While India presents one of the world's largest consumer markets, marketers are perplexed by its eccentricities. Why are its demand patterns so unpredictable? Does the great Indian middle class really exist? What is its exact purchasing power? Why do Indians splurge so much for their weddings, but stretch the buck everywhere else? Why does the consumer act so sophisticated while buying a tech gadget and act so traditional while buying breakfast cereals?

These intriguing questions about the ways of the Indian consumer is one of the hot topics in business circles. So when TiE (The Indus Entrepreneurs) organised a networking meeting on "Understanding the Logic of Consumer India" with Vinita Bali, the CEO of Britannia Industries Ltd. In conversation with Rama Bijapurkar, the renowned thought leader on market strategy and consumer related issues, it was obvious find the hall jam packed!

Vinita began with the question, "Rama, in your book "We Are Like That Only", you state that the Indian consumer is a peculiar species defying every possible marketing theory" Why is that so? With her typical straight forward, hit hard style, Rama began with an example of Coca Cola's entry into India.

Rama: Let me do some Cola bashing here since Vinita was once the Head of marketing strategies for Coca Cola! In the early days in 1990s, there was an attempt to kill the ‘Thums-up' brand in a bid to promote Coca Cola, but that did not work at all. Shutting their eyes to Indian preferences such as water, lemonade, Jaljeera, the company insisted that Indians should adopt Coca Cola. Later, the company realised that it should be focusing on getting refreshment products at consumer's arm's reach.

There was a time when distributors of Hindustan Unilever (erstwhile HLL) could not sneeze without the company's permission. They knew that there is a lower end of the market which is not catered by HLL. When Nirma came out with a cheaper detergent, HLL said "You cannot produce a detergent like that," but later it had come out with a competing product. So marketers need to think beyond the old best practices and create country specific best practices. It's time to move away from ‘Best Practice to the ‘Next Practice'.

Vinita: Why do marketers get trapped with such rigid business models?

Rama: I would say shallow thinking leads us into such traps. Even long term public projects built to last have such a shallow outlook. For instance, the much hyped Pune-Mumbai expressway is today plagued with highway robbery issues since there are slums and there is no mobile police patrol. Similarly the Bangalore International airport is about to be launched and the approach road is not yet ready. Though prolonged commuting means telecom companies make a lot of money!

Kishore Biyani says the seller needs to show an Indian model apart from the western model.

People cannot believe that their business concepts can go wrong, since most of the family businesses have been into it since generations. Their typical refrain is "Hamaare khandaan mein aisa nahi hota" and they have list of holy business rules. They need to realise that the Indian economy is like drunkard who takes two steps forward and one step sideward, but eventually he will reach home!

Vinita: Why is it so hard to be customer centric?

Rama: Being sensitive to customer needs is so simple yet it is so difficult. For instance, a café in Ahmedabad airport sells coffee without sugar at a higher price than the coffee with sugar. That is because there is a need to customise the product to suit diabetic customers who particularly need sugarless coffee and they are ready to pay a premium.

Another case is creating sari pins with plastic heads so that the cloth edge does not get stuck inside the pin-head. We need to realise that the Cola drink cost is nothing when compared to the bottle cost, so the bottle has to reach safely back. Similarly, ‘Sachetisation' of FMCG products has worked since a little bit of sales from everyone is like little drops creating an ocean.

Vinita: So how many men here understood what Rama just said about sari pins? Anyway,

I would like give a simple example to illustrate how consumer tastes can be changed with a little persuasion. As part of my regular surprise visits, I had visited a mall in Kolkata where a consumer was buying Sunfeast Marie. That woman had never tried a Britannia Tiger and was doubtful about it. I spoke to the consumer and convinced her to buy instead. Since the malls are self service, consumers are not given personal attention.

Rama: Talking about consumer sensibility, Johnson & Johnson does more sales on the first child in the family than the second or the third. Parents realise that the expensive baby care products are not really necessary since a child can manage on its own without them. While companies are constantly looking at their profit margins customers know how garner value for their purchases.

That is the reason why vegetable hawkers can withstand the onslaught of the hypermarts. Our neighbourhood Kirana stores give us much higher value than organised retailers. They can recognise us and remember our needs very well. Since they can even give credit, it is no surprise that housewives prefer to hang out at neighbourhood store. Moreover the arrival of large retail outlets has helped wholesalers who are now buying from places like Metro to sell in the rural areas.

How do we stand out in the clutter?

Vinita: We sell in a market of scarcity by seeking to put someone down; forever we are obsessed with the competition rather than customer. Instead of trying to match up with our competitors, we need to look at catering to under-served needs of our customers. Only a new entrepreneur breaks the conventional thinking and creates a differentiated product. We need to remember that every difference is not a differentiator.

Rama: Sure, ‘every difference is not a differentiator'. For instance, despite so many gadgets in the markets, we still cannot find a single unit of old audio cassettes to CD converter. We need to assemble our own unit from various appliances. That is because western markets do not have this need and our companies have not thought of creating an Indian centric product. Even in IT sector, they are struggling to transplant ideas from the Silicon Valley rather than create the India centric software. When you present products to customers you need to provide end-to-end solutions. Technology without the ecosystem is like ‘all dressed up but no where to go'.

Do free offers have any impact?

Vinita: The infamous ‘B1G3 - Buy one get three' kind of marketing works only in a short term. You cannot bribe the customer anymore without giving value for money. The moment consumers realise that free offers are being used to promote a product without value for money, sales will collapse.

How do you convince your customers to pay for the high value?

Rama: Market mechanism is such that a consumer is forever looking for value. So you need to cut down your costs and bring up your productivity; you will suffer until you get your value.

If a government owned railways can give ticket refund for a no show and can maintain timing, why cannot the low cost airlines do it... First serve the unserved need then ask yourself why buy me. If the competition keeps cutting each other's margin, then whatever reduction in price that happens is what I call at it as ‘margin perception correction'.  

Roving Reporter Levine Lawrence

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