A few days ago, I got a call from a friend. She was at a Dell outlet and wanted to buy a laptop. She’s aware that I keep a tab on developments in the gadgets arena and therefore trusts my judgment. Interestingly, I could hear the sales representative trying to sell her a particular model at a price point she had suggested. Unfortunately, for the folks at Dell, my friend wasn’t really listening to them. She was asking them for what I had recommended. And this is when the thought struck me – what do you do if your customer knows everything? What if a channel, which was supposed to convince prospective customers to make a purchase, is no longer seriously considered by the buyer?
According to McKinsey’s Consumer Decision Journey report, “Consumers rather than sitting passively and having advertising come after them, are much more actively reaching out to their friends and family, the Internet and other channels to understand their options.” As such, there is an urgent need to step back and re-evaluate, both how consumers go through the decision process and see what companies need to concentrate on in order to make their marketing efforts more productive. Even greater today, when more marketers – both Indian and global – want a generous pie of India’s domestic consumption base of over $830 billion, which translated into 44.8% of the nation’s total GDP of $1.85 trillion at the end of 2012 (even ahead in percentage terms of China’s 32% consumption share out of a total GDP of $7.32 trillion).
Globally too, businesses are looking at the “Next 4 Billion” nations for growth, especially now, given the slowdown in mature economies. As per a recent report by PricewaterhouseCoopers (Profitable growth strategies for the Global Emerging Middle), “These nations are defined as having average per capita income of between $1,000 and $4,000 per year, and are home to 4 billion people, or more than half of the world’s total population of 7 billion.” Within this group – which includes China, India, Indonesia and Latin America countries in Africa – businesses have traditionally focused on the ‘Middle’ and ‘Upper Middle+’ income tiers. “The Global Emerging Middle (GEM) already accounts for 2.3 billion people globally. And it is only going to get bigger, thanks to high birth rates and above-average economic growth in many countries in the group. The GEM will represent a combined annual market in excess of $6 trillion by 2021. In India alone, the segment is expected to cross the $1 trillion threshold by 2021 as its ranks swell to 570 million, from 470 million in 2010,” the report sates. Even according to Deloitte’s report (Indian Retail Market: Embracing a new trajectory), “The total retail spending is estimated to double in the next five years. Of this, organised retail – currently growing at a CAGR of 22% – is estimated to be 21% of total retail expenditure.”
Hence, India is a top priority market in the future plans of almost every global company. But getting to know the heterogeneous and diverse Indian consumer is no mean feat, especially in a dynamic socio-economic environment, where what was a novelty until yesterday is quickly consigned to the dustbins of history the next day (The annual 4Ps B&M-ICMR Consumer Compendium is our effort towards understanding the Indian consumer’s mindset, figuring out his buying motives and also getting a handle on what he is contemplating next and why. The next few pages following this cover lead attempt to collate and communicate the big takeaways on consumer attitudes and behaviour from our survey spanning key product categories including consumer durables, electronics, automobiles, banking & finance, and online buying). Today brands cannot rest on their laurels, because standing still in a rapidly developing and fast growing market like India is dangerous. Agrees Mrinmoy Mukherjee Director – Marketing & Business Development, Retail, Raymond Ltd. as he tells 4Ps B&M, “To be successful in future one needs to continue innovating and delighting customers every single day.”
Changing demographics, rapid urbanisation, increased media exposure, and the proliferation of mobile services have changed the dynamics of the game. The fact of the matter is that traditional channels of advertising no longer serve the purpose of convincing consumers to buy the product. They merely help the brand in establishing its presence in the market. A television ad is as good as deploying a loudspeaker in a crowded market place which announces “Brand X is available at a store near by you.” End of story. This might surprise you, but CEOs already realise this. A recent study conducted by the London based Fournaise Marketing Group reveals that CEOs across the globe are increasingly getting with their marketing department. The study, titled Global Marketing Effectiveness Program 2011, states that “73% of CEOs say that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without explaining how it will generate increased business, and 77% have had it with all the talk about brand equity that can’t be linked to actual firm equity or any other recognised financial metric.”
Recently, Gerard J. Tellis, a Professor and Director of the Center for Global Innovation at the Marshall School of Business, University of Southern California, too undertook a research with Raj Sethuraman and Richard Briesch, through which they attempted to establish the impact of advertising on market share. They analysed 750 cases between 1960 and 2008 across brands, product categories and countries. The results were startling. Half of the ads were ineffective, the average effect of advertising was half as much as previously believed – they found that a 1% increase in ad expenditure results in a 0.1% increase in market share. They concluded that while advertising remains a powerful tool, its impact has declined over the years. Hence, the writing on the wall is clear. Instead of pushing a bulk of your ad spends on buying TV spots and getting celebs on board, there is a need to expand the digital presence of your brand to keep alive the ever-wandering consumer interest in your brand.
Just adding customer-centricity to your vision statement isn’t enough. Thinking like your customer is the first challenge, and delivering a positive customer experience is even harder. Achieving customer-centricity requires rethinking the way business is done. And this, in turn, requires a holistic approach that encompasses everything from analytics and insights to strategy and customer experience, from operating model design and execution to governance and transformation management. The reason is simple. Your customers are evolving. The traditional shopper has been joined by the digitally oriented, multichannel customer; as a result, operating models must accommodate both. The traditional customer may still be reluctant to share personal information, but the growing base of digital customers tends to be more open with data, especially if it is used to provide them with a better product or service experience.
A case in point is the sportswear giant Nike. The multinational did exactly that with its Nike + iPod Sport Kit, partnering with Apple to change the running shoe forever. Anticipating that runners would be eager to adopt technology and online channels to augment their training, the company developed a sensor for the left shoe that sends workout data wirelessly to an iPod. The sensor tracks distance, time, pace and calories burned – and even tells runners if they have beaten their personal best. Back at home, Nike’s online portal enables the runner to plot goals and compete with others. Therefore you, as a marketer, need to identify similar ways to reinvent your product or brand as markets evolve.
If you really want to stand out and survive this shift in consumer behaviour, you will need to do much more than allocate budgets and hire a great advertising agency. If your website does not answer all possible forms of questions but your competitor’s website does, you have lost the bet. In fact, this is the reason why today almost every popular brand is making investments in the digital medium to take its brand closer to consumers. Globally, spending on online advertising topped $100 billion ($102.83 billion) for the first time in 2012 (according to a report from eMarketer). This year, eMarketer reckons online ad sales will rise 15.1%, to $118.4 billion. And by 2016, digital ad spending will pass a quarter of all ad dollars. Even the Indian online advertising market (pegged at Rs.35.35 billion at the end of 2012), including classifieds, will grow by a whopping 54% in the next 12 months (source: Internet and Mobile Association of India and IMRB report).
Sounds great, but at the same time it’s important for companies to understand that putting money blindly in digital doesn’t serve any purpose; what is important to note is what they are doing online. “The communication needs to be meaningful rather than memorable. People also remember spam, but not for any good reason. The key difference between the traditional and digital medium of marketing is that in digital, brands can’t apply the push message strategy,” Anthony Rhind, Co-global CEO, Havas Digital tells 4Ps B&M.
Hence, marketing in the 21st century is about going back to the basics. If you are one of those who have suddenly started questioning the viability of Facebook as a marketing platform just because its IPO tanked and a lot of your friends in the industry say their are no reliable metrics, then you’re making a grave mistake. Look at the immense potential of the native ads market (the market for native advertising, which was sized at $4.6 billion in 2012, is expected to grow at 19.2% CAGR to $9.2 billion by 2016). For starters, native advertising involves sponsored content that is designed to appear along with a publication’s regular content, adopting the same look and feel as the website or blog it’s placed in. In fact, they’ve been around ever since the rise of Google. Google’s search ads let marketers display offers relevant to their search queries. Similarly Facebook has ‘Sponsored Stories’ which have been proven to be more effective than Facebook display ads.
Further, the movement to mobility is at full throttle. Smartphones and tablets are the “power players” in technology growth rates, helping consumers use their virtual network to access a growing portfolio of content, services and apps. Today the voice of dissatisfaction echoes louder than ever before. According to a recent study by Accenture (How to make your company think like a customer), while a dissatisfied customer was able to tell 10 people of a negative experience in the past; today, social media enables that same customer to reach thousands with a few keystrokes. Even Warsaw University of Technology and University of Wolverhampton in a joint 2011 study of nearly 2.5 million posts from over 18 thousand users at innumerable BBC forums concluded that the “most posts contain negative emotions and the most active users in individual threads express predominantly negative sentiments.”
Thus, companies and brands, which underestimate the relevance of new-age media, will suffer. Its effects may not be immediate, but over the long run it will just become impossible to catch up. However, unlike traditional media, brands don’t own these platforms. They’re evolving everyday. In fact, there is still a long way to go before the interaction with users reaches the next level. There is data that says that less than 8% of the users who download apps have less than three applications. In other words, it means that people download many apps, but actual usage is still very low. So, where do we see the next big shift coming? “The big shift will come when the apps will be relevant to the consumer in a wider space than just the initial brand interaction. The change will happen when brands try and touch base with the user at a relevant time, which will ensure that the user stays with that app for a longer period of time rather than using the app thrice for three minutes each and never coming back,” Ashok Lalla, Global Head – Digital Marketing at Infosys tells 4Ps B&M.
As history holds – from telephone to televisions – businesses have always resisted change. The resistance is not because of individual judgments but because the growth of a large number of companies depends on many other factors than just sound strategy. Many CEOs are reluctant to invest in social media because returns from such initiatives will take a little more time than usual. And stock markets are not very kind to those who can’t deliver consistently quarter after quarter.
No doubt, the herd mentality does work at times, but when you are in the business of getting hold of a customer before your competitor tries to hijack her, listening to what everyone is saying might backfire. While there’s still time, forget everything you had learned about traditional marketing and start looking at data unique to your business instead of trusting your past experience – by all standards, that’s now obsolete.
