Friday, November 25, 2011

IS INDIA REALLY 4 NATIONS?

SO FAR, MARKETERS HAVE LARGELY PAID ONLY LIP SERVICE TO THE CULTURAL DIVERSITY WITHIN INDIA. IT’S TIME THEY DO MUCH MORE TO LEVERAGE IT TO THEIR ADVANTAGE

Companies are worried about the coveted FDI regulations for this market. Economists are worried about its massive poverty indicators and growing inequality. Politicians are worried about their next elections as usual, but perhaps much more today about simply getting caught! Business in general is worried about favourable government policies and reforms and also about the appalling Indian version of the term “infrastructure”. And on top of all these, the common man is worried about (including infrastructure, of course) rising prices on all fronts, corrupt and inefficient systems, uncertain markets, lack of a social security net… the list is quite endless.

Welcome to “Incredible India”, the term itself a perfect fit for this country, and not just because the words are catchy and rhyme well. It’s also because of their meaning. Not great, or awesome; but ‘incredible’, in simple terms, hard to believe. And that’s how intellectuals at different points of time have described the ascent of the Indian economy.

Nevertheless, marketers love stories, and the Indian story attracts them like few do. Goldman Sachs’ BRIC report laid the groundwork followed by many others. Another exhaustive report by McKinsey in 2007 gave some important indications of where India could potentially be. It projected, with an assumed CAGR of 7.3%, that India would triple its income levels by 2025. That will bring around 291 million people out of poverty and the middle class will rise by ten times over the period to around 500 million. What’s more, 23 million people would count among the wealthy, which would be more than Australia’s current population (around 22.7 million, Australian Bureau of Statistics, October 17). And the most exciting part, of course, is that the country has a combined young & working age population (14-60 years of age) that comprises nearly 54% of the total (UN, 2009 figures). Another 31.3% are in the wings to enter this group (age 0-14 years). India’s working age population is expected to edge out China by 2028.

This is a brief of the larger India story that marketers across the globe have grown to believe; and all it seems to say is that – unless you want to be a bit player on the global stage a few decades from now; it’s imperative that you invest in India. Of course, it’s a great story for shareholders of a number of MNCs as well, who have been terribly short of good news lately. However, before you hop on to the India bandwagon, you have to understand the fact that although the macro picture makes a valid case, it’s very easy to get lost in a maze if you are unable to grasp the intricacies unique to this market.

One of the most critical and overlooked aspects of this market is culture. Generally, marketers and analysts have attempted to either club the entire India as one (using economic segmentation) and look for a unifying theme, or considered it just too diverse to really merit the time and energy in segmenting it in this manner. Either approach is dangerous. In fact, my ongoing research provides compelling logic that supports the existence of India as 4 nations – North, South, East & West – and this has profound implications for today’s marketers. These divisions have a strong historical context and continue to be extremely relevant even today.

CONSUMER PARADIGMS

Art is a very apt reflection of life. And if you look at our movies, there are a number of stereotypes that have been used to define Indians in different zones. A Punjabi is often pictured as brash, impulsive, imposing and ready to pick up a brawl, or even join an ongoing one for company sake! Conversely, a person from Tamil Nadu is pictured as relatively submissive and also deeply rigid about his style of living. Mumbai residents are typically shown as immensely practical and down to earth. And a person from the city of Kolkata will be portrayed as too passionate about his state, ready to revolt at the slightest excuse and be ready for an intellectual solution to every problem, if not a practical one.

While extreme, these stereotypes are not without basis! Some research into consumer buying habits also brings out some vital differences in the four zones. A small perception-based survey across 4 metros revealed some interesting characteristics. West Bengal, for instance, has a strong history of revolution, and they harbor a fierce sense of pride in their culture. They are highly intellectual and able to achieve their goals (financial or otherwise) through proper planning. Purchases made by them are skewed towards long term assets like real estate. New Delhi has been an epicenter of power and also attracted a mix of cultures from across India, with a larger influence from the neighbouring states of Punjab and Haryana. There is a great obsession with earning money, and perhaps an even greater one with flaunting it. Down south in Chennai, one sees a conservative society that has a deep sense of traditionalism as well as a bit of a colonial hangover. Higher education rates and rise of industries like IT here have attracted wealth to a great degree from abroad, and people here do invest in certain luxuries as well. But customs and traditions are strong influencers, visible with the amount of jewellery they buy; an integral part of traditional attire. When you look west in a city like Mumbai, there is a very strong influence of the British Raj as well as of the traders that frequented the city’s shores. The city works strongly on the ‘time is money’ mentality and is tremendously practical and pragmatic; a vivid barometer of which are the local trains, used by people of all economic classes.

Now take a look at how this reflects on purchases. The benchmark J.D. Power Asia Pacific 2011 India Escaped Shopper Study talks about how regional patterns affect purchases. Exterior designing and style dominates in the North, while the West looks for acquisition costs as well as total running costs. The South in comparison looks for utility, is extremely sensitive on price and even considers opinions of friends and family before taking a purchase decision. The Vizisense New Age Shopaholics survey analysed the trends of users on group buying sites and saw West and South leading over the North when it came to online shopping. An eBay India study showed that South Indians were the most active buyers at the site at 41% followed by West at 27%. North seems more skewed towards offline buying. Divisions in the zones also reflect in reading habits. The National Youth Readership survey 2010 reveals that the southern region leads with 24% youth readers, followed by the west and east with 22%, the north with 13%, central with 12% and north-east with 7% readers. Food patterns are a very obvious differentiator across regions. For instance, mustard and soya oil is preferred in the north, sunflower oil is used commonly in the west and cottonseed/groundnut oil is used in the south.

Besides, there is a definite distinction in terms of the kind of advertising. Milward Brown studied nearly a thousand advertisements across markets in India and concluded that only one in seven had a pan-Indian appeal. Leading advertising agency Ogilvy launched a unique initiative Ogilvy Dakshin, in recognition of the marked differences in which North and South India perceived advertising and the observation that brands who were simply doing language translations were only spending money on further disconnecting from customers. By using local actors, dialects, songs, et al, Ogilvy Dakshin campaigns have successfully delivered visible growth for brands like Coke, Thums Up, Asian Paints & Fortune Sunflower Oil. One campaign worth discussing is the Fortune Sunflower campaign, since the brand was totally out of consideration for Tamil Nadu and Karnataka. The agency devised a series of campaigns showing south Indians confessing on their issues with eating restrictions and the advertisements talked about how having food cooked in Sunflower Oil was light and one could eat to his/her heart’s content. The campaign took Fortune Oil to number 2 in Tamil Nadu. The characters were so successful that the agency created a kind of serial (actually a series of ads with them). They also held roadshows that honoured women and gave them free snacks and had other entertainment activities. But the killer was the shuttle service they organised from one music sabha to another (Chennai has a plethora of these sabhas playing Carnatic music towards the end of the year). They distributed snacks cooked in Fortune oil in the buses, roped in caterers at these sabhas to use Fortune Oil and promoted all this through a media campaign. When you get that much into the local flavor, success can’t be far away.

MAKING CULTURE WORK

When it comes to success stories, there are in fact three broad categories that you can define – Indian companies successfully adopting regional positioning, regional Indian players becoming national/ global brands and MNCs leveraging regional diversity.

In the first category, one brand that comes to mind is The Times of India (TOI). Till a little over a decade back, the English daily market in India was broadly defined as TOI in Mumbai, Statesman in Kolkata, Hindustan Times in Delhi and Hindu in Chennai. It is said that changing newspapers is as difficult as changing your cup of tea/coffee. But within a few years, TOI raised the stakes with its invitation pricing strategy and became the leading English broadsheet of not just India, but also the world (readership of 7.47 million by June 2011 as per IRS). Its success mantra to a large extent was also customisation of content to suit local audiences. Rahul Kansal, CMO, Bennett, Coleman & Co., affirms, “Kolkata for example, is a group with a highly eclectic set of interests. So we have kept an eclecticmix of contents in our Calcutta Times. We may have, on the other hand, a far more Bollywood-oriented mix in some other markets like Delhi for instance; as I don’t think it is as wide (the readership orientation). Chennai is a city where even the English reader seems far more comfortable with his own traditions. The newspaper there reflects that.” Dabur is another instance, which successfully forayed into South India using local branding, marketing strategy and brand names. For instance, it renamed its ‘Dabur’s Lal Dant Manjan’ as ‘Dabur Sivappu Pal Podi’ (red toothpowder in Tamil) for the South Indian market. It launched Dabur Herbal Toothpaste in Kerala and Tamil Nadu due to their preference for Southern products and Dabur Shwaasamrit in Karnataka and Kerala as it provides relief from cough, cold and bronchitis that’s quite common in these regions. TV advertisements were also customised to provide a more rational appeal since that works more with South Indian audiences. Parle acquired Tops and the brand successfully took around 10% of the market in West Bengal & Assam in direct competition to a strong regional brand like Bisk Farm. It also took its Jhalmuri flavoured wafers national. Similarly, ITC launched Bingo Masala Chips for North India and then took the flavour across India. Local flavours in general do have a certain appeal across the nation. Apollo Tyres used the concept of diversity as well. Company Chairman O. S. Kanwar emphasised on this thus, “North Indian truck drivers tend to overload their trucks as compared to South Indian drivers. So we researched and developed different tyres for the two segments!”

When it comes to regional brands going national, the telecom sector is full of them. Bharti Airtel itself started from New Delhi and went into more circles across India and went global through a spate of acquisitions. The most recent case of a regional brand going national is Aircel. Till around four years back, it was limited to South India. With aggressive national intent, it launched simultaneously in eight new circles. Then it made a bid for 3G licences and did a national branding for itself by using Indian cricket team captain M. S. Dhoni. It has also brought customised offers for various regions. In Odisha, it launched the Rs.30p/min. call for STD from Aircel to any other operator and a balance transfer facility for its pre-paid subscribers in Odisha and unlimited free Aircel to Aircel calling in Bihar and Jharkhand for 30 days at a price of Rs.349/-. Its 3G services are now available across India barring 3 circles. The company, which had around 31 million subscribers by end-2009, crossed 50 million in January this year. Cavincare’s story is well known, which started from founder C. K. Ranganathan’s initiative of selling Chik shampoo satchets through bicycle vendors. He later took the brand to overseas markets like Bangladesh and Sri Lanka. Another instance is Amrapali Jewels, which started with one retail store in Jaipur. Rather than being conservative, they selected the most unique pieces of jewellery from across India and set up a luxury jewellery business, which has a presence across India and in UK, US, Sri Lanka, Spain & Nigeria (they designed the entire jewellery for the Hollywood flick Troy, which really launched them on the global stage). Waghbakri tea and MTR Foods are other instances of brands that leveraged their regional strengths to go national and global.

Some MNCs have also got equal to the task. Unilever’s India arm has understood it only too well after a number of setbacks from regional players like Wipro’s Santoor, Anchor Health & Beauty, Godrej’s No.1, Ghadi & Sasa. Now it wants to act like a regional player. An interesting instance is HUL’s launch of Brooke Bond Sehatmand tea, a tea they developed for the regional (more specifically rural) market with vitamins fused into each granule, positioning it as a health supplement. They further ensured that they customised tastes to regions, like catering to South Indian taste for strong flavours and dark colours. The Bharti-Wal-Mart venture, rather than go pan-India at the outset, decided to start with Amritsar in Punjab and then go further to North India with its cash & carry stores as it found the agri-rich state to be a lucrative starting point where it could start building a strong supply chain. Actually, the company strongly believes that supply chains have to be regional in India at least for now, since national supply chains aren’t so strong yet. Nestle’s Maggi has been a traditional success story of launching regional flavours from time to time and so has Lays from Pepsico.

There have been instances of failures or setbacks for major brands too, like HUL mentioned above. Wipro’s Santoor overtook Lux in south India while Godrej No.1 overtook Lux and Lifebuoy in the north in 2009. It’s amazing how Maruti, which is considered more apt for conservative and tradition loving customers, was not accepted too well in the South as it was perceived as a North Indian firm (south just accounted for around 20% of national sales till a few years back). Through innovative campaigns like the annual Dakshin Dare rally and launch of more economical diesel variants, the company claims to have improved its standing. Coca Cola faced a different kind of failure when it refused to acknowledge or appreciate local farmer concerns over water shortages in Plachimada, Kerala, and had to shut down its plant.

All in all, it’s time marketers understood the relevance of cultural diversity in India and bring it into this ‘4 nation’ framework. And like their environment keeps telling them everyday, they cannot rest at that, as they have to also then look at diversity within regions! Besides, the post-1991 generation, which accounts for over 50% of India, is confronting traditional values as well as getting exposed to modern, global ways of living. Not much research has been done on what kind of cultural orientations this youth market will display in the coming time and whether the diversity of previous generations will diminish or get stronger. Food for thought, isn’t it?

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