Our challenge is to leverage the values of Parachute, Saffola,

Saugata Gupta, chief-marketing, Marico Industries, started his career with Cadbury’s India as a brand manager, where he was instrumental in launching the Perk brand. Later, he moved to ICICI Prudential Life Insurance. His desire for challenges made him shift back to the FMCG sector to explore new categories.

Gupta tells Prajjal Saha of agencyfaqs! about how Marico is trying to leverage the equity of its two age-old strong brands, Parachute and Saffola.

Edited Excerpts

The insurance sector, as I saw it, was a category with low penetration. Our challenge was to increase the consumers’ interest in the insurance sector. Today, the sector has evolved from being a tax-saving device to an investment towards future. In fact, the average ticket size or the average sum assured has increased exponentially. In my three-year stint with ICICI Prudential, it emerged as the number one brand.

Insurance as a sector is more channel-centric. One big challenge for us was to make it more consumer-centric without disturbing the equilibrium of the market.

For the second part of the question, it’s my love for the FMCG sector that has brought me back. Although the FMCG sector has not been doing particularly well, there are several new sectors in this segment such as grooming, personal care and healthcare, which has a great potential to grow. As a person, I always love challenges and at Marico, I took up the challenge of taking Marico in diverse sectors.

Yes there is trend where people are looking for solutions and not just products and services. Two types of players are operating in this domain. The first are the ones like Kaya, which provide technology-driven solutions. It’s like providing a customised product and solutions to the consumer. The second type of players include value-added beauty parlours.

It’s not that only SEC A consumers come to Kaya. Many SEC B consumers are also part of our consumer base. Today, people are ready to spend money on grooming, beautification and entertainment. In fact, the value proposition of a consumer has changed. They don’t equate value with price any longer. Today, for a consumer, value is 'the benefit' that they get with the product.

For instance, products such as Dove and Saffola are sold at a premium, but still people from all socio-economic classes buy it. We are not promoting this fact as in the Indian market, efficacy comes with a price.

Kaya is still not a profitable venture, but very soon our balance sheet would turn black.

Affordability drives growth. We have seen that happening in FMCG sectors such as detergent and shampoo, where prices had come down temporarily. The market has reached its equilibrium point from where price will only grow.

There are certain product categories, where profit margins were huge, if not super normal. The prices have stabilised now. We have also seen lately that the prices of detergents have gone up.

But for long term sustainable growth, it has to be a topline-driven profit. A bottomline management growth is not sustainable. It has to be an innovative driven and value added driven profit.

But the challenge is how to drive innovation. We at Marico have been constantly delivering profitable growth. We are essentially focusing on high margin products. We want to keep on sustaining the growth and keep moving up the value chain. This has been the mantra of the Marico group.

We could have also dropped our prices and increased our sales. But this is not a sustainable strategy for a longer period.

This is a very conscious decision. There are certain products which do not have a sustainable strategy. And, we only intend to invest in those products, which can deliver long term growth. Frankly, we do not have the natural strength in the high volume, low margin game. Groups such as Adani are great followers of this strategy. In fact, they start implementing cost-management right at the beginning of the assembly line. They can do it because they are smaller in size. But for a company such as Marico, which has turnover of Rs 1,000 crore, this is not a feasible strategy. Today, we can start exporting rice and increase our turnover by Rs 500 crore, but that’s not a long-term strategy.

We are aware of the fact that consumers and especially youngsters are moving towards value-added hair oil. But the changing consumer behaviour hasn’t led to a decline in coconut hair oil sales. In fact, as per a research done by AC Nielsen, the overall category of hair oil has grown.

This is because value-added hair oils are always a second product, the core consumption is still of coconut hair oil. But presuming the threat, we have already started developing our product, so that consumers can develop it as a habit even in their changing lifestyle. Our campaign ‘Ek Ghanta Champi Karo’ is one such initiative to promote this.

Parachute as a master brand is very strong, full of heritage, equity, and is a symbol of trust. The challenge is to leverage the pure value of the brand and take it forward to drive growth in contiguous categories. In the last two years, we have made the brand more salient and relevant to today’s need. We have extended the 'Parachute' name to different product categories such as Parachute Jasmine, Parachute Sampoorna, and now Parachute Aftershower.

However, at the same time, we are also consciously trying to decrease our dependence on Parachute Coconut Oil category. In fact, the contribution of Parachute Coconut Oil has declined by 7-8 per cent in the overall sales of Marico Industry. We are not at a liberty to divulge exact sales figures.

A brand may mean different things to different people. A brand such as Parachute stands for maximum goodwill and trust. The challenge is to transfer the brand value to other product categories. Aftershower may be a superior product in terms of quality, but it certainly is not a very costly product. A tube of Aftershower costs only Rs 29.

So, all one needs to be careful is that the value of the master brand is not compromised.

Internationally, there are brands that straddle across all demographics and socio-economic groups. Nivea is a great example, which stands for gentle care, and it caters to both high-end and low-end consumers.

We are still test marketing in Mumbai, a practice we strictly follow in Marico. We will be ready for a national launch within a few months.

But it wouldn’t be a mega launch. The product is very niche. After all, it’s not a shampoo, which needs a mega launch. A product in the hair grooming category doesn’t need mass advertising. But we will certainly try to maximise the return on the spend, and effectively increase the impact.

There was a brand-fit with the programme. The idea was to invest smartly and we learnt about how effectively one can use a strong media vehicle such as 'Indian Idol'. It’s a good vehicle to drive salience.

Yes. As I said earlier, the way we are extending the Parachute brand to different contiguous categories, we are planning to do the same with Saffola. We have already launched Saffola salt, which is sold at a premium. The volumes are not very high for this product, but we have met our expectations and that too without spending a single pie on advertising and promotions.

We may not launch an atta brand, but we have plans to launch a functional food category such as Roti mix, which also has a therapeutic value.

It’s not that we don’t use print at all, but it’s true that we do not take the national dailies, unless it is a launch. For product categories such as personal care, I don’t think print is that effective and in addition, it’s not at all cost-effective. At times, we also use regional print media and magazines.

We didn’t see a long term growth in this category. Anyways, the entire category is losing its impact on the market. As Indian consumers become more and more health conscious, this category will de-grow. In addition, there are several other category options available in the market. So, there is no point dragging it, or further investing in it. Sil as a brand is still part of our legacy, but it doesn’t fit into our strategic objective.

We may take a call on it, but there are no concrete plans yet.

We have learnt that price wars only help a company to grow to a certain extent. But after that, the companies are stuck as it is very difficult to manage the after-effects of the price-cuts. One can see regional companies growing due to competitive pricing, but their growth is limited. Of course, there are exceptions such as Nirma. The reason behind this is that at the national level, these companies fail to manage the supply-chain management, distribution, and even attracting the right kind of marketing talents.

As for women consumers, the average buyer has become more value-conscious than price-conscious. And value-consciousness is in terms of benefits delivered by the product. In addition, the consumer has become a lot more experimental as the basket of brands and products have grown hugely. Advertising can only be helpful in spreading the message, but regular usage can be possible only after experiencing the product, or through word-of-mouth publicity from someone who has already used the product, especially in case of personal care products.

Managing a rural market is tough, unless you have a strong distribution, which can only be managed when a company has a huge basket of products. HLL is a prime example of such a company.

As far as rural consumers are concerned, there is a radical shift towards brands. But the biggest challenge in this market is to fight the duplicate and imitation brands. Regional brands are also very active in the rural markets.

Marico went for a name change to Marico Ltd in a bid to reflect the company's broader business canvas better. The company adopted the name Marico Industries in 1989. At that time, the charter of the company’s business was largely industrial. That's why the use of the term 'industry' came into play. Over the last fifteen years, the company has been diversifying into new business segments and allied services in hair care and health care. As for the logo, that was adopted to reflect a new identity, freshness of thinking and vitality of spirit.

The thrill for managers working in an Indian MNC such as Marico is the freedom we offer to experimentation and innovation. Our managers have the freedom to devise strategies independently without having the restriction of acting as mere implementers to strategies formulated in head offices in APAC, the UK or the US.

The freedom to innovate and experiment coupled with the responsibility that we give them make Marico a great place to work and learn. At the same time, we ensure that our managers get the best of international exposure. We have a dedicated policy, wherein marketing managers and brand managers are sent abroad for exposure to international marketing practices, so that they can bring the learnings back home.