afaqs! Round Table Conference: PSUs bound to up marketing spends in the next decade

The afaqs! Roundtable Conference, held on February 04, at the ITC Grand Central in Mumbai, focussed on the marketing strategies of PSUs (public sector undertakings).

The panel debated upon the issue of whether PSUs tend to shy away from aggressive marketing and whether the marketing budgets of PSUs are at par with those of their private sector counterparts. The issue of red tape was discussed as well.

Bhagwat began the discussion by stating some basic points about the whole concept of marketing of PSUs. "Marketing is a culture, an attitude and a vision for PSUs," said he, recalling that 30 years back PSUs had a clear purpose, and that today good marketing strategies can reinforce that purpose. "We need to create organisations that can take risks," he suggested noting that many such organisations are missing out on opportunities due to inadequate marketing.

According to Bhagwat, the word PSU today is a "dirty word that needs to be changed into a positive word". This, he believes is possible if public sector companies sell themselves better and instil in themselves a belief in the notion of marketing. "They need to market themselves as 'good' organizations," explained Bhagwat. He gave the example of how SBI (State Bank of India) capitalises on the trust it generates. According to him, when the criterion for judgement is safety, citizens tend to trust public sector banks more than private sector financial outfits. SBI has leveraged the trust factor to its advantage. "This is brilliant marketing," said Bhagwat, "Better than any advertising campaign!"

The basics of PSU marketing

The panel was unanimous in its appreciation for SBI's efforts to reach out to the customer and alter the consumers' mindset with its 'green banking' initiative. It was thus concluded that aiming to bring about a change in consumer behaviour is effective marketing, whether it is done by launching attractive product offerings, or by building swanky infrastructure to serve the people. "To focus on putting forward the best product is indirect marketing. PSUs are doing that. Aggressive advertising campaigns are important only when a product faces stiff competition," said Nagpal. He added tangentially, that at AAI the three paramount factors are safety, security and customer satisfaction. A recent customer satisfaction survey showed that the level of customer happiness (with all airports in India) is around 79 to 80 per cent.

A PSU operates under several constraints that are absent in the private sector. In Divakar's words, when it comes to delivering the brand to customers, PSUs have a slightly different perspective. Thus, it is not entirely fair to compare the marketing initiatives undertaken by these government organisations with those of private firms. PSUs have a lot more accountability and the stakes are high. The issue of lack of adequate marketing talent in PSUs was raised. Kheterpal defended these organisations and enlightened the audience that while PSUs definitely possess the right talent, they are, more often than not, bound by procedures. The real challenge, he believes, is to successfully replace the existing talent. "When the current workforce in the public sector retires, there will surely be a dearth of new talent. Good marketing can attract the right talent," he stated.

Marketing in the public sector is need-based

The overall feeling across the panel was that marketing in the public sector is need-based. As Divakar put it, "When there is a specific need to strategise and evolve, PSUs will do so," adding that the Club HP 'Achha Lagta Hai' campaign that heavily promoted HP outlets was a good example. However, to the question, put up by the audience whether PSUs had the capability to come up with ad campaigns in order to match the threat posed by competition, Divakar reiterated that in the public sector, such campaign-related challenges and knee-jerk counter campaigns are not needed since advertising did not equal marketing. "Our role in society is more balanced and mature," he said. Bhagwat added that advertising and marketing gimmicks are not the prime drivers of public sector businesses. Rather, they are more about power, logistics and brute force. He predicted that when marketing does become the main driver of this sector, these businesses would evolve accordingly.

Though there is a lot of competition at the retail level, in case of government-run businesses, the customer is looked upon as someone who will take the brand's message forward. Thus, ad campaigns are treated differently and given less importance than in private businesses. For PSUs, advertising alone doesn't work. CSR (corporate social responsibility) activities are needed as well. These initiatives (such as polio and AIDS awareness drives) are treated less as marketing initiatives and more as an actual manifestation of the concerned company's responsibility towards society. Divakar explained, "CSR activities on part of PSUs are not treated as a reflection of the image of the organisation, or as a means of communication. It is about actual responsibility towards the people of the country." According to Divakar, PSUs are service providers more than custodians of brands, especially since they have the natural advantage of being viewed as do-gooders.

Summing up the session, Chakraborty said, "All PSUs in India are not one single homogenous mass. Those in competitive categories have upped their marketing spends and initiatives, while others will do so as and when the heat rises." There is much scope for growth for PSUs in the next 10-15 years, provided the opportunities for marketing are exploited. The future looks promising for the Indian PSU, with visionary as well as reactionary marketing initiatives.

(Held in Mumbai on February 4, the Round Table Conference on the challenges in the PSU marketing was sponsored by STAR News)