Saturday, September 5, 2009


“ If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants. “ David Ogilvy

Stretching the Rupee to the last mile should be the endeavour of any marketing organization. It is music to ears to listen to kum karcha jyada charcha, any penny wise pound foolish entrepreneur will fall for this sloganeering. Affordability is an issue for a start up company, but once an organization is into its take off stage after a decade’s existence, than it has really look for ways to reev up its brand image and ensure the goodwill of the customer.

Media selection and Deployment in trade dominated Industry :

When I was heading a branch in Kurl-on @ Nagpur I was faced with an akward situation of competition engulfing us in the market place. Being a dealer dominated trade we had collection problem galore and our brand equity was being encashed by competitors for lack of advt. Any coir mattress was being sold as Kurl-on by unscrupulous dealers. It was akin to any vanaspati being sold as Dalda. Kurl-on was a generic product for coir mattresses.

An idea flashed in my mind to educate the English speaking segment. I contacted Hitavada and found that Rs 50 per column centimeter was the rate card. I asked them for front page solus advt. The advt rep gave it at the same price instead of charging regular 50% premium. Well it was a golden opportunity, so go bang bang during the festive season. The positioning of the advt. created a Hulchul so to say in the market place, all dealers woke up from their slumber and they wanted their names to feature prominently in the advt. We had the policy of mentioning all the dealers below the corporate advt. This lever I used it effectively to promote the sagging image of Kurl-on, and sales literally doubled and we got rid of bad dealers. Thus Kurl-on brand was firmly entrenched in the minds of the consumer despite two strong local brands such as Rama coir and Aerocom which established their factory had to struggle with their capacities to establish their brand.

Treating advt. as an investment for building brand equity :

The influx of MNC brand poses a real threat to any Indian brand in the long run. Nutrine and Parrys was literally overtaken by Perfetti within a span of 4 years. The deep pockets and high profile advertising and maverick type of marketing ensured brand equity. The same example I had to give to our director in HPL, who literally woke up from slumber. The MNC competition in the form of Faber Castle and Staedler was looming ahead. What is now the key to protect the brand equity ? He asked me casually on a market visit, my simple suggestion to him was to pump all that he can on advertising forget short time profit for a few years. It made logical sense, the advt budget which was a measely 50 lakhs was pushed up 3 crores in the first year, second year it was 5 crores and so on it was multiplied. Today the company is able to withstand the competition head on without bowing down and selling the company lock, stock and barrel. Whereas Nutrine was sold to Godrej and Parrys was sold out to Lotte.

Dealing with Modern Trade format :

Modern trade format dependence, to large extent can be retarding for an organization. An optimum dependence on modern trade will boost the overall sales and consumer awareness. Excessive dependence can literally switch off the retail sales with millions of outlets. Indian retail universe for any healthy FMCG organistion should be 5 lakh plus. This would obviously comprise of Wholesale, Retailer and Modern format. Many of the companies do fall prey to the superior bargain power of the Modern format. Some mega mart offer excellent display opportunity. The merchandising effect lures the customer into impulsive purchase. The boost in the sales can be tremendous for short duration, but if used judiciously than the company will be able to do justice to multitude of retailers. Discriminatory Policy and consumer schemes can literally switch off sales from the millions of retailers as against a few mega mart. So it is absolutely essential to caliberate the consumer offer to niche segment or operate it on universal basis.

The feel good factor for any marketing guy to witness his product being sold like hot cake is heavenly delight. The modern trade demands, merchandising fee or rental, higher margins, exchange of slow moving stocks, etc for which any organization should be prepared. Sometimes delayed payment too is one the technique adopted by mega formats. The same situation we faced with CSD canteens, I suggested that we withdraw supplies stating production constraint, which factually we were facing. The sales multiplied in that area. If the product has tremendous brand equity sales will never be lost. This move was fraught with risk because many FMCG cos, obtain nearly 10% of the sales from CSD canteens. Nevertheless our call was based on rational thinking when we are selling the products against advance DD why should we give credit and follow up for a measely sales. It was purely a commercial decision, but if one follows the social responsibility it was a bad move.

Cadburys once had this very problem in state of Kerala, the dealers were asking for 20% margin instead of 10%. The trade boycotted and supplies to the market started flooding from TN. The sales trebled during the tenure from TN wherea sale was absolute Zero in Kerala. It was win-win situation for Cadburys, despite ban product was sold as hot cake under the table in black in Kerala. The trade realized the futility and lifted the ban. This is the precisely the power of branding. Even Johnson and Johnson faced the boycott situation among the chemist segment demanding higher profit margin sometime back, but they more than made up their sales from Grocery and other segment. Local brands took this opportunity to entrench themselves in the market place. Shapers was one of the biggest gainers alongwith Whisper.

Modern trade format can be very useful platform for new product launches, consumer sampling, product testing, research, etc. Brand managers of reputed companies employ event management firms to undertake a plethora of experiments at Malls, of with some strings attached. It is worth passing on 50% margin and ensure display of the product on the shelves rather than shelling out window display rentals. The sales expense ratio will match, otherwise the rentals will sometimes overshadow the cost or volume of business generated. In case of food products the best way to popularize is to distribute free samples or prepared foodstuffs. I was lucky to witness Kitchens of India sampling, Pepsi, and other companies in line of this business sampling.


“I notice increasing reluctance on the part of marketing executives to use judgment; they are coming to rely too much on research, and they use it as a drunkard uses a lamp post for support, rather than for illumination.” David Ogilvy.

During my marketing heydays i happened to visit the corporate HQ of Unilevers in connection with a tie up promotion. The directors warned me stating that the brand manager is going to demand his pound of flesh. It was my curiousity to see a brand guy at work. He has so busy with multiferous activity trying to reev up the sagging brand. He was spending lot of time with advt agency guys dicussing the promos, positioning and deployment. We lost the order to some local unorganised company even though we were brand leaders in the segment. But he lost the battle to ITC with Ashirwad and Philsbury brand firmly establishing in the market place. My theory on how Levers lost the golden opportunity to sieze the market leadership is totally different. The feel good factor was never employed effectively. Just take Cadbury on the contrary, despite having controversy over nickle content and worms they were able to surmount the challenge. Just have a look at their advt. The feel good factor associated with the brand has helped in recovering the market share after intial set back. The company worked overtime to set its packaging, ingredients, formulation etc right. Once the feel good factor is embedded in the minds of the consumer no amount of negative publicity will snatch away the market share.

Disclaimer : This article does not purport to demean or discredit any organisation but focus on educating the future generation or breed of brand managers to learn from mistakes which committed during our times.

Retailing scenario in Indian Mega Format or Modern Trade

My experience with Mega Retailer has been a mixed bag of experience.  Some times i avail good offers 1 plus 1 free offers on mostly slowmoving products such as Amul butter milk, Frozen chicken sausages, Tasty bite products, etc.  But the billing errors, scheme being knocked off, loyalty card not being swiped, old priced stocks sold at new price, etc are some of the goof ups.  The biggest let down is when you are asked not to enter the premise before the opening time.  Will you chase out your first customer just because he or she has arrived before time ?  If it were your own business you would happily serve him.  How about sharing your experience guys ?

Modern retail format in India is currently funded by deep pockets of Big Banners Reliance, Birla, Future group, Raheja etc. Even during the worst of recession period none felt the pinch of salary delays or downsizing to a large extent. Companies which were mismanaged, likes of Subsiksha went down under without trace of revival. The gaps in the retail format is so glaring in Indian scenario, when compared to the Harrods philosophy, which boasts of getting anything in the world for its customers.

Availability : The majority of the Modern retail formats don t have the right indenting or replenshment procedures. Many a times the stock out is a bane. Stock outs in FMCG product segment is bemusing, particularly with daily consumption items such as Milk, Curds and dairy products. Stock outs prevalent in veg and fruits are understand in view of seasonality factor. Some formats adopt push indenting, others physical indenting and some others random indenting on customer demand. I always found that the following items have random supply such as Amul curds, Dabur coconut milk, Modern Shakti atta bread, ( which was wrong understood by one major as Shakti bhog atta ) MTR Macroni, Priya Veg or Non Veg curry paste, etc. One finds stocking in plenty of MNC varients in the segment such as Nestle, Daily bread, Kitchen India, etc. Some of the supervisors are not even bothered to note or send request to their feeding points to ensure supplies.

Attitude towards customers : Any mom and pop grocery outlet which is run by an individual values his first customer as Boni customer and treats them as God, whereas the Modern day format salesmen treat them as a Dog, and literally chase them away if they arrive before time. Many a times i have faced this and complained to the respective supervisors. Other day i went to urgently purchase some idli and dosa rice before 10 minutes of opening, the salesmen argued with me how did the security personnel allow me inside the outlet, because 10 am is official opening time. I checked up with the billing clerk, she said she is ready to bill. It was a shocker to the salemen. He had to oblige me by default and so i ended up with purchase 9 minutes ahead of scheduled opening time, but with persuasion skill. Under normal circumstances, i would have to waiting beyond 10 am at this outlet. So whatever training is imparted to salesguys are literally superflous if they are not able to change the attitude towards customers. I hope they understand customers are not DOG but God.

Exchange of defective goods : The procedure for exchanging goods and services depends on the discretion of the retail supervisors in most cases. Many a times it is question of trusting a regular customer that he is not going to lie or mislead. After nearly a year of transaction with Reliance, i was for a pleasant surprise for exchange of defective potatoes. I just wanted to point out the defective product not least expecting exchange. In fact i was given the option of 1 kg without even verification. But i found only 2 pieces defective of medium size but i was given small sized potato which I happily accepted. There was no verification of bill, date of purchase etc, it was pure trust. This is what i liked about Reliance with no frills attached. Whereas my experience with SMART was really stupid. The concerned supervisor who gave me Tomato ketch up in exchange of Mangoes refused to exchange the sauce bottle for higher grammage. I was about to return half a kg Tomato ketchup to buy 1 kg of the same brand, after realising i had paid Rs 60 for half a kg and 1 kg price was Rs 90. The supervisor refused to exchange the product and thus lost a customer maybe forever.

Benefit of Lower Pricing : Majority of the modern format despite assured margins would like to hike the prices along with market trend. Recently i noticed that toor dhal which was selling at Rs 50 went upto Rs 90 per kg within a fortnight. The SMART supervisor was literally cursing the billing clerk, to revise the price immediately, that too in front of customers. The SMART way of doing business would have been to give the benefit of doubt to the customer and revise the price later. But he chose to boost up the profit of his company and ignore the customer interest.

Many a times I found that modern format revise the price of the products with 2 stickers, one with old price and revised with newer and higher price. It goes against the MRTPC act, PFA and weights and measure act to incorporate two price stickers. This phenomenon is really exhibiting the greed of the format to fleece the customer. When we were involved in selling the product, we used to pass on the benefit of lower pricing to the trade, who in turn used to pass it on the customer, what a change of attitude towards the customer in a span of 2 decades.

Expiry Dated Stocks : The prudent way of getting rid of near expiry stocks adopted by many a companies is to cut the prices by 50%, instead of taking back the stocks and incurring additonal expense. Some companies do take back the stocks and repack it and dispose off the stock. Many a hefty discounted food products like Jams, Squashes, Pickle, Fruit juice, Atta are all products nearing expiry date. If at all one ventures to buy such products it should be consumed immediately and not stored at the consumers place. I am wondering whether such stocks should carry the rider. To be consumed as soon as possible.

Clearance Sale : Many non moving, slow moving stocks in garmets, and other consumer durables are periodically disposed off in clearance sale mode. Garmets are disposed of in various discount formats. Buy one 25% off, Buy two 50% off, Buy three 75% off and Buy four 4 free. The logic for eliciting better sales would be to offer buy 2 and get two free and furnish 50% off on sale of one unit. Sounds tricky. Yes this formula will elicit better sales volume than offering a deep discount on higher purchase. The consumer should not fell sleighted by scheme mechanics. The reverse is true for marketers too, when one operates a volume purchase the telescopic benefit should vary in minor percentages. The difference can be maximum half to 1 percent, beyond that it is harmful practise akin to cutting the wood under one’s own shadow leading to downfall.

Targetting Practises in India

Many organisations get their targetting wrong in terms of fixing the same for individuals or territory. Targetting a segment of populace for achieve the desired sales is a broad objective, but when it comes to specific time bound targets in a given territory or a branch a rational and scientific method has to be adopted.

PSU Banks Targetting Strategy :

In some organisations like PSU banks targets for deposits, lending, no of accounts SB/CC accounts, credit card customers etc are laid down quaterly. The responsibility of achieving the target is fixed on the branch manager. Apparently target fixing seems to be ok. But if one probes deeper, one gets to know that the targets are not sub-divided among his staff members who are working under him. He may be having 8 to 10 staff both clerical and officers cadre along with sub staff. Sub staff who are either cleaners or sweepers can be excluded. Rationally speaking if eight members are given equal target of 10% each and 20% is allocated to the manager than it would be an ideal situation. Even that 20% allocation to the manager should be credited to the account of the juniors under him, which i shall deal with later in this article. This would ensure that branch manager has absolute unity of command over his staff members. The interaction among the staff members will be in the form of specific targets rather than arbitrary and emotional. Just imagine if the bank manager is able to inter-act with staff members on weekly basis questioning them how far they have managed to achieve the targets ? An archiac system of targetting in followed wherein the bank manager is fully and solely responsible for the target achievement of the branch. This naturally sets his staff free to play politics, non-co-operative attitude, etc. It also leads to ignoring the customers at large and thereby diluting the brand equity of nationalised banks. Some of the private banks too follow this trend blindly leading to imbalanced approach of managing staff. I only hope the bank managements change their approach in due course and avoid being a laughing stock in following an archiac system from decades.

Divide and Rule : Some bosses, right at the top of the hierarchy who occupy their seats by virtue of experience in some organisations believe in dividing and ruling the organisation or team members. This happens if the boss at the top believes that he can fetch more business by allocating individual target for the head of the branch.

Individual Target : A classic approach if a boss is handling a territory with 4 juniors working under him, he divides the target either equally or proportionately according to customer or potential for sale in the territory. In his individual capacity he helps his juniors to achieve their respective targets. This is an ideal way of managing a sales territory. What if the super boss at the head of organisation thinks that by dividing the territory in 5 parts instead of four, the boss chooses the best of the territory or potential area and selfishly tries to achieve his target and leave his team in the lurch. This creates a lot of tension, friction in the team. Thus if there are incentives fixed than the boss always grabs the incentive by virtue of choosing a potential territory and juniors will only be watching in dismay.

Partisan Attitude : If one is heading an all India organisation, he has to have the overall perspective of achieving all India targets. The customers may like a particular shade of tiles produced by one factory and places his order to fulfill his huge requirement based on the assessment of the production capacity of the factory. The boss feels that he is not based in the factory locale, where he is based in a factory location where the capacities are under utilised. He tries to divert the order to the factory where he is based. In the bargain there are numerous complaints when the production is shifted to the mother factory, the customer is highly dissatisfied and the biggest customer is lost forever. The company as a whole suffers because of one of the stupidest move of the super egoist boss.

The same partisan action can take place in trying to prop up a favourite sub-ordinate as against other juniors. He may be using the chamcha as a stooge to leak information about what is happening in the branch or territory. Ultimately the stooge does not perform his duty and ends up meddling affairs in other man s territory. This is a sure shot method to destroy the team spirit in an organisation. This invariably happens in a shop floor under the four walls but in marketing if it is used it can have dangerous consequence.

ACE : What does ACE signify ? Arm chair Executive : Many a times the boss believe that he has the magic potion and he can achieve all the targets by sitting in his cabin. They forget the fundamental that marketing is all about controlling the uncontrollables. It is impossible to dictate terms to a distributor, customer, franchisee, etc, many a times actual persuasion would work. Inorder to ensure that the boss knows his customer well he has to undertake market trips periodically to understand the ground level situation in the market place. Visiting the micro level customer is more important in an FMCG set up. In case of Micro level customer he can be pan beedi outlet, he may not be serviced directly by the company personnel, he may be buying from a wholesaler. At what price he is buying may be key. This information can be used when the wholesaler bargains for a better discount.

In majority of the cases a decision taken by an ACE back fires very badly and it can set back the company by years. I had a personal experience wherein an ACE was installed as a branch head in Ahmedabad. He was supposed to know nook and corner of Gujerat. He knew all the main customers by name and their family lineage. The promoter thought he can fetch or multiply his business multifold by the virtue of his experience. The ACE set back the company by ages by his unethical practice. He started dumping goods in the wholesale market and ended up destroying the very fabric of retailing. Out of staff strength of 15 field staff only 2 were happy who were manning the wholesale. The rest of field personnel were unhappy. Thus the organisation suffered immensely and was unable to recover their lost market share. The 50 year old organisation learnt a bitter lesson that ACEs dont work but basic distribution principle of management established over a period of time works. Only a professional can manage business effectively.