Next Generation Marketing: Challenges and Issues in India

Submitted By:

Suman Verma (0911275)Manish Kumar Urele (0911033)

Indian Dynamics

Source: McKinsey Global institute

Aggregate annual consumption, Billion, INR

Urban/Rural market Growth

All India Consumption2005

Rural Consumptiongrowth

Urban ConsumptionGrowth

All India Consumption2025

32% 68%

16896

16695

35913 69503India's Consumer Market will Quadruple over the next two decade

Total household consumption, billion, INR

16896

23840

34089

48677

69503

2005 2010 2015 2020 2025

24

8

11

21

29

32

36

42

46

52

No. Of Active Internet User in Millions

Changing Demographics

• Tech-Savvy, Trendy• Difficult to reach-out through traditional

meansYoung: 65% of Indians are

below 35 years of age

• Concern for environment and society increased• More AwarenessEducated: 79.9 % (2009) as

against 34% (1971)*

• Price sensitivity decreased• Concern for society & environment• Focus on company image rather than product

attributes

Affluent: No. of affluent HH (Income > 10 Lakhs) are

expected to increase from 9.5 Mn to 14.2 Mn by 2025

• More players will enter• More competition

High Purchasing Power: Fifth largest consumer market by 2025, 32% growth in Rural

market by 2025

India shining

• More demand• More Production• Less number of deprived household

GDP growth : 8.4 % (Year 2008)

• More disposable income• Seeking more optionsPer Capita Income doubled from

Rs 18885 in 2002 to 38084 in 2010

• Personalized communication possible• Cost decreased• Maintaining relationship become easier

Total Mobile Users 660 and growing with a rate of 50.4% per

year

• Competition increased• Need for up-to-date marketing strategies• Choice of proper marketing channels

5th largest advertising market. Ad spend of $6.6Bn in 2009

growing with rate of 19%

• Opportunity to reach-out younger generation• More effective Viral & buzz tactics• Customized message

45 million Internet users growing at 30% in urban areas

Marketing Strategies & Challenges (1/3)

Social Media Marketing•Maintenance of Information•IT infrastructure hurdles •Customers are not so tech-savvy

Green Marketing•Misconception- green product cost more•Green Myopia: unwilling to pay premium•Requires huge investment in R & D•Green Washing: Distrust on credibility•Newer concept: awareness is required

Rural Marketing•Major income from agriculture (variable)•Lack of Infrastructure Facilities•Many Languages and Dialects•Low Levels of Literacy•Spurious brands and seasonal demand

Direct Marketing•Intruding customer’s Privacy•Design of marketing programs•Analysis and modeling for targeting

Organized Retail•Underdeveloped Supply chain•Inadequate human resources•Real estate hurdles•Insufficient government incentives

CRM•Cost of DB•Slow ROI•Difficult to estimate gain•Employee resistance

Marketing Strategies & Challenges (2/3)

Ambush Marketing•Fear of law suits•It has to be within the premises of law•Needs creativity to design ambush strategy•Consumer’s attitude to ambush marketing

Mobile Marketing•Intrusion of Privacy•Fear of Legislation

Blue ocean Strategy•Difficult to create blue ocean•Can turn to red ocean •Opposed by retailers

Marketing Strategies & Challenges (3/3)

‘Hamara Bajaj’ to ‘Distinctly Ahead’

Marketing Practice in companyE-

Networking Fan page on facebook, Orkut profile, Blogs, Twitters P220TheFastestIndian.com to promote its Pulsar 220 DTS-i

Buzz Sponsoring local events, auto expo, Mileage campaignViral Youtube, Pulsarmania, Internet

Mobile SMS Blast (Monsoon scheme, High value exchange), SMS footer ads to call for a test drive.

Blue ocean Through product innovation (PULSAR), Kawasaki Ninja

CRM Used to send postcards but now sending emails Colour coded card based priority service

Social Education, healthcare

Green Planting new trees on environment day, Giving plant to customers, BS-3 norms, Wind Power

Rural Camp based marketing Setting up Rural Service outlet (RSO)

Changed the positioning from Scooters to Power bikes to deal with the competition from Hero Honda

Hero Honda …… Heartbeat of the Next-Gen

Marketing Practice in companyE-networking Facebook profile, Orkut profile, Blogs, Twitters

Buzz Tagline Dhak Dhak, Women focused PLEASUREViral MTV roadies, twitters

Mobile Sending SMS to customer to remind due dates for service/maintenance

Blue ocean First to introduce the 4-stroke bike in India in 1985 Introduced ZMR bike costing 1 lakhs

CRM "Good life" service, Passport schemeSocial Schools, Hospitals, Relief funds

Green Govt. mandate is Euro2 norms Hero Honda has euro3 standard bikes Uses maintenance free environmental friendly battery

ATL Showing ads aggressively on television, newspapers Sponsorship of commonwealth games 2010 and Zee Sa-Re-Ga-Ma-Pa

BTL Promotional schemes in festive season, gold coin on purchase during Diwali

Rural Separate dedicated department for rural marketing CD deluxe rugged and low priced to suit the price sensitive rural customer Mission Har Gaon, Har Aangan

Hero Honda has become the Market leader owing to its fast response to the changing trends and adopting newer technologies

Customer’s Perspective

FMCG Goods

Customers value offers/discount as their highest priority

Mobile SMS and e-mails proved to score the lowest among all the offerings by marketers.

The 3 top offerings by marketers in FMCG category would be:1) Discount offers 2) Advertisement3) Green Factor

For a typical Indian customer the new technological means are still way into the future and they are not able/willing to access them.

X-Axis : Type of Marketing TechniqueY-Axis : Degree of Likeness (Scale -3 to +3 converted to percentages)

Source : Primary Survey data of FMCG customers

Customer’s Perspective

Consumer Durables

The customers are mainly high end and are less price sensitive. Hence discount offers are not the top priority

Mobile SMS is still the lowest preference for the customers as far as marketing is concerned

Even the High-end customers do not prefer to use mobiles and e-mails as a source of receiving product information

X-Axis : Type of Marketing TechniqueY-Axis : Degree of Likeness (Scale -3 to +3 converted to percentages)

Source : Primary Survey data of FMCG customers

Recommendations

General Recommendations

• Visual and interactive Aids on Mobile

• Focus on Green marketing

• Focus on Rural Masses

Produce environment-friendly products in durables

Hygienically safe products in FMCG category

Use MMS in place of SMS Traditional message on new

platforms such as mobile phones and laptops

Product in different SKUs Provide financial option Demonstrate product & make

rural masses experience them

Use interactive billboards to create buzz among less aware rural masses.

• Rejuvenating CRM

Testimonials by customers Inviting suggestions for

added features

Comparing FMCG and Durables

Characteristics RecommendationsPer unit prices are less and repurchase cycle is small

Implementing CRM: If Per unit price of FMCG is relatively high and repurchase frequency is very high then it is recommended to use otherwise not. (For example, it is futile for the candy if its price is Rs. 10 )

Impulse based purchase possible More Above the line marketing to create mind space

More switching loyal customer, high price sensitivity

More Below the line marketing to retain customers

Too many products in market and are not differentiated too much, any new attribute introduced is readily imitated

Blue ocean strategy is not suitable, No need to invest in R&D, better to follow me too positioning

After sales support requirement is minimal

Mobile marketing is not recommended

Generally the product characteristic are not discussed during public gathering

Viral and social media marketing is not recommended

Lot of spurious brands (similar names) are dominating the rural market

Rural marketing is recommended

Comparing FMCG and DurablesCharacteristics RecommendationsPer unit prices are more and repurchase cycle is high

Implementing CRM: If Repurchase frequency is very low it is not recommended to use. (For example, it is futile to do for item which is one time purchase item like Piano)

Price insensitive customers More Above the line marketing

Products can be differentiated by continuous R&D, people acknowledge the new technologically innovative product

Blue ocean strategy is more suitable, Need to invest in R&D, better to go for first mover advantage

After sales support requirement is high Mobile marketing is recommendedThe product and product characteristic are discussed during public gathering

Viral and social marketing is highly recommended

Rural masses not aware about technology based durables and hesitate to use them

Rural marketing is recommended

DURABLES