all that marketers need to know about the indian youth

8/7/2019 All That Marketers Need to Know About the Indian Youth

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All That Marketers Need to Know About The IndianYouthHaving a Middle class that just about Matches The Entire Population of United Statesis good enough, But having a Young Population that nearly Rivals the Total Citizenryof the EU is the Icing on the Cake for India

Issue Date - 24/02/2011

Its not for nothing that marketers of the world are gettingready for India. But are they able to grasp the fine printwhen it comes to enticing this young country?

Generation gap. Its the reason why every father considershis child to be chasing all the wrong things in life and thechild considers his/her father to be too far away from todaysreality to make a judgment. But when you consider the waychange happens in todays time, it doesnt take a father-sonkind of age gap to look at a generation shift. A lot of us who

came out of college or bagged our first jobs just around ten years back would notice a starkdifference in the way youth behaves and acts today, and also how marketers try to target

them. One instance that caught my attention just some time back was with respect topersonal loans. Even till a decade back, we were thinking twice over just taking a loan for atwo/four wheeler. Today, home loans are taken by people under 30, and there are loans forthings like consumer electronics, mobiles & holidays. The last I heard was that there are loansfor dinners in five star hotels as well!

Marketers do have a number of tricks in their playbooks, and this is just one of them - whenyou break up the amount payable into installments, price sensitivity to demand comes down.Of course, the fact remains that debt funded consumption booms are not uncommon. The UShas just been through that and the resulting bust cycle, as its current national debt stands ata whopping $14.13 trillion, and it bears a household debt of $11.6 trillion by the end ofSeptember 2010 (GDP of $14.12 trillion as per World Bank). US has an external debt to GDPratio of around 94.75% compared to 21.65% for India and 19.2% for China. So definitely,there is a lot more scope to fuel debt fuelled consumption here, as compared to countries like

US, which have pretty much stretched themselves to the hilt, and cannot stretch further tillsome strong GDP growth numbers come in.

When we talk about the attractiveness of the Indian market, the first point that comes to mindis its middle class. As per NCAER, the Indian middle class (now defined as an income bracketof Rs.3.4 lakh to Rs.17 lakh as annual household income) will swell to 267.7 million by 2015and 547 million by 2025. Current US population was around 310.23 million in 2010 and isshowing a growth rate of around 0.9%. Even if it grows by 1% every year from now, it wouldreach around 360.16 million by 2025, which means that the Indian middle class alone wouldoutnumber the entire US population by that time. However, many experts have called this achimera, since the average income and prosperity level in India are far behind the levels ofdeveloped countries.


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Thats where being a young country can be of immense help, and that is one area whereIndias credentials are tough for even China to match. According to a report by McKinsey,India is expected to add a workforce of 250 million by this decade. By 2025, around 28% of

Chinas population will be aged 55 years or more; India, with 16%, of the same, will obviouslybe at a better position. India could potentially add 170 million urban workers between 2005and 2025 compared to 50 million for China, if it gets its urbanization story going. In fact, thenumber of Indian people below the age of 25 is around 600 million, and the population of theentire EU is just touching 500 million so far.

Indeed, as discussed earlier, there are a lot of marketing experiments happening in the Indianmarket today, and the attempt to push debt fuelled consumption is just one of them. The factthat a consumption boom is emerging in India is not too far-fetched. Look at how costs ofpremium branded products (see table) are going up at rates of 15-20% every year, and yetthey are finding takers. Of course, this inflation is hardly of concern to the government of theday. As the combined effect of economic growth (GDP growth of 8.6% expected this fiscalcompared to 8% the previous fiscal) and favourable demographics come into play, thereseems to be hardly a better market to play on. Discretionary spending is expected to be some

70% of overall spending by 2025 as compared to some 38% in 1995. Also the ratio ofdependents is bound to come down to around 48% by 2025 compared to 60% by 2005. Butthe numbers can only provide the tip of the iceberg in a market like India, where the market isso diverse that it can befuddle even the most seasoned of marketing brains.

People who have studied this market have realized that the Indian youth follow no setpatterns in their consumption behavior, and making any assumptions too soon is insensible.For instance, while private consumption will grow to Rs.67 trillion by 2015, organized retail willgrow at a crisp pace to account for Rs.3 trillion by that year (thrice its value in 2010).However, unorganized retail isnt a write-off at all, as it is expected to grow by Rs.4.5 trillionin the same period. They note that while Indians are going to unorganized retail for categorieslike apparel, footwear and electronics, they still prefer the traditional route for groceries,furniture, medicines, et al.


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This is the great Indian paradox that marketing expert Rama Bijapurkar talked about in

her popular book on Indian consumers titled We are like that only. She calls India thebullock cart to business class economy, which implies that extremes coexist in thiscountry, and this is true for the youth as well. They may seem to be least interested in anational cause on most occasions, but they surprised everyone when they came togetherfor the Jessica Lal candlelight vigil and to protest 26/11. Indian youth are ready toindulge in materialism as well as dwell in spiritualism. They eye foreign brands withrespect, but do not mind going Indian as well when they feel like it. The upcomingdouble income couples are ready to enjoy packaged meals in American style, yet theyalso want to enjoy the pleasures of cooking at home and having fresh food. They enjoyeating in the most expensive restaurants, but cannot avoid street food either. They areequally at ease shopping for apparel in Shoppers Stop and Lifestyle, as they are

shopping in Sarojini Nagar in Delhi or Fashion Street in Mumbai. They may go beyondtheir monthly budget to be able to enjoy an expensive holiday, while they haggle withvegetable vendors, rickshaw drivers, door to door salesmen, et al in their daily lives forthat slightly better bargain. They will buy expensive cars, and look to save money bycurbing their travelling. India is truly a land of contradictions, and the youth of thiscountry display these same contradictions in no uncertain terms.

Marketers typically have to approach this market with a lot of sincerity and alsounderstand that this market can surprise as well as shock. For instance, there was a hugepent up demand for FMCG goods post liberalization, and players were typically bullishabout a sustained boom. When the concept of EMIs for personal vehicles started gainingtraction, it was shocking for even giants like Hindustan Unilever, as their brisk pace ofgrowth suddenly stalled. The size of the wallet had not changed; the consumers had justreallocated their expenditure to what they considered was more critical to their status. Asmobile phones, laptops and iPods gained favour, hardly anyone noticed how the musicsystems slowly lost their appeal in the market. TV channels and advertisers face anuncertain future, as the youth of India growingly gets hooked on to the internet. Earlier,we had time to watch ODIs, now even watching T20s can be an expensive proposition. Iftablets gain prominence the way they are expected to, both desktop and laptop playersmay have to start planning exit strategies soon. A number of market leaders have seentheir positions being eroded in the last few years Nokia, Samsung, Maruti and HP toname a few. While the grey market used to be a threat earlier, private labels are aneventuality that the top brands are yet to get accustomed to. There is also no telling whena new player like Micromax can suddenly discover a new Y factor that the incumbentshave ignored and take the wind off their sails. This youth market is intensely dynamicand willing to experiment. If India is on your itinerary in the coming months, do makesure that you possess these traits as well, and in ample measure.


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4Ps B&M- ICMR- CVOTER SURVEY

Know The Indian Youth Inside out4Ps B&M in association with ICMR & Cvoter showcasesan in-depth analysis of the Indian youth (in the age

bracket of 18-25 years) and its unique buying behaviouracross product categories

Methodology

4Ps B&M in association with Indian Council for Market Research (ICMR) & Cvoterconducted a survey amongst the Indian youth (18-25 years). The survey includedresponses from 1,628 respondents belonging to 31 different Indian cities as given below -

Tier-I cities: Delhi, Kolkata, Chennai, Mumbai, Bengaluru & HyderabadTier-II cities: Jaipur, Chandigarh, Indore, Bhopal, Guwahati, Ranchi, Nagpur, Lucknow

et alTier-III cities: Varanasi, Ambala, Jabalpur, Nashik, Agra, Jodhpur et al

Interviews conducted were both face-to-face and telephonic. The target respondents wereadministered a structured questionnaire and the Survey had a good mix of working andnon-working individuals. The process was an attempt to understand the buying behaviourof the youth in categories like mobile phones, gadgets, internet usage and apparels(especially casual wear). The survey also took into account certain psychographicparameters to judge the TG. The analysis of the survey is represented by categorising thecities different tier zones to further understand the diversity of the Indian youth.

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MOBILE PHONES


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Internet Usage


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Gadgets


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Gadgets


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Casual Wear


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EXCLUSIVE COLUMN : MICKEY GOODMAN, PROFESSOR OF MARKETING, STERN SCHOOL OFBUSINESS

Whos Buying and Why?Shopper Marketing Takes Center Stage

How do consumers decide where to go to make a purchase? What influences them before they get to thestore? Once there, what factors influence how they navigate the store? Ultimately, what do they buy andwhy? These are some of the critical questions that we ask in understanding the rapidly blossoming world ofShopper Marketing. But, before we go any further What is Shopper Marketing?

At its most fundamental level, Shopper Marketing as a discipline recognises that there is a differencebetween Shoppers & Consumers. Consumer Marketing has, of course, always focused on how and whyconsumers choose and use product categories and specific brands within those categories ... and how they

consume. But before a consumer can consume they have to buy, and in order to buy they have to shop.Shopper Marketing recognises that a shopper and his behaviour is different than a consumer, andinvolves the study of that shopping. It is important to understand that Shopper Marketing is not meant toreplace Consumer Marketing; rather, it should be viewed as another layer to the study of marketing and,ultimately, to the marketing mix, one that brings more depth and dimension to the entire marketing process.

Though there are many definitions being utilised around Shopper Marketing, all of them integrate the keyaspects of the discipline: Gathering insight to understand shoppers; recognising that the retail store is acritical element of the mix; and that effective programming must ultimately drive incremental businessresults for both brands and retailers, at a suitable return on investment.

The definition that is currently the most widely-utilised in the United States was an outgrowth from a studyby the In Store Marketing Institutes Retail Commission on Shopper Marketing. As per the study, ShopperMarketing is the use of insights-driven marketing and merchandising initiatives to satisfy the needs oftargeted shoppers, enhance the shopping experience, and improve business results and brand equity forretailers and manufacturers.

Its interesting that all of the buzz in the marketing world right now is around Digital Marketing,especially mobile and smartphones as well as social media like Facebook and Twitter. Yet in two differentstudies of marketing trends that we conducted over the last two years top consumer goods marketers citedboth Digital Marketing and Shopper Marketing as the key growth areas of the marketing mix, the areas towhich they were increasingly dedicating more funds. In fact, in terms of total dollar spending, for many

companies the funding allocated to Shopper Marketing actually exceeded that being spent in the digitalareas! So, Shopper Marketing is here, it is important, and it is not a fad. It is here to stay!

There are three very clear mega trends that are responsible for the growth of Shopper Marketing, and webelieve these trends apply to US, European, and Asian markets, albeit at varying levels of development andemphasis.

First: Its harder to reach consumers. The old mass market, traditional marketing model was built around


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the premise that consumer goods manufacturers could develop brands that met consumer needs, makeconsumers aware of them, and that consumers would then be driven into the store to buy them. Thestore, i.e. the retail distribution channel, was viewed just as a channel to ensure that the product wasavailable to consumers; it was not really viewed as an element of marketing influence in the marketing mix.But this model was built at time when there were limited media vehicles to reach consumers and as such it

was therefore relatively easy to reach the consumers. In todays world, we are dealing with an incrediblyfragmented environment for reaching consumers with many media options available to reach the consumers.Further, we are dealing with an environment in which more and more media consumption is on demandand time shifted.

It is not within the scope of this article to review the dynamic changes we are currently seeing in the mediaworld. But the point here is a simple but incredibly important one: If it gets harder to reach and influenceconsumers before they get to the store, then it is more important to reach & influence them when they arein the store.

The second mega trend which is clearly visible is that today retailers are more powerful. Around the globe,

the retailing industry, like many industries, is consolidating, mainly due to the drive for economies of scaleand operational efficiencies. Consolidation means that there are fewer and fewer power retailers to whomconsumer goods companies are selling, and who determine the success of failure of consumer brands. So, inthe old world, brands could in many ways dictate the retailers; but in the new world, it is the powerfulretailers who are dictating the brands. Hence, the importance of the retail arena within the marketing mix is akey factor driving the Shopper Marketing growth.

Another result of increasing retailer power is that the store as brand has begun to rival the consumerstrength of traditional brands. In the US, for example, Walmart and Target are brands that have equal or

larger marketing budgets than Nike or Coca Cola. What does that mean? Simple: The first big decisionconsumers make is where to shop; what to buy comes later.

And finally the power retailers are all now selling their own brands, competing aggressively with traditionalnational brands in every big category. Their own label brands have become key points of competitivedifferentiation for them, because while all Walmarts competitors also sell Coca Cola, only Walmart sells theWalmart line of beverages.

The last mega trend which can be clearly seen is Technology, Technology, Technology. As we noted inthe definition of Shopper Marketing, insight is a critical aspect of the effort therefore we cant engage inShopper Marketing without understanding shoppers. Reason: We cant understand shoppers without

information and insight about them.

As in all areas, the impact of technology has been profound here. While there are many aspects to this, thebiggest ones revolve around the introduction of UPC barcoding to products, scanners to retail stores, andshopper ID cards tied to shopper loyalty marketing programmes. This evolution has occurred over the last 20years and, of course, accelerated as technology innovation has accelerated; what it has resulted in, ultimately,is an incredible wealth of data and sophisticated analysis around how shoppers are behaving on a verygranular basis. This data simply did not exist in such a fashion in the past.


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When we couple this type of data with RFID-based in store technologies that track shopping patterns as wellas more old school shopper research (surveys & shop alongs), we are able to develop a picture of theshopper unlike anything we have seen ever before.

In fact, we have conducted a number of Best Practices studies around Shopper Marketing in the US and alsostudied activities in other markets throughout the world. While variations may exist within markets, productcategories, retailers, and companies, we have identified four absolute keys to success:

Path to PurchaseThe gathering of shopper insights and the development of shopper marketing programmes should encompassthe entire path to purchase. This means not only what happens in the store but what happens beforeshoppers are in the store, is what influences them to select a certain store to buy a certain brand. Once theleverage points along the path to purchase are understood, marketing programmes can be implemented toaffect all of these leverage points.

Mutual benefit for brands & retailersShopper Marketing differs from Consumer Marketing efforts as it requires collaboration between brands andretailers since programming often occurs in the store and/or integrates both brand and retailer messaging.Most important, successful Shopper Marketing must drive incremental product performance not just for thebrand, but for the retailer as well. If the programming increases a brands sales, but at the same time onlyshifts shoppers from one brand in the category to another, it has not benefitted the retailer. Thus, ShopperMarketing must drive incremental sales of the retailer and must support both brand and retailer equity.

Both strategic and tacticalMany companies make the mistake of treating Shopper Marketing as a tactical initiative, rather than a corestrategic element of the marketing mix. Shopper Marketing must have strategic underpinnings that align with

the overall strategic marketing plan, and must align strategically with what key retailers are trying toachieve. Only then can effective tactical platforms and programmes emerge.

Continuous cycleShopper Marketing is much more complex then traditional Consumer Marketing as there are severaldifferent programmes which are often being implemented simultaneously at many different retailers.Therefore, companies must engender an ongoing cycle of programme evaluation and improvement, centeredaround the incremental impact of programmes for both, the brand and the retailer.

Thus, we can say that Shopper Marketing will only continue to grow in importance as all the factors thathave been driving its growth are accelerating. In fact, one can expect a consistently larger portion ofmarketing budgets to be allocated in this area which in turn will help both companies and brands to becomemore sophisticated & effective in the practice of both gathering insights and developing programmes. Onecan even expect Digital Marketing elements, especially tied to mobile technology, to play an increasinglylarger role in the coming times.

This is global, this is real, and this is one of the essential and powerful ways to win in today andtomorrows marketplace.


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Coordinated By : Amir Moin

PRICE VB QUALITYAt what Price can you bellthis cat?Increasing disposable income has beena fairly common feature with the Indianyouth over the past decade. But thatdoesnt mean they have necessarilygiven up the good ol Indian approachto spending

Former British Prime Minister BenjaminDisraeli once said, Almost everything that is great has been done by youth. Indeed, theyouth are achieving a lot in India today. If not anything else, they are drivingconsumption to the extent that companies across the globe are compelled to look at Indiaas a market at least, if not as an FDI destination. With a population of over 1.20 billion,

India is the youngest country in the world with almost 65% people below the age of 35.By 2025, 9.5 million Indians will be in the league of global Indians (with a salary of morethan Rs.1 million per year) and their aggregate spending power will hit Rs.14.1 trillion 20% of total Indian consumption as quoted by a McKinsey report.

The Youth advantage is considered as a major edge to the Indian economy, which evenmakes it a more favourable destination as compared to China. Moreover, these aretechnology savvy people and are optimistic enough to be big time spenders due to theirage and the sheer diversity of lucrative career opportunities that they see for themselves.But is this generation actually defying the conventional Indian logic of saving for rainydays, keeping expenses under tight control and looking for the most economicalproducts? Or are they now increasingly American in their choices, which means going forquality even if the price doesnt seem so right?

It depends on which part of India you are looking at. Indeed, there has been a stipulatedrise in the income levels in urban youth, which has turned the traditional demand-pricecurve upside down to an extent. A MindShare Insights report found that the earning agein India is down by 10 years, and 54% of youngsters are actually making money duringtheir studies. This is largely due to the number of BPOs opened across the country, whichhave boosted the buying power of these people. Brands like Zara, Louis Vuitton, EdHardy, Honda and BMW have been increasingly bullish on India. Even realtors have beenforced to adapt to this new genre as the average age of buying a house in India has gonedown from 45 to 30-35. And so has the purchase age bracket for other products.Consequently, many more products have been pushed to the youth category, a categorythat is ready to pay the extra buck, provided their need for quality and brand value ismet.


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On the other hand, there are alsobrands like Micromax and GFive Mobilethat have been giving hiccups tocompetitors like Nokia and Samsung asthey provide low priced products withhigher value and advanced features.GFive and Micromax have captured

10.6% and 4.1% market sharerespectively according to an IDCsurvey. They are finding takers inurban markets as well as thehinterland. Similarly, Ford Figo hasbeen a game changer for Ford primarilydue to its price proposition. TemasekBusiness School did a survey on theyouth of Singapore and found that81.9% of the youth have budgetaryconstraints and will look forward to aneconomical deal and only 25%responded that they wish to stand outof the crowd with a high end costly

handset.

Indian youth, on the other hand, arentso straitjacketed in any productcategory. They could beBlackberry/Apple enthusiasts orMicromax/GFive zealots, even in thesame socio-economic strata (see ICMRYouth survey at the start of thissection). It is very difficult to treatthem with the same coin. Variousresearches have concluded that they

can be lavish spenders as well as incorrigible misers, depending on their relativeinvolvement. A report by McKinsey, Ingeninsights, found that a store which displayed a

40% off sign actually sold 8 times more than usual and attracted the youth to the hilt.

When it comes to spending, Indians are far more optimistic than their globalcounterparts, as successive ICMR surveys have indicated. But these surveys are onlyrepresentative of the predominantly urban Indians who are also internet users. In Tier IIand III cities, towns and villages, the propensity is to extract maximum value possible, aslate Prof. C. K. Prahalad discussed in his bottom of the pyramid thesis. Even if they areearning well, the rural youth have a more traditional approach to spending, and firmshave to approach these markets with a lot of patience and sensitivity. This is exemplifiedby the fact that a brand like GFive has done so well without having an established brandidentity in these markets. So if you are a brand looking for that killer pricing strategybefore you launch your product for the Indian youth, you can well give up the idea. Youcannot judge how the currents of this ocean will really move until you actually enter it.Marketers behind the Indian forays of brands like Tang and Kelloggs should be able to

give you some interesting insights on the same!

SOCIAL MEDIA MARKETINGEXCLUSIVE COLUMN : MICKEY GOODMAN, PROFESSOR OFMARKETING, STERN SCHOOL OF BUSINESSIF YOURE NETWORKED, YOU EXIST!Social Media is here to stay because thats where the youth is. Marketers haverealised this and shifted the battlefield to the networked space. Sanchit Verma


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writes on how this could alter marketing dynamics

Six years ago, when Facebook picked up pace inside Harvard University, Facebookme became the common expression. Thanks to that superlative start, today thesocial media landscape has undergone genetic modifications to an extent that your

presence on it is taken for granted by society. Although one can comprehend thisattitude given the fact that 7.3% of the world population is present on Facebook,brands had perhaps never contemplated what social media would become. But now,this medium has farther reaching implications for companies than one can imagine.According to a 2010 Social Media Study by the Social Media Examiner, 91% of allmarketers across the globe are using social media in some capacity. The ICMR 2011Indian youth survey carried at the start of this section contains exhaustive details onthe internet usage of Indias youth today.

Even secondary research shows that in India, social media today reaches around 60%of the online audience (ViziSense data) and Facebook here too tops the charts with a

user base of 22.1 million followed by Orkut (18.5 million), ibibo (3.56 million),twitter (3.14 million) Bharat Student () and Linkedin (2.95 million). In fact, a study(The Generation 2.0) undertaken by Tata Consultancy Services (TCS) in 2010 statesthat 85% of the Indian youth is hooked on to social networking sites. Thus, forbrands, the question is no more about being on the social network; it is now abouthow to capitalise on it. Agrees Dawn Iacobucci, Professor of Marketing, VanderbiltUniversity, Owen Graduate School of Management, as she tells 4Ps B&M, Socialmedia is growing quickly, and as such most companies will soon find themselvesfacing the questions about how best to use it. Her views are reaffirmed by a reportreleased by Xperian, which estimates that $4.3 billion will be spent towardsadvertising through social networks in 2011, a 29% increase from 2010. If thatsgoing to happen, then the money better be put to good use.

This sudden rise inpopularity of thisplatform is not bydefault but by design.Reason: Social mediagives its user thepower to comment,post, tweet or like

round the clock. Toput things inperspective, this isprobably the firstmedia platform whichfacilitates a two waycommunication.Consumers, the world


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over, have criticised media for edited content, but this is a platform where anyonecan become a part of a discussion. The sudden rise of social media stems from thefact that it engages. The challenge, however, remains finding a more brand-centricmeans of measurement to take it to the next level, Max Hegerman, President, TribalDDB, India tells 4Ps B&M.

As far as India is concerned, companies are playing it safe by maintaining aformidable presence in the social media space. For instance, with 2.4 lakh fans, theofficial Facebook fan page of Pizza Hut, has the largest fan base for any restaurantbrand in India. Even Ford Motors India is operating a blog with the domain namewww.drivingford.in which updates interesting developments pertaining to thecompany. Its not as if only a few brands realise the pressing need to be a part of thiseco-system, brands across industries with distinct target markets too have joined thebandwagon. Although it does not make sense for a luxury car maker to be active onsocial media, but considering the youth demography that influences the decisionmaking process of our target households, it becomes necessary for brands like us to

be present on social media platforms, agrees Clemens Ollmert, Head Marketing,Audi India.

If human psychology is to be traced, then one would observe that people tend to readbooks and newspapers mostly in isolation. But the toxic cocktail of digital access,mobility and social networking has re-engineered the intake of media from being asolo activity towards being social experiences. No doubt, at this point of time,quantitative measurements are hard to come, but then, the repercussions of ignorancecan be fatal. After all they say, if youre not on the network, you dont exist!


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Change comes from Youth

How significant is social media with respect to the entire marketing mix?The most significant achievement of social media has been its ability to magnifyword of mouth exponentially. It has become an extremely important source ofcommunication in todays world. What happens now, for instance on the net, is that auser visits the Ford Figo page and writes that he doesnt or does like something aboutthe product. All of a sudden there are 10 advocates who come out of nowhere andresonate the discussion. Their words are very powerful because they carry enormousconfidence. As a result, more visitors reading these comments become a part of thisconversation (despite never having met each other). I therefore think that word ofmouth is going to drive most outcomes in the future because it brings both the goodand not so good experiences of customers on board.

Is digital marketing really important?Well, its just as important as one-on-one conversations. Its getting bigger by theday. At one point of time it was perceived that digital activities were niche andexisted as a mere support element in the entire communication mix; that has nowchanged.

How important do you consider suggestions given by a young employee?When I was young, there was a philosophy that children should be seen but notheard. That no longer exists and certainly not at the Ford Motor Company. Aninteresting article years ago mentions that if you really want a change in the

organisation, it can only come from two groups either the people who are young(the ones who havent been moulded on the organisations philosophy) or the lotconsisting of people who are theoretically at the end of their careers (considering theexperience they bring to the table). Others in the middle of their career are justmaintaining. If you really want a real change in the organisation, you better belistening to them because they might just have the next big idea.


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EXCLUSIVE COLUMN : NIRMALYA KUMAR,PROFESSOR OF MARKETING, STERN SCHOOLOF LONDON BUSINESS SCHOOLMarketers need to Rethink Best PracticesIn an exclusive interaction with 4Ps B&Ms Shephali

Bhatt, Nirmalya Kumar talks about marketing bestpractices, Social Media and The Asian consumer

Is there a dichotomy between marketing bestpractices and the consumers current perception?Unfortunately yes. As I stated in my book,

Marketing as Strategy, markets always change faster than marketing. Themarketing fraternity is still push-marketing oriented in its tactics whilst consumers,especially the young ones, feel informed, energised, empowered, and spoilt forchoice. In such an environment, marketers fearing a loss of marketing effectivenessincrease the use of their in-your-face marketing tools to enhance their sales. Some

subtlety is certainly the order of the day!

Which, according to your observation, are best practices that do not influence theconsumer anymore?The short-term effect of promotions and push marketing, such as spamming mobileswith sms, e-mail boxes, and cold calling for offers may still lead to increased totalsales even if the response rate is abysmally small. But the long-term impact on thebrand is unfortunately not measured consumers smell the desperation of the brandand subsequently build a perception around it. Its rather better to work on buildingthe success formula of the brand (one great USP and a differentiated value networkto deliver it).

Citing the Groupon example, how do you think consumer behaviour would changewith the increase in such deal-of-the-day, group buying websites?The ability to leverage social networks for marketing is still at a very nascent stage.Even the executives at Facebook admit that there is a lot they have to learn aboutwhat works with respect to marketing on their site. Unlike search where consumerscome looking to buy and for information on brands, Facebook is a more privatespace in the mind of users and he is there to interact with his friends. Thus,marketing has to consider this difference. Having said that, Groupon has been verysuccessful in using social networks to create a buzz for the deal. But then, it istargeted to a specific set of consumers the bargain hunter. The challenge is not tomake the consumer too deal prone and thereby lose price integrity. It is a slipperyslope, because once lost is hard to regain pricing power. We dont want the youth tostart believing that everything should be available on deal.


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Wheredo you thinkthe consumer isshiftingto atthe moment. Is he becominga

loyal brandambassador (read customer) or is he movingaway from thattag?

My research reported in the book titled Private Label Strategy indicates that there has

been no decline in brand loyalty despite popular beliefs to the contrary. Any consumer is

brand loyal to some brands, brand ambassador to the very few, and demonstrates

various levels of indifference to the rest. Only iconic brands with radical differentiation

(Apple, Nespresso) or passionate service levels (Mandarin Hotels, Starbucks) elicit brandambassadors.

Since you havespenta major part of your life outside Asia, how do you think

consumer behaviour differsacross continents for thesame brands campaign

(keepingasidethedisposable income ofthesetwo set of consumersasthe

same)?

Asia is a large continent and the behaviour of Japanese consumers versus Indian

consumers or Iranian consumers is very different. Still to make three gross

generalisations excluding Japan, Asian prosperity is relatively new in the emerging

economies of China, India, Indonesia, and Vietnam. In contrast, Europe, especially

Western Europe, has seen sustained prosperity for well over 50 years post World War II.

Europeans are also relatively more educated. Higher income combined with education

makes consumers more confident about making independent decisions on quality. Suchconsumers have less need to rely on the reassurance provided by brands and are willing

to focus on objective quality. Second, since prosperity has come to Asia recently after

decades of consumption denial, Asian consumers prefer ostentatious markers of

affluence. This is also partially a function of high Asian social stratification and the need to

establish difference with the lower status portions of the population. Third, younger

consumers in Europe and US have become sensitive to impact on the environment. One

does not observe this in Asia in any substantial manner.

YOUTH MOBILEYour Best Possible ConnectionThe Transformative impact of young India onmarketers isperhaps most visible inthe mobile

handsetsegment. Featuresandtechnologiesareconsistently getting redefinedasper their needs,andthey arekey to any players future.

Inflation bites us to no end in this current day and age,yet mobile phones as well as telecom services remainmost relieving exceptions. Thanks to competition, theyhave only had a negative correlation with risingeconomic prosperity in India. Currently, we have arobust 729.57 million strong mobile subscriber base,making India the worlds second largest market. Thecherry on the cake is our ever growing population which

is approximately 1.3 billion at present. Also, the Indian population is the worlds youngestwith approximately 50% of it under the age of 25.

Companies in this industry, therefore, are leaving no stone unturned to make themselvesrelevant to the youth. Airtel repositioned itself as a young brand with a global appealrecently. The latest move by Blackberry manufacturers Research In Motion (RIM) is alsotelling. Through their latest TVC We Are The Blackberry Boys they have tried toreposition themselves in the Indian market from originally being exclusively forcorporate users to becoming For All, predominantly the youth.

Youth has transformed India into a vibrant market with space for multiple handsetmanufacturers, applications and technologies. As per an IDC report, domestic vendors


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have risen from a meager five, accounting for 0.9% market share in 2008 to 68,garnering 41.2% market share in 2010. With the advent of domestic players, there hasbeen a sudden rush with the introduction of varied features by both domestic andinternational players to tap the youth and retain or grab the market. The most popularones have been dual-SIMs, longer lasting batteries, touch screens, QWERTY keypads,GPS, e-mailing and internet surfing.

Nokia and Samsung have been classic case studies. After the entry of other domesticplayers, Nokia, though still the leader, has lost market share drastically from 64% in2009 to less than half at just 31.5% in Q3, 2010. On the other hand, Samsung is the onlyinternational player to have sustained its position and in fact doubled its market sharefrom 9% in 2009 to 17% in 2010. This exceptional progress, according to analysts, hasbeen attributed to its strategy of focusing on segments like smartphones and touchscreens, which are liked by the youth. Samsung has led the touch screen market with 23models, the most famous being Samsung Champ and Galaxy S. It also catered to thesocial media frenzy & the tech-savvy side of the youth with its Samsung Corby andvarious models with dual and triple SIMs. It realised that Indians had started to changehandsets frequently (within 18 months) to access new features or applications. Accordingto Ajay Sharma, Country Head, HTC India, For the Indian market, which is dominated bythe youth today, it is all about experience rather than just a communication tool ormedium. Price is no more the key as handset quality and quality of services have taken

centre stage.

In 2010, the total number ofhandsets sold touched 155.9million units. Smartphones inparticular have seen a growthof 34.2% qoq (Q3) and year-on-year rise by 294.9% (IDCReport). The propensity toadopt feature phones andsmartphones is greatestamongst the youth andbusiness executive segments.Todays youth is intelligentand very tech-savvy andwants to experience world-class quality. For them,everything boils down toExperience, opines

Naveen Mishra, Telecom Analyst, IDC India. Googles Android has also gainedacceptance as a mobile operating system (OS), as 9.4% of smartphones sold in Q32010 were based on the Android OS compared to 2.9% in 2009.

A report published in 2008 by University of Michigan has studied the effects ofmobiles as a Personal Communication Tool (PCT). It states that the most noticeableeffect can be seen only amongst the youth and so the need is to pay attention to


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mobile youth culture. For common users, mobile phones are a status symbol. Butfor youngsters, they mean embracing of technology. For young adults, the distinctiveuses of mobiles maintain and reinforce social network ties and help them create theirown independent identity. On the whole, mobile phones serve as a core identity foryoung people. It is widely said in US that If you have a Nokia you are cool; if you

have a Motorola or a Sony Ericsson, you are a business guy. Similarly, the Indianyouth strongly associates mobiles with personality, as the success of the BlackberryBoys campaign has shown.

Players need to keep a tab on all such inputs related to Indian youth preferences,since they are the perfect destination for handset majors today. They are technologysavvy, they dont mind spending a few bucks more and they are extremely open tonew brands as well. All in all, they are the perfect antidote for slowdown bluesacross the globe

By : Bhuvnesh Talwar

Youth & youth trends will remain the key

AJAY SHARMA, COUNTRY HEAD, HTC INDIA

How do you view the importance of the youth to theIndian handset market?India is young with the majority of the populationbeing in the age bracket of 20-30 years. This iscomplemented with the fact that the Indian youth isvery intelligent and tech-savvy. In recent times, there

has been a bombardment of innovations on the youthwith various applications, new mobile operating systems, touch screens and it hasbeen well received. So, the mantra is that India is youth centric, which wantscontinuous exposure and has a huge appetite to consume breathtaking technologyand innovations.

How do you see price playing its part?The Indian market has transformed today and I believe that the 4Ps of marketingcannot be used the way it was before. The market has become a multiple price-tier,where every handset manufacturer at all levels has its own space to survive. Price isnot the key anymore as handset quality and quality of service have taken centre-

stage. VAS players have redefined the market and have been very successful,because the youth has given its full support.

How do you view the competition in the vibrant telecom space?HTC is not driven by a price-strategy but is completely focused on technologyinnovations and quality output. We deal with smartphones, which are high-end andfull of applications and features. We want to empower the communicationexperience and transform mobile handsets into an all-in-one platform. Today, and


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in the future too, youth and youth trends will be the centre for marketers. Our latestinnovation has been the new HTC Sense.com service. People can simply managetheir mobile phone experience from their HTC phone or PC. For example, anyonecan easily locate a missing phone by triggering the handset to ring loudly, even if itis set to silent, or to flag its location on a map. If the phones been lost or stolen,

users can lock the phone, forward calls and texts to another phone, send a message tothe phone to arrange its return or even remotely wipe all personal data from it.


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MICROMAX VS GFIVE

Chinese Fire vs Indian ThunderConsidering how they made The Incumbents Bleed, both Micromax and GFivehave been Revelations in The Indian Mobile handset Industry. Now they areIncreasingly getting in each Others WayIssue Date - 24/02/2011

Ages ago, Charles Darwin coined thephrase survival of the fittest. Hiswords make all the more sense intodays era where change happensovernight. And verdicts are given onthe victor and the vanquished in muchlesser time. In fact, one can safelyadapt Darwins theory and say that thisis the era of survival of the fittest andthe swiftest. The Indian handset

industry, with estimated sales of around 10-12 million units every month, currently hasits hands full with a number of players already in the race for a slice of the pie; of course,the larger, the better. But with that perspective, comes the fact that there are alwaysnewer players looking to get their foot inside the doorstep. This market, which earlierboasted of only a handful others, was redefined a few years back by a clutch ofcompanies, which made the incumbents bleed, and profusely. Micromax and Gfive aretwo brands, in particular, that emerged from the resultant hostilities to becomeprominent players in their own right. And while they both have benefitted from attackingthe leaders, they are off late increasingly finding themselves in each others way. Andgiven the fact that they perhaps are the most acerbic competitors in the market front,4Ps B&M decided to cover them in this section of Marketers@War..

Micromax established a new business model in India by importing handsets as there areno duties levied and selling them in the Indian handset market. Most imports areoccurring from China, Hong Kong, Taiwan and other east Asian countries. Off late, theChinese players have also realised the potential and growth opportunities and entereddirectly. And Honk Kong based GFive, irrespective of its lineage (how many of usassociate Hong Kong with consumer electronics?), is playing on similar tunes.

Micromax and GFive are competing in the Indian market on a common principle offering exceptional value for money to their users and becoming the alternatives to theincumbent MNCs. However, they are not similar in their actual method of approach.Micromax, since its inception, has adopted an aggressive marketing campaign to promoteits brand. It has leveraged both cricket and Bollywood (it roped in Bollywood superstarAkshay Kumar, a testimony to its ambitions) and indulged in a number of visibilitycampaigns. Our target audience identifies itself with cricket, Bollywood and music. Thatis why we have been marketing our product around them, points out Pratik Seal, HeadMarketing, Micromax.

On the other hand, GFive has remained a silent killer in the industry and hardly promotedits products or its brand at the national level. It therefore came as a shock when IDCreported that GFive has emerged as the largest handset player in India after Nokia forthe quarter ending September 2010. Nokia further slipped by around 5% to post amarket share of 31.5% and GFive took the second spot with 10.6%; beating Samsung at8.2%.Yes, I agree that GFive as a brand was not visible in the Tier I cities and metros.But we have been doing enough branding and marketing campaigns in Tier II and IIIcities, says Arshit Pathak, Managing Director, GFive. In the initial stages, the companyhas been targeting Tier II and Tier III cities, and 80% of sales of GFive handsets arecoming from these cities. After having reached a formidable position, GFive is nowpositioning itself in metros and Tier I cities. It is also looking forward to tie-ups with some


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of the large format retail outlets.

GFives first TVC hit the screens inearly January this year. It introduced15 handsets and other telecomsolutions and products. The company,with some 70 people on its payrolls inIndia, is planning an aggressive mediacampaign in the next few weeks.Jignesh Maniar, founder and CEO,Onads and Span Communications(creative agency of GFive) comments,

The TVC was just a precursor to our marketing campaign. Unlike other players, we didnot highlight the features, we just communicated that we are a serious player and aregoing to stay.

Micromax, on the other hand, has remained focused on its innovative product portfolioand aggressive marketing and branding. Be it Q5, Q7, Bling or the recently launchedAndroid phone, the New Delhi-based company has been investing a handsome amount onthe promotion of its products. Some of the TVCs have done wonders to Micromax. Its Q5phones have redefined the segment, as the QWERTY technology was earlier associatedonly with business phones. The handset player identified QWERTY with social networkingand almost forced every other player in the space to follow suit. Similarly Bling was thefirst female only phone.

We have been building the brand Micromax on innovations. In the recent TVC featuringAkshay Kumar, Micromax tries to visualise the future where we can do anything with ourphone, said National Creative Head, Lowe Lintas Amer Jaleel. Micromax recentlylaunched the Android phone and received advanced bookings soon after the TVC hitscreens. It created a microsite for the promotion of the Android phone, where a buyerwas asked to share his experience of buying the first Android. More than 50,000 peopleshared the experience and made the innovative campaign a huge success. There arearound 40 models in the Micromax kitty, which cater to every handset user, irrespectiveof age and sex. However, the company is targeting youth between the age of 18-24years, as they are the ones who are always excited about the handsets and frequentupgrades. The handset major has associated itself with some major Bollywood events towin the hearts of this target audience. It is also sponsoring the Bryan Adams show to beheld in Delhi on the eve of Valentines day.

Micromax is very particular when it comes to choosing brand associations and sponsoringevents. Despite the IPLs huge success, Micromax did not sponsor this gala festival ofcricket unlike its competition, as it wanted to associate the brand with serious cricket,being a serious player in the market. However, Micromax has been associated withseveral Test and one-day series where team India was participating. Lately, GFive hasalso realised the potential of cricket to get brand recognition. Just before the ICC CricketWord Cup, GFive will launch six TELLY series handsets which will have the capability toreceive free to air analog TV signals, so that users can watch matches aired byDoordarshan on mobile screens.


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Our Products & Innovation cater to our Targetaudience - The YouthIn this exclusive with 4Ps B&M, Pratik Seal talks about howMicromax is planning its India strategy going forward

Lately, Chinese manufacturesareenteringthe Indianmarketdirectly anddoing well. How is Micromaxlookingatthesedevelopments?We at Micromax do not believe in only selling products. Webelieve in creating a brand. Since our inception, we havebeen working hard towards creating a brand and giving ourbuyers a quality experience. Unlike other players in thespace, we do not believe in box pushing. Our philosophy hasbeen providing a quality product at affordable prices, so thata buyer comes back to us again.

Pleasesharethe overall marketingstrategy of Micromax. How is itdifferent from thecompetition?Today, India has a strong population below 25 years of age. We target people in the agegroup of 18-24 years. All these people use mobile phones and prefer having variousmultimedia and social networking features. Our products and innovation cater to the needs ofour TG. As youth love cricket, movies and music, all our marketing exercises have beenfocused around them.

How are you leveragingthe brand value of Akshay and Twinkleas your brandambassadors?We do no tend to believe in the concept of having a brand ambassador. Rather, we would liketo have a quality product for our users. We do use Bollywood celebrities Akshay and Twinkle in our communication to the TA. It helps us to create awareness about our products in abetter way.

How havetheselargescale marketingand branding campaignsaffected your bottomlines?Our marketing campaigns are reflecting very well on both top lines and bottom lines. Some ofour campaigns, especially around Q5, Gamolution & Q7, have done a great job for us. Afterthe TVC of Bling featuring Twinkle, the product became a huge hit among females. Bling wasoverbooked for few months. Similarly, our Android phones campaign resulted in advancebooking of the handset by the retailers and vendors. We ran out of stock a few days after thelaunch. To promote Android, we have made a microsite. It got as many as 5 lakh hits andmore than 50,000 people shared their experience on how they bought their first Androidphone.

How is your marketingstrategy different for metros,tier II & III cities?We have a strong BTL and ATL going on throughout the year. At the national level we havestrong TVC and print campaigns. Besides, in rural areas, we continue to promote our productsthough various BTL activities, as these are the areas where print and TV have a limitedpresence. In such areas, we have to reach out to the customers to promote our products.Micromax has a strong presence in malls and shopping complexes in some semi-urban areas,where this trend in catching up.

We havenotseen Micromaxsponsoring IPL cricket matches.What is your strategytowardssponsorships?As a serious player in the handset segment we only associated Micromax with serious cricket.IPL is not serious cricket; rather its entertainment. We sponsored India-Zimbabwe Tri-series,Asia Cup & India-Zimbabwe test series. We have been associated with IFA & APSARA awards.We are also sponsoring Bryan Adams concert in Delhi.


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We want to be The Largest Handset player in TheCountry by 2015

4Ps B&Ms Pawan Chabra meets Jaideep Chopra to findout what gives in GFive!

Despite being a Chinese brand, GFive created a spacefor itself in the Indian market in a short span of time.How did you manage to pull up such a good show?Our journey started close to one and a half years back,when the company entered India with around 10 handsetmodels. Since the beginning, we made sure that at

GFive, we provided consistent quality at affordable prices. In fact, we opened a newsegment in the Indian market. We targeted people who were not able to afford mobile

phones. At the same time, we also banked on the fact that apart from making andreceiving calls, Indian consumers also use their mobile phones as a mode ofentertainment. Thus, we developed our products accordingly. You can see that now weare the #2 player (IDC India survey) in this market.

But the urban young consumer still conceives GFive as just another Chinese mobilebrand...I dont think so. Earlier, we were facing this problem, but not any more. Today, we haveour own brand loyalists. GFive has established itself in this market and there are peoplewho accept it.

The company started marketing aggressively just about eight months back. How has beenthe response so far?We started our marketing activities in March last year and the response has beenoverwhelming. This has encouraged us to spend multiple-times of our initial budget onthe media and promotional activities. In fact, we are now associated with severalchannels and the idea for such brand affiliation on television is to create awareness aboutthe product.

Service is a great concern for Chinese handset makers. How are you planning to addressit?We have already opened 500 service centres across the country. The process started close

to one and a half months back. However, it is a long procedure to open service centres.We have over 150 models in India and we will ensure that all our service centres areloaded with spare parts needed for all the handsets.

GFive entered India with a handful of distributors. But recently it incorporated its Indiansubsidiary. Was there any problem with the first business model?We entered India with close to 20 distributors across the country. However, the issue wasthat every distributor was using his own channel to distribute the goods and the company


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was failing to manage the problems directly. With our Indian subsidiary, it will be easierfor us to interact with our consumers directly.

So far, you were limited to a specific set of consumers. Are you planning to expand yourpresence to all the segments?

Currently, prices of our models range between Rs.1,200 and Rs.5,000. But as we movealong, we surely would want to take it higher. In fact, by end-2011, we will be havingproducts in all the segments.

Where do you want to see GFive by the end of 2015?To be very frank, we want to be the largest handset player in the country.

all that marketers need to know about the indian youth

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