Strategy; Customers: Delighting customers discontinuously

TRIMILLENNIUM MANAGEMENT: CUSTOMERS
Delighting customers discontinuously

By Rajan Saxena

This millennium comes with new dreams, hopes, and aspirations. It heralds the emergence of new business paradigms that will keep pace with a world rapidly changing under the impact of developments in infotech and communications technologies. This change is not incremental. It signifies a quantum jump in all spheres of life. It touches the lives of individuals all over the world. The context in which business is done, therefore, changes significantly. Emerging customer and market needs will demand a new set of corporate responses leading to intense competition. Technology will drive change, without being the source of a sustainable competitive advantage. The homogenisation of markets will see the creation of global and national brands, which will be under siege from low-cost generics, or regional and local brands. To succeed in this century, companies will have to increasingly invest in both technology and market development.

The Indian situation is unique. The lowering of entry-barriers over the last 10 years and the consequent influx of transnationals has changed the dynamics of the Indian market, changing both the customer's choice-set and the complexion of competition. Rapid advances in communications technology-telecom booths and cyber-cafes dot the landscape today-and the advent of satellite television and the Net have increased customer awareness and led to the partial homogenisation of the urban and the rural markets. Increasing literacy-rates have also played a role in enhancing customer awareness. The literacy-level in India is expected to touch 60 per cent by end-2001. The result, which is already visible at the beginning of this millennium, will be the emergence of an informed, aware, and empowered Indian customer.

This customer's purchase-behaviour will be similar to that of her global counterpart's. Higher levels of awareness will create a demand for (similar) products and services to be priced similarly across markets. This will significantly impact customer lifestyles and midwife the emergence of universal values and beliefs across both urban and rural India. Increasingly, customers will expect more benefits and better value for their money; they will want the latest and the best in the world without having to pay a premium for it.

Interestingly, while customer awareness will lead to an increase in the role of brands across product-categories, brand loyalty will decrease. Faced with multiple choices, the Indian customer will, increasingly, opt for a repertoire of brands within the same product-category. She will choose brands on the basis of intangibles, like service-delivery and the extent to which it is customised to her lifestyle-something that the interactivity of e-Commerce will make possible. In categories like consumer durables and industrial products, companies will find that performance-guarantees will be key to customer retention.

As consumer-spend increases, price-sensitivity will decline. The universalisation of lifestyles will drive the millennial consumer to opt for packaged and branded products in all categories. Price will no longer dictate the Indian customer's decision. Even now, at the beginning of the millennium, it is not price or performance alone that are important. Rather, the Indian buyer today wants to-and will increasingly want to-maximise the price-performance ratio. This shift in the decision criteria, coupled with the heightened awareness of the customer, will create new challenges in building and managing brand equity.

The Indian market of the millennium will comprise multiple layers of buyers. Customers will be segmented not only on the basis of demographics and lifestyles, but also on the basis of their decision-criteria and attitudes. Some new segmentation-parameters could be product-and brand-awareness, risk-taking propensity, value-awareness, technology-sensitivity, information-orientation, and exposure to international markets.

The re-emergence of joint families in urban India, fuelled by factors like dual-career couples and the lack of child-care infrastructure, will be another variable in the profiles of customers. This will lead to multiple brand- and product-choices within the same family due to the co-existence of generations. There will also be structural changes in distribution channels. Large company-sponsored distributors are likely to dominate the Indian marketplace. The change in distributor profile will usher in a retailing revolution in the form of supermarkets, shopping malls, multi-brand superstores, and automated retailing.

This will encourage new consumption-patterns like impulse buying, which will be further fuelled by an increased penetration of credit cards. The emergence of e-Commerce will only accelerate the re-structuring of distribution channels in the country. This millennium will, thus, see the demise of conventional marketing and the conventional picture of the customer. Orthodox paradigms of distribution or brand building or service will fail to deliver results in an environment dominated by e-Commerce and the extensive use of interactive technologies. It will also herald the end of the differentiation between the global and the domestic markets.

Given the scenario of a seamless global mart, marketers will have to focus on maximising their opportunity there rather than in local markets. They will need to optimise sales and the returns on investments in a shorter time-span because of shortened product and service-lifecycles. This will only be possible if organisations are able to leverage the benefits of economies of scale. Thus, companies will have to be both customer-focused and volumes-driven. And they will also need to use multiple distribution channels to reach target segments and utilise interactive technologies to meet the challenge of managing the customer-interface in real time.

As customers demand made-to-order offerings, companies will have to move from standardisation to customisation of products without piling up costs and passing them on to the consumer. This will entail investments in R&D. Although the millennial customer is likely to be a much more complex entity than she is today, technology will make it possible to integrate the customer with the organisation through data-warehousing and data-mining techniques.

Rajan Saxena is the Director of the Indian Institute of Management, Indore

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