The Indian consumer has been disloyal...

To enjoy marketing research, passion levels have to be extraordinarily high even after 27 years. And, Francis Xavier, managing director, Francis Kanoi Marketing Planning Services, has it in abundance.

Xavier, who founded Francis Kanoi 22 years ago, is the acknowledged pioneer and a specialist in market research. But earning this reputation has not been an easy affair. This meant conducting market research on hundreds of diverse products, covering every conceivable aspect of marketing and having ears perpetually to the ground. Today, Francis Kanoi monitors over a hundred different fields including economy, telecom, power, computers, automobiles, durables, cosmetics and toiletries, foods and agri-inputs.

It is for this expertise and experience that virtually all the majors in these fields have chosen to do business with a low-profile company operating from Chennai. In an email interview with Sumita Vaid Dixit of agencyfaqs!, Xavier talks about the changing attitudes of the consumers and how marketers are responding to that change.

Edited Excerpts

For serious players in the consumer durables field, not participating in the Diwali promotions is not an option.

An attractive promotion can shift a sizeable proportion of customers from one brand to another within the same league. The customers expect promotions during Diwali. If the promotions are not there, the customers will become open to promotional offers from other equivalent and competing brands. The dealers also expect promotions because such offers increase the flow of customers and also gives the dealers some leeway for improving their margins. No company can ignore these realities.

The intensity with which companies participate in promotions will, of course, vary – depending on the circumstances and compulsions specific to an individual company at that time. So, if certain companies are not aggressive this reason, they must be having solid reasons to explain that.

The main objective of Diwali promotions is to protect your domain during the peak buying period and to poach customers from competing brands to the maximum possible extent. There are, of course, other effects of promotions, including preponement of purchases. However, the extent to which preponements take place do not alter replacement cycles here in India.

Since there is a technological parity among companies in most of the durables fields, in the medium term, product developments incorporating consumer insights is the way to go for all of them. They know it. But operationally very little gets done because all of them are under enormous pressure to do things that deliver results, here and now.

At this stage, they are also into introducing ‘innovations’ in local markets that have been already been introduced internationally. Once all this is done, the companies normally do not have serious time and resources available with them to do anything else.

Therefore, I doubt, if there are strong and empowered teams uncovering consumer insights and incorporating them in product development with any of the companies. It’s not that such exercises are not done at all. It is just that it is, at best, something peripheral in the scheme of things.

We haven’t yet even defined what ‘commitment’ to rural consumers actually means. If it means coming up with a low-priced option with an Indian name, then, I guess many companies have done it. Otherwise, I doubt if anyone from companies ever steps into a village to understand the needs of the rural consumer.

The Chinese are world-beaters in manufacturing, and that too in a host of fields. They don’t have much experience in brand building, especially in the international context. Therefore, their entry into India as brands have been very diffident and that hasn’t worked in the extremely competitive market that India is.

As for the products manufactured in China, there is nothing to stop any of the companies already in India from sourcing their requirements from China. In fact, in cases where there is an advantage, Indian companies are already doing so. The flights to China must be full, considering the number of routine trips that managers from India are making to China in this context.

Single brand and multi-brand retailing formats vary across different product categories. And, that will continue to be the case in the foreseeable future as well. There will naturally be structural changes happening with the development of organized retailing. However, there are formidable barriers to be overcome before organized retailing starts making a discernible difference in this context. And, this will happen closer to 2010 than 2005.

The availability of several brands that are almost equally acceptable in most of the product fields is a far reaching change in India during recent years. This has reduced the risk perceptions in brand choice and has consequently allowed the customer to be spontaneous and adventurous.

Therefore, it will not be presumptuous at all to say that the brand loyalty of Indian consumers is waning. However, this should not be seen as the same thing as commoditization of product fields. The consumer may not be brand loyal, but s/he is certainly brand conscious.

When product fields get crowded and companies try to position brands within narrower and narrower bands, it is inevitable that product differentiation blurs. But this blurring may be to the observer and not to the intended customer.

For example, when TVS launched Victor, there was nothing in the product which could be seen as a major differentiator to an observer, but to some among the intended customers, Victor was a ‘new model’ because Splendor, the market leader had aged by then. To some others, the offering was attractive because first, it was from TVS and second, the company did not have a representation in the 4-stroke motorcycle market till then. Therefore, there were a large number of TVS loyalists who were looking to buy a 4-stroke motorcycle.

Many new launches are intended to fill small gaps in the market, or those in the product portfolios of the companies so that companies are able to address the market more completely. Most of these products will be essentially in the ‘me-too’ category with a few new features thrown in to justify launching these as new offerings.

I don’t think that quality of service is the prime differential in any brand communication even in the durables and automobiles industry. Service is a necessary condition. It is expected in any product that a customer buys. Though the existing offerings may be lacking on service, it is hard to see a brand being sold primarily on service.

I would also like to point pout that a particular approach to communication gets chosen because of differentiation or novelty. And, it has been also witnessed that a campaign’s popularity builds up through imitation, if the approach succeeds.

However, if we agree with the premise of technological parity and the increasing difficulty in finding a sizeable product differential, it follows that dependence on creativity in advertising will increase considerably as a differentiator of brands. There will also be increased emphasis on communication, focusing on identification of brands with specific lifestyles. In other words, a Pepsi kind of approach will then become the chosen approach across a large number of product categories.

I would say, Indian viewers’ interests were always diversified. It was just that the television industry had not catered to these diverse interests earlier. How can it be otherwise in a country that is as large, heterogeneous and as fast changing as India? The satellite channels field is just 10 years old and it is a miracle that it is already into seeing niches as viable entities.

There is bound to be a lag between changes in viewership and media buying and this is bound to get pronounced when changes in viewership are rapid. The lag is likely to be inertial because of the tendency among clients to favour popular programmes targeted at large audiences. It is impossible to escape this stage. The fact that we are conscious means that are we are already into looking at alternative approaches.

The malls are few and are still at a novelty stage. So their impact on population at large is likely to be negligible. And, it is their novelty that makes the ratio of purchases : foot-falls low. A large number of people come to these places out of curiosity or to meet special shopping needs that arise only occasionally.

For a mall to succeed, it has to become the prime place for shopping, meeting, eating and entertainment for a large enough community. Alternatively, its store area – I am referring to the area from where malls draw customers – should extend so much that the sheer volume of foot-falls makes up for low value of sales per visitor.

As of now, there is confusion on which formats ought to be adopted. And many entrepreneurs are opting to be a little of both, and are falling between the stools. That is going to be a very expensive thing to do on a very expensive real estate.

Subsequently, if this trend continues, this will deter the development of malls. However, such attrition during the initial stages is natural. It may take another 10 years before a mall format suitable to India emerges. By then, the consumer behaviour would also have changed similarly – meeting the evolution of malls at least half way.