New Marketing Concept for India

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NEXT GENERATION MARKETING: AN INDIAN PERSPECTIVEFaculty Contributor: Nagasimha Balakrishna Kanagal, Associate Professor

Student Contributors: Manish Kumar Urele and Suman Verma

The changing profile of the Indian customer has made it imperative for the marketer to change the wayhe communicates with the customer. The next generation Indian customers are educated, smart,

equipped with technology and well informed through various media channels available now. On onehand, while rural markets have shown a tremendous growth Internet advertising has become the

fastest-growing segment of total ad spending; rising at a rate of 20% 1 in the first half of 2008. Thisarticle provides an integrated marketing view on the efficient use of next generation tactics such as blueocean strategy, green marketing, permission marketing, buzz marketing, social marketing, ambushmarketing etc. for the marketer to optimally utilize these favorable trends and reap the maximumbenefits in terms of revenue growth and value creation to the customers.

India has been an attractive destination for marketers because of its growth potential as an emergingmarket. The average Gross Domestic Production (GDP) growth rate2 of India is 8.37% which indicatesthat future consumption will increase. The affluence level of the average Indian household has increasedsignificantly. The per capita income has doubled from the 2002 - 2003 level of Rs. 18885 to Rs. 380843.

Education level has reached to 79.9% in 2009 from a meager 34% in 19714. As shown in Exhibit 1, theresearch findings of McKinsey Global Institute indicate that the Indian consumer market is expected toquadruple by 2025, making it the fifth largest consumer market in world5.

Exhibit 1: Growth in Indian consumer market

With the saturation of urban market, a shift towards the rural market is evident and high growth is

expected in rural consumption. As the market is expanding, the customer is becoming rich, educated &tech-savvy with an increasing concern for society and environment. There are several implications forIndian marketers from this trend.

Next-Generation Marketing Strategies

In the view of the changing profile of Indian customers, marketers have been experimenting and utilizingdifferent strategies to communicate and influence the new Indian customer. A number of techniques havebeen used to tap into wallets of the next generation customer some of which are:

Social Marketing: Social marketing is a process for influencing human behaviour on a large scale, using

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marketing principles for the purpose of societal benefit rather than for commercial profit.

Viral and Buzz marketing: Any strategy that encourages individuals to pass on marketing message toothers, creating the potential for rapid multiplication to explode the message to thousands, to millions.Buzz marketing is a viral marketing technique that attempts to make each encounter with a consumerappears to be a unique, spontaneous personal exchange of information.

Mobile marketing: Mobile Marketing is a set of practices that enables organizations to communicate andengage with their audience in an interactive and relevant manner through any mobile device or network.

Blue ocean strategy: A blue ocean is created when a company achieves value innovation that createsvalue simultaneously for both the buyer and the company. The innovation (in product, service, or delivery)must create value for the market, while eliminating features or services that are less valued by futuremarket.

Green Marketing: Green marketing is the marketing of products that are presumed to beenvironmentally safe so that the customers value the product.

Ambush marketing: Ambush marketing is as undeniably effective as it is damaging, attracting consumersat the expense of competitors, all the while undermining an events integrity and, most importantly, its

ability to attract future sponsors.

Permission marketing: Permission marketing is an approach to selling goods and services in which acustomer explicitly agrees in advance to receive marketing information.

However, the perception of these marketing strategies is not the same for the marketer and the customer.An analysis of the strategies adopted by the various marketers was done to understand this difference.

Marketers Perspective

With the changes in lifestyle there is increased pressure on the marketer to grab the attention of thecustomer. Increasing emphasis is laid on interactive social media tools such as radio channels, textmessages and e-mails as well as social networking sites such as Orkut, Facebook, Twitter and companyblogs. These media platforms enable the customers to discuss about the issues, likes-dislikes andrecommendations.

Increasingly Indian consumers are also aware and concerned about the efforts companies make towardsthe conservation of environment and community development. The concept of Societal Marketing andGreen marketing although decades old, is being increasingly used in recent times. In face, companies havestarted leveraging on these concepts to entice the aware customers. The Jaago re campaign of Tata Tea,launched to create awareness about the voting right of Indian citizen, was very successful. ITCs camapignof donating Re. 1 towards the education of poor students on every purchase of notebooks is an exampleof new tactics used by the modern marketer.

A study of bajaj and Hero Honda in the 2-wheeler segment presents the similar story. In the wake of thecompetition provided by Hero Honda, Bajaj has completely transformed its image of being a traditionalfamily scooter to a younger generation bike with marketing techniques like Bajaj pulsar stuntmaniawhich has been possible through the use of next generation marketing techniques such as gaming, virals,green marketing, buzz and rural marketing. Similarly Hero Honda has utilized these techniquesconsistently to remain a market leader in the category.

Thus our marketer is entirely focussed on integrating the current technologies with the marketing programin the form of emails, text messages, internet blogs, networking sites etc. However the attitude ofcustomers towards these strategies is a bit different from the marketers viewpoint.




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Customer Perspective

The customers perspective about these strategies has been collected and analysed through a survey abouttheir preferences regarding various new generation marketing strategies. A distribution of consumerpreferences for marketing strategies utilised in Fast Moving Consumer Goods (FMCG) and Durablessegment was obtained as shown in Exhibit 2.

Exhibit 2: Consumer preference to various advertizing techniques in FMCG

The survey findings revelaed that in FMCG category the customersvalue offers/discounts in the marketing efforts of the company as theirhighest priority. Consumers gave a clear distinction in terms ofchoosing three offerings of the marketers. A typical consumer ratesdiscount offers, advertisements and the environmental benefit of aproduct over the other features. Mobile text messages and e-mailsproved to score the lowest among all the offerings by marketers. For atypical Indian customer the new technological means are still way into

the future and they are not able/willing to access them. As the executive of a leading car manufacturingcompany states the customers are not very tech-savvy, and specially the buyers of luxury products areelderly persons who are very particular about the look and feel of the product.

In the durable products section customers are more likely to prefer advertisements as shown from Exhibit3. It is because the customers are mainly from the high end segment and less price sensitive. Mobile textmessages still have the lowest preference in the mindset of the customers as far as marketing is concerned.

For a typical Indiancustomer the new

technological means are stillway into the future and they

are not able/willing toaccess them.




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Exhibit 3: Consumer preference to various advertizing techniques in Durables

From the qualitative analysis it is shown that the customers are slightly inclined towards the traditionalmethods such as advertising and communications using billboards.There is a need to educate people aboutthe advancements in marketing techniques so that they may adapt to the more convenient and effectivestrategies which are coming in place in the 21st century.

FMCG and Durables MarketingBased on the above analysis and by mapping the marketers perspective to the consumers preferencescertain trends can be seen.

Visual and Interactive Ads on Mobile

Although Indian customer has become technologically advanced owing to changing demographics, as perthe analysis he is still more affected by the traditional methods of marketing. Hence, communicating thesame message to the customers on a new technological platform will enhance its acceptability. Customersneed more visual and interactive platforms of marketing. Hence, marketers may send innovative multi-media messages (MMS) exhibiting the TV commercials to exploit the high mobile proliferation among thecustomers.

Focus on Green Marketing

As the customer has become more educated and affluent, the awareness regarding harmful effects ofpollution and chemicals has increased. Therefore, the companies need to develop and emphasize theirenvironmental friendly products in durables such as cars and hygienically safe products in FMCG such aseatables and soaps to tap potential customers.

Rejuvenating Customer Relationship Marketing (CRM)

In the changing trend of marketing innovations, customers should be involved in the marketing phase tocapture a greater hold over the market. Some of these changes could be:

a. Testimonials by customers: In products like Pureit the testimonials from customers are utilizedthat exhibit that they are satisfied from the product. These strategies should be used and improved toinvolve customers in the marketing of products.

b. Inviting suggestions for added features: For FMCG products such as Kurkure inviting recipesfrom customers for preparing delicacies provides them incentives to spread Word-of-Mouth aboutthese products.

Focus on Rural Masses

Given the fact that rural market is booming, marketers need to evolve and pursue rural marketing. It isdesirable to provide the products in different SKUs so that their price comes in the range of the ruralmarkets affordability. Demonstrations about the product through workshops or camp based activities

should be done for the less educated rural customer. Marketers can use innovative financial schemes toincrease their reach to the rural customer particularly in the Durables product category.

Conclusion

The income of a typical Indian customer has risen and so has their preference for tech-savvy products.Yet, customers are still connected to the traditional ways of marketing. They have become more aware andhave shown an inclination towards environment-friendly products. CRM has emerged as an important toolfor marketers and it should be renovated by involving customers in the marketing phase throughtestimonials. Rural markets offer potential and need to be tapped by innovative strategies. Thus, thoughIndia has changed but traditional marketing strategies on new technology platforms can aid the marketer in




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reaching the new customer.

Keywords

Green Marketing, Mobile Marketing, CRM, FMCG, Marketing

Contributors

Nagasimha Balakrishna Kanagal is an Associate Professor in the Marketing area at IIM Bangalore. Heholds a B.E Degree from Bangalore University and PGDM from IIM Ahmadabad. He has also done hisMA, MS and PhD from University of Texas at Dallas. He can be reached at [email protected].

Manish Kumar Urele (PGP 2009-11) holds a Bachelor's Degree in Electrical Engineering from NationalInstitute of Technology, Bhopal. He can be reached at [email protected].

Suman Verma (PGP 2009-11) holds a Bachelor's Degree in Electronics & Communication Engineeringfrom National Institute of Technology, Jaipur. She can be reached at [email protected].

References

1. Jessica E Vascellaro, Sep 4, 2008, Gap Widens in Online Advertizing, The Wall Street Journal, AsiaEdition

2. TradingEconomics.com Market watch, 2010, India GDP growth Rate, May 05,http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=INR, Last accessed onSeptember 24, 2010

3. Press Trust of India (PTI) News, 2009, Indias per capita income doubles in 7 years to Rs38,08,Feb 09, http://www.livemint.com/2009/02/09150714/India8217s-per-capita-incom.html, Lastaccessed on September 24, 2010

4. Adlakha, Arjun, 1997, International Brief, Population Trends: India, April 1997,http://www.census.gov/ipc/prod/ib-9701.pdf, Last Accessed on September 24, 2010

5. McKinsey Global Institute, 2005, The Bird of Gold: The Rise of Indias Consumer Market,http://www.mckinsey.com/mgi/publications/india_consumer_market/slideshow/main.asp, Last

accessed on September 24, 2010


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