IMS 2009: The flip side of the downturn

By Neha Kalra , afaqs!, New Delhi | In Marketing | February 27, 2009
The panellists for the first session of the second day of the Indian Marketing Summit looked for positive sides to the slowdown in the economy

The first session of the second day at the Indian Marketing Summit (IMS) 2009 had the panellists looking at the brighter side of the economic slowdown, when adversities actually turned into opportunities for the respective organisations. Organised by the All India Management Association (AIMA), the session brought out several cases highlighting the flip side of the economic downturn.

The panellists included Pradeep Kashyap, chief executive officer, MART (a rural consultancy organisation); Salil Kapoor, chief operating officer, Dish TV; and Alok Kejriwal, founder and CEO, Games2Win, pondering over and bringing out the positive and opportunistic side of the downturn being experienced by the country.

& #BANNER1 & #Kashyap opened the discussion with a macro view of how the downswing is affecting the urban and rural parts of the country. He broadly outlined the main areas affected in the urban environment - IT, financial services, real estate, infrastructure and textile. FMCG, media and entertainment, pharmaceuticals, and oil and gas are, according to him, the least affected. Slight tremors have been felt by the automobile, retail and hospitality and tourism sectors.

He brought out that rural India, which constitutes about 13 per cent of the world's population with 800 million people, is the segment which lends itself to the maximum sales in the FMCG, durables and services sector in India.

Kashyap presented certain figures on the impact of the downturn in rural markets. In terms of employment affected by the slump, 70 per cent are affected by the current gloomy situation, which includes farmers, farm labour and the self-employed in non-agriculture. The remaining 30 per cent, which are least affected, constitute artisans, salary earners and non-agricultural labourers.

In terms of expenditure, food commands the maximum expenditure in a rural household in India (35 per cent), which hasn't declined. Consumption of FMCG comes second - the growth in the rural areas in FMCG (20 per cent) has surpassed that in the urban areas (17 per cent).

Ceremonies and leisure travel, which constitute about 58 per cent of the rural non-routine expenditure, could see a drop with a loss in income, he says. Purchase of durables hasn't been affected either. Telecom has seen an uphill activity in the rural areas, wherein out of a total of 15 million new connections in the beginning of the year, 10 million were from rural areas.

Demand for insurance has increased and a lot of private players such as Tata, ICICI Prudential and Bajaj Allianz have cashed upon the opportunity. Real estate prices in the rural areas haven't been hit much and the demand for transportation, too, has only seen an increase with time.

He points out that the future of rural markets shows that the per capita consumption of FMCGs will be equal to current urban levels by 2017, and the rural FMCG sector will grow by 40 per cent against 25 per cent in urban. Telecom is expected to grow from 100 million rural connections today to 300 million by 2012. Semi-urban and rural life insurance market will rise from $ 5 billion to $ 20 billion by 2012. Alongside, government spending will continue to grow.

Acknowledging that marketing in tough times is both a threat and an opportunity, Salil Kapoor of Dish TV focused his point of view to creating opportunities. "During the good times, you bask in the sunshine of consumers wanting to talk to you and therefore, you love to respond. Well, in tough times, the consumers will not respond - that's when you have to create an opportunity to interact with the consumer and offer him the best or he would not be interested in picking your brand," he said.

The downturn, he added, offers an opportunity to come up with innovations. Also, it is important for a company to realise that the most valuable asset for the company is not the capital but the consumer base. It is important to spot the grievance of the customer and then tend to it, he said, which is a good way of gaining brand preference.

To expand its market share, Dish TV tapped the market in the South. Promotional offers, the a-la-carte technique of selling channels on its platform, recharge free schemes, movie-on-demand, and becoming interactive in areas such as insurance, games and news, have been some of the tactics employed by Dish TV to attract and retain consumers. Special interest services such as spiritual and astrology services are an added feature provided by the brand.

Additionally, VAS on television, ad sales opportunity, bundling with television sets, tying up with hardware, CD/DVD and gift shops, mobile Dish TV for car owners, mobile TV in buses and trains and in-flight television were some of the other examples that Kapoor cited to show how the brand has managed to create opportunities for itself as and when desired.

Alok Kejriwal of Games2Win has seen his own set of difficult times and he talked about how his organisation countered it. Being in the online business, Games2Win creates games for players to play on its website. It faced the problem of piracy, where more than 3,500 websites robbed the company's games! This obviously meant loss of revenue as players had found alternate websites to play games.

Realising that suing would only end up transforming Games2Win into a 'law firm', they saw a positive side to the situation. The company had created value and there were free distributors for the games. His team put in place fully programmed 'Invisible Ads' into the games. When the games were picked up by another website and placed, the ads became visible. The solution was termed Invizi Ads.

Apart from the games channel, Games2Win also offers media solutions which act as replacements for full-fledged expensive commercials, considering the large number of brand launches and the corresponding costs - called virals. These help the brands in difficult times of looking at an alternative to huge ad expenditures.

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