the very thinking of the consumer away from the familiar parameters of evaluation, the retardation that a recession creates on purchase decisions can be eliminated. Says Geeta Agarwal, 39, Head (Corporate Marketing), Domino's India: ''When the product provides a unique service backed by strong product attributes, there is no direct comparison that the consumer can make with an existing product, which helps build brand equity despite its higher price.''

BUILD BRANDS AROUND PRICE. Price may be the easiest route to the consumer's purse in a recession. But staying there on the basis of price alone is tough. For, lowering prices is the easiest strategy to imitate, particularly when competitors are new players willing to invest in building marketshares at high costs as their entry strategies. To turn price into a source of sustainable competitive advantage in a recession, the starting-point is to ensure that the differential is continuous. And unexpectedly high. And innovatively presented. The first is essential to ward off imitation. The second, to keep customers interested. And the third, to build the brand-image around the price instead of being dismissed as a cut-price and, therefore, low-quality, player. Says Ravi Kant, 53, the Director and Senior Vice-President (Consumer Electronics) of the Rs 1,572-crore Philips India: ''When a brand can bring about a paradigm shift by offering a price-value equation not thought of earlier, it stands to gain enormously.'' The rule-setter of recession marketing in the consumer markets has, of course, been the Rs 920-crore Baron International, which has used price to take its Akai TV brand to a growth rate of 55.50 per cent-far higher than any of its competitors. Wisely, Akai did not enter with price as its weapon: it took the trouble to build a premium association, using the fact that the brand had originated in Japan. Thus, the announcements of revolutionary prices, when they came, conveyed a same-value-lower-price equation, rather than a cut-price-cut-value one. But even that alone would not have sufficed. What CEO Kabir Mulchandani did, therefore, was to choose his price-points in a way that actually made a TV of a particular dimension available at the price of one below it: a 21-inch set for the price of a 14-inch set, for instance.

In the process, he achieved his real goal, which was to knock the product off the premium pedestal altogether, bringing it within the ambit of a much wider base of buyers. Says Mulchandani, 25: ''I wanted Akai TV to be the benchmark of a true Value-For-Money brand, equivalent to the Maruti 800 in cars, and Nirma in the detergents market.'' That the TV was the ideal product for a gloom-hit market so long as the price was right was an obvious advantage. Points out Ammirati Puris Lintas' Mehra: ''During a recession, the number of TV-watching hours go up significantly since people want to escape reality.'' Cashing in on this need with a product-offering that smashed the price-barrier, and managing to do it continuously instead of sporadically, helped Akai conquer the recession.

CHOOSE A RECESSION-SPECIFIC USP. ''One single factor which can swing the customer's decision in the favour of a brand is the relevance of the value it offers in a recession. The direct link of every rupee spent is to the value derived,'' says Dimensions' Banga. The key to succeeding in a recession, then, is in identifying just what kind of value will appeal to the recession consumer. That it has to be more tangible than intangible where high-ticket products are concerned goes without saying. That, for non-durables, the feel-good factor could also work in a recessionary environment is also accepted. The issue, however, is to single out the most critical factor that will advance the purchase decision.

Says Banga: ''Lower price is not as important as the worth of the product, which the consumer gives more weightage to than before.'' To take advantage of the unwillingness to lavish spending on any products except those whose benefits will last for a long time, marketers can emphasise the durability of their products, instead of technology or design. That's what the Rs 721-crore Godrej & Boyce did, for instance, as it re-associated its Storewel brand of almirahs with sturdiness and the ability to last a lifetime, thus giving customers a sound reason to invest in the product. In fact, the very unchanging quality of the brand's benefit, which could have proved a liability when the customer was chasing smart looks and state-of-the-art design, was effectively used as the USP.

Another efficient mechanism to advance a purchasing decision is to devise payment options that address the customer's requirement of not parting with too much money out of her already-strained budget. That's a strategy that every marketer of high-priced products has been employing. By offering easy instalment options, they are providing consumers with the one benefit that adds a great deal of value in a recession: the flexibility to protect their pay-packets now, while the recession lasts.

Marketers who can win over customers in a recession have the great advantage of emerging from it with a lead already established over their rivals. For, now that she has become wiser, the customer will no longer stop shopping for the best value even when the recession ends and her disposable income and purchasing power grows. That is why the strategies of recession marketing could well be equally applicable even when the economy returns to a growth mode. After all, a marketer who can harness a recession cannot but gallop ahead in a boom.

THE Ps OF RECESSION MARKETING

SAMSUNG TELEVISION
As recession-induced price-wars compete for customer attention, drawing the customer's attention on the strength of the product alone is difficult-but rewarding. Yet, that's just what the Rs 400-crore Samsung Electronics India has achieved. Instead of touting a panoply of hi-tech features, the company has invested its TV with just one USP: the ability to provide a wider picture than conventional sets. That has made decision-making easier for the buyer. If she considers the feature valuable, she opts for Samsung without considering the competition. In a recession, customers use many criteria for their choice: with its product, Samsung is trying to eliminate lengthy comparisons and influence the customer's choice quickly and definitively.

GODREJ-GE WASHING MACHINES
How much does a Godrej-GE washing machine cost? The answer that the company is trying to get customers to give: Rs 399. How much does it cost a home-maker to get her family's clothes washed, either by a maid or through a laundry, or both? The answer that the company hopes its customers will give: Rs 399. Since its 5-kg twin-tub model is priced at Rs 8,700, Godrej-GE is reframing the context in which the price should be evauated. The weapon: an instalment scheme that charges Rs 399 a month. By playing up that figure, the company is evoking comparisons with the monthly cost of laundry, thus trying to seal a favourable price-equation for its product.

KITKAT CHOCOLATES
When, not how much. Defining the occasion of consumption-and not the quantity-was the objective of the ad campaign for the Rs 1,434-crore Nestle's KitKat chocolate, whose launch virtually coincided with the advent of the economic downturn in the country. KitKat's communication used humour, in a chuckle-loudly form, to brush away the blues. And, cleverly, the real message-that the product is a slim, chocolate-covered wafer, the kind of non-heavy snack that adults too can consume-was enrobed in this packaging. Thus, the promotion became the vehicle for the proposition, with its form enabling the effect of the recession on the consumer's mind to be lifted.

TUPERWARE
Its premium-priced plastic kitchenware made the Rs 13-crore Tupperware's product ill-suited for a recession, when consumers prefer the cheaper option of commoditised products. Distribution has become the differentiator for convincing potential buyers that the additional price is worth paying. Since using retail outlets would not have allowed buyers to interact sufficiently with the product to decide whether the premium was justified, the company chose direct marketing, in its most contemporary form: multi-level marketing, where customers double as distributors. The advantage: the distributors reach out to customers, instead of waiting for them to come to the product.

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