Franklin Templeton: Demystifying investment solutions

Great help, much of mutual funds advertising. It explains, in great detail, the whys and hows of higher returns on investment - articulated, of course, in the mumbo-jumbo of high finance. Makes a lot of sense to an investor familiar with the nitty-gritty of money management. One who knows which egg to put in which basket and all that.

But what about potential investors who don't quite grasp the basics of personal finance? People who can't figure out ‘tax structures', ‘rising inflation' and ‘falling rate of returns' beyond the point that all of it can only mean more bad news? Mutual funds advertising rarely gives such investors (and there are far more of this kind than the savvy type) a strong argument in favour of mutual funds. Certainly never in a language this investor understands. It isn't surprising then that this investor falls back on his tax consultant - the ubiquitous office accountant also does fine - who recommends an instrument, any instrument, that appealed to him (which kind of defeats the purpose of mass-media advertising for the category). Worse still, this investor seeks refuge in the tried-and-trusted savings bank account or fixed deposit… low interest rates being of little consequence, as what he doesn't know doesn't hurt him.

Small wonder, the mutual funds business in India draws only evolved investors into its fold, and as a result, is not clocking big-time growth. A fact that Franklin Templeton Investments, one of the largest private sector fund houses in India, has cottoned on to, going by the new mass-media campaign it has unveiled to target the not-so-savvy investor.

The campaign - created by Contract Advertising, and comprising three television commercials - has a three-point objective. One, inform potential investors about the availability of multiple investment opportunities and products, each product suited to meet a different end. Two, demonstrate the crippling effect that inflation and taxes have on savings. Three, establish the snail-paced growth of fixed deposits. All this, through the use of simple similes.

So the first ad in the campaign is about this gentleman who keeps referring his wife to ‘the plumber' for all household woes - be it a broken-down television or ‘Munna's injury'. The point being made is that different needs ask for different solutions, and that there is no one-size-fits-all when it comes to investing. The second commercial is about this man in a restaurant who has ordered some tea. The tea is served, but while the man is buried in his newspaper, another man seated at an adjacent table walks over, quietly gulps down some of the tea and returns to his seat. When the first man finally looks up from his paper, he fails to fathom what happened to all the tea he was served. ‘Isi tarah, bina aapke jaane, mehengai aur tax aapke fixed deposit ko ghataa dete hain,' the voiceover explains. The third ad is about this old man keenly watching a bonsai grow, watering it every now and then in an attempt to stimulate growth. Likening the slow growth of the plant to growth in fixed deposits, the voiceover suggests investing in mutual funds to jumpstart growth. Naturally, the takeout from all the ads is that Franklin Templeton Investments offers investors better returns on investment through its instruments.

What comes across clearly is that Franklin Templeton is seeking to broaden its investor base. Rajiv Sabnis, senior vice-president, Contract Advertising, bears this out. "Not many people understand what mutual fund investments are about. It is a grey area even for people who have the money to invest, so it attracts a limited number of investors, which is very restrictive. Franklin Templeton's buyout of Pioneer (Templeton acquired a 100-per cent stake in Pioneer ITI in March 2002) has given it increased reach and distribution access, allowing it to target a wider investor audience."

The need to tap a wider audience is easily understood. "The penetration of mutual funds, as a category, is very low in India," elaborates Rohit Srivastava, senior vice-president - strategic planning, Contract Advertising. "In contrast, the traditional fixed deposit and savings bank market is humongous, and this offers a much larger opportunity, especially considering that today, the real rate of return in both these options is down to roughly 1 per cent, what with falling interest rates and inflation. Getting the investor to switch to mutual funds makes perfect sense, and Templeton is taking the educative route here."

Consumer education is fine, but care had to be taken in speaking in a language that the target audience comprehends. "The brief was to address the big fixed deposit and savings bank market and offer these investors a more viable investment option - but speak in a language they understood," says Srivastava. "Which is why we simplified finance, and instead of speaking mutual funds language we addressed the core issue of investments not growing fast enough through non-financial metaphors."

While most mutual funds advertising addresses investors who have bought into the concept of mutual funds, the current Templeton campaign does the opposite. And that, perhaps, is its biggest point of difference. "The competition for mutual funds is not other mutual funds but any and every investment opportunity available to the investor," Sabnis sums it up. "Franklin Templeton has understood this, and as it wants to be in the area of investment advice and counsel, it has taken a leadership stance, whereby it is redefining the competition, redefining the consumer and redefining the manner of communicating with the consumer." © 2003 agencyfaqs!