In a freewheeling discussion with marketing management guru Dr Philip Kotler, founder of Great Lakes Institute of Management in Chennai Dr Bala Balachandran, managing director of Pantaloon Retail Kishore Biyani, and managing director of Titan Industries Bhaskar Bhat, the talk revolves around foreign competition to Indian brands and how Indian companies are planning to ward off competition against Wal-Mart and other retail giants.
Excerpts from an interview given to CNBC-TV18.
The 'Made in India' Titan watches are gaining acceptance slowly but surely across the globe? What about the fact that Titan's recently launched brand called Xylus, which is for the Indian market, had to insist on being Swiss made?
Bhat: I think we are consumer-centric always and the market at the high-end opened up with the arrival of Swiss brands. The price point of Rs 10,000 plus was where we were not present and research told us repeatedly that for a brand above Rs 10,000, a Swiss-made brand is what the customer is willing to pay.
We got this watch designed overseas. Even though it's our design it was made overseas and we have launched it under the Xylus brand name.
It's doing well, but the point is that it has come out of an opportunity in the marketplace, out of consumer understanding, perhaps opened up by the Swiss. Now the approach is -- different strokes for different folks. So we have a low-end brand -- Sonata, then we have Titan, Fastrack, Raga and now we have Xylus.
You are saying that it's a different segment?
Bhat: It's different segments and different brands for different segments. It's based on our consumer understanding.
Do you see companies find different segments or create products or innovate largely due to competition?
Kotler: The big stimulus, particularly for Indian companies, is that they have to be aware that multinationals are going to come in from abroad and challenge them and often bring in greater resources. So, I told domestic Indian companies that part of what they should do is go out of India as well as stay in India, if they can.
But basically -- one of two choices, either the company here in India says that 'I know they are coming in but I am more unique, I understand the people better so I can outpace them', or they worry about the strength of these competitors who are coming from abroad.
The question is -- how do you understand the competition and how do you distinguish yourself from competition through service, through branding, through technology and many other competitive variables?
We know that government regulation is keeping out the big giant chain retailers. But is that something that branded retailers are also going to have to deal with?
Biyani: We are not concerned as much because Wal-Mart or any other brand, which comes to India, will have to build up an emotional account or emotional empathy with customers. The customers will have to first experience their store or have to relate to that store before they start buying in that store.
I think they will also have to complete the work which we have done -- in terms of building up a brand in the country.
But we are seeing some thing unique when it comes to Indian brands. Take a Tata car or a Videocon television, they are not the best cars or the best television sets -- yet they are still the market leaders. We believe Indians have a lot of affinity towards Indian brands.
Is it because of the price proposition?
Biyani: Indians have an affinity towards Indian brands, that's what we have seen in our work till date.
Kotler: That's interesting because in a lot of other countries people prefer foreign brands. The reason was because foreign brands were better in quality. But you are saying something different -- that Indian people are satisfied with the quality or value they are getting.
Biyani: Absolutely. At comparable levels, if given a chance, they will prefer Indian brands.
Balachandran: I think that is a real statement. They will prefer it and are also proud of 'Made in India' kind of stuff. But that was not the case about 10 years back. The reason was quality. Now the Indian brands are also ensuring quality and listening to the customer, listening to the needs of the customer and just because American customers likes something, that doesn't mean that the Indian customers need to like the same thing.
So, I think listening to the voice of the customer is very important. Therefore, creating a value proposition is important, but not stopping there since value migration is even more important. What will be the need for tomorrow's customer? You don't need to eavesdrop, but you need to go to the malls or wherever they are buying the stuff from, and find what they are talking about.
Bhat: I agree with you that Indians are proud of owning Indian brands. But I think brands which do not deliver sufficiently on the quality, value, service equation won't go through the marathon race.
Kotler: So, you're saying that there are a lot of those brands in India that will lose out because they don't hit one of those things in the equation.
Bhat: That's right.
If they hit those parameters then you are saying that the 'Made in India' brand will ride home?
Biyani: There is an emotional affinity towards an Indian label or Indian brand -- that's what we have found out.
Balachandran: I think that's right. We are making a fundamental assumption, and all these points are taken care of and they are very happy now that they have a choice. Therefore, if you not only take care of their choice but also anticipate what they are expecting tomorrow, or one year from now, you can astonish them by giving it today.
Is this a trade peculiar to India?
Kotler: This idea that the people of a country prefer things made in their country differs in different places. There are still people, especially the young people, who are different than older people. They may glorify themselves in Western or European shirts and show off in being more western. So, you may lose out on certain groups, if you over-depend on their proposition that they prefer Indian.
I would think as a layperson reacting purely as a consumer that if I have the money and if I have the choice, I would just pick the best across the board.
Biyani: But what if we are able to offer you a similar product, similar in quality and at a much better price that fits into the equation, I think then the emotional account will come through.
Kotler: But would there be an Indian Mercedes?
Isn't India always getting beaten with the fact that it's not very good in the service sector, traditionally at least?
Biyani: We have not been able to market ourselves quite well as Dr Kotler said. I think we need to create our own PR agencies and need to create our own brand. I think we have lots of good things, it's all about the marketing. Ultimately we have not marketed ourselves well.
Bhat: I just wanted to say that I think fundamentally by attitude we are very good at services, we are hospitable and so on. I think the marrying of technology and then converting that into customer service will be a delight -- that is where we need to go. We have to marry this attitude of our being hospitable and service oriented and marry that with good technology.
The other point I think is that Indian marketing is truly global in one sense. You know India is many countries in one -- the diversity in India is huge. I think Indian marketers have mastered selling a piece of jewellery in Assam or in Kerala or in Kashmir or Delhi and the tastes are different.
The tastes, needs, seasons and festivals are different and to create a national brand like a Tanishq, let us say, and yet deliver at the local level is a challenge. I think that ability will stand in good stead for Indian marketers, as they go overseas.
We keep hearing about how the Internet has completely revolutionized the way you can connect with the consumer. Your thoughts on the digital consumer or marketing in the digital age?
Kotler: I think marketing will have to be a redefined and revised in many ways. The Internet gives power to the customer to look at the web page of different competitors and if they are buying things online, they could be even aggressive enough to say 'I want a certain automobile, I wanted it to be blue, I wanted it to be Ford, let's say and I want to only pay X, so, is there any dealer out there, who is desperate enough to sell that car to me.'
It just changes the whole search function, as there is always a product that someone might want and can now find it.
But the point is, the Internet also can be used by the suppliers as well, to study the other competitors and their prices. There is much more price transparencies and you can't get away. A bad company cannot last anymore because the word of mouth is going to kill it and the word of mouth will be from C2C -- consumer to consumer -- a customer can run a blog saying something bad about a company.
How is the retail sector using the Internet especially where Pantaloon is concerned?
Biyani: I think we are the first one to get into the e-tail business. We are just about to launch our site, it's in test mode right now. It's called www.futurebazaar.com and we are bringing in a virtual store inside the whole Internet place and are creating the same experience for our customers in terms of a trolley, and how they shop at various sections.
The biggest things which we are going to do is to have the lowest prices everyday, and every hour there would be promotions. So we are going to take promotions on the net and we are testing the whole site for 100,000 users at the same time.
What kind of investment do you need as backup infrastructure?
Biyani: I think we have used the entire backup of our existing infrastructure in our retail business, the distribution, the warehouses, and the categories of merchandise. So we have used the same infrastructure, while catering to the new infrastructure, and have developed technology for dealing with net consumers.
But we believe our whole idea is not only to sell to the net consumers, but we want to sell our products much cheaper on the net because the cost of operations will be much lower for us. We want to offer a mobile phone which will be cheaper on the net than what is available in our stores.
So, that's the intention. We want people who have never used the net to come and buy our product online.
Are you estimating the size of this target?
Biyani: Our test results have been phenomenal and we are scared that's why stress testing is going to be very important because the technology should not fail once 50,000 customers log in at the same time.
We have heard about how Wal-Mart and chains like that have changed the equation between organized retail and the big large companies, mainly the FMCG companies. Are you seeing that happening here?
Biyani: I think it's beginning to happen. I saw a Wal-Mart store two years ago and I found it to be a very insipid store. Everything was in the backend, while at the front end there was no emotion, it's like a machine.
So, I do not think an Indian would like to deal with a machine, we are used to sales staff. I have a very interesting example of the lingerie business, which we are just getting into. Lingerie here are sold by men in this country, They know the woman they deal with, they talk about the new stocks which comes in and they have one on one equation in terms of relationship.
We have never been able to sell lingerie off the racks so well as we can sell off the counter. So, I think we are all discovering new things in this country at the moment.
I just wanted to link the question about the Internet and the digital age. An advertiser like you, how much are you using the Internet to reach your consumers?
Bhat: Not very much, we still have a lot going for us through the normal networks, which is television and print. But our retail chains are now leveraging the internet because we have a large number of stores and using those stores to interact with the customer more deeply is what we are doing. The internet is used for youth brands a little more but it's used more for our backend operations for connecting with our distributors, for buying and for B2B a bit.
Would you say that advertisers would do better to not focus so much on the big commercials?
Kotler: On advertising! I would say there are new modes of communication and reaching people and they should pay more attention to the use of public relations, sponsorships, maybe product placement, blogs, community development, the internet, chatrooms and so on.
Dr. Kotler often quotes Peter Drucker saying that the purpose of the company is to create a customer. The business has only two functions -- marketing and innovation, they produce results and all the rest are costs. From your perspective are you seeing Indian companies doing that?
Biyani: I can talk about myself and we strongly believe in innovation and marketing -- internal as well as external marketing.
Are you seeing the people who stock with Pantaloons, are you seeing them doing that in all the brands and product categories from across sectors?
Biyani: Absolutely, if you look at everyone in this life, we are all in the business of sales, we are selling something right now. You are selling your channel, we are selling our companies. So we are all in a business of sales and marketing always.
In 2001, we saw how marketing was under tremendous pressure to justify the function. Are you seeing companies get over that? Are you seeing departments within companies understand that marketing is something that everybody needs to do?
Balachandran: Now I am positive people have understood, they may not use the word marketing but customer-centricity has completely come. I call both the same. Marketing is being customer-centric. So, the point I would like to say is when you say customer, you are trying to think of sales and maybe a one-time transaction, but I would like to make core customers into becoming clients.
Kotler: We are now saying that the job of a company is to create value, communicate value and deliver value and value innovation is as important as just value delivery. That's the key word for all of us. Value for the customer will generate value for us.
Source : moneycontrol
Excerpts from an interview given to CNBC-TV18.
The 'Made in India' Titan watches are gaining acceptance slowly but surely across the globe? What about the fact that Titan's recently launched brand called Xylus, which is for the Indian market, had to insist on being Swiss made?
Bhat: I think we are consumer-centric always and the market at the high-end opened up with the arrival of Swiss brands. The price point of Rs 10,000 plus was where we were not present and research told us repeatedly that for a brand above Rs 10,000, a Swiss-made brand is what the customer is willing to pay.
We got this watch designed overseas. Even though it's our design it was made overseas and we have launched it under the Xylus brand name.
It's doing well, but the point is that it has come out of an opportunity in the marketplace, out of consumer understanding, perhaps opened up by the Swiss. Now the approach is -- different strokes for different folks. So we have a low-end brand -- Sonata, then we have Titan, Fastrack, Raga and now we have Xylus.
You are saying that it's a different segment?
Bhat: It's different segments and different brands for different segments. It's based on our consumer understanding.
Do you see companies find different segments or create products or innovate largely due to competition?
Kotler: The big stimulus, particularly for Indian companies, is that they have to be aware that multinationals are going to come in from abroad and challenge them and often bring in greater resources. So, I told domestic Indian companies that part of what they should do is go out of India as well as stay in India, if they can.
But basically -- one of two choices, either the company here in India says that 'I know they are coming in but I am more unique, I understand the people better so I can outpace them', or they worry about the strength of these competitors who are coming from abroad.
The question is -- how do you understand the competition and how do you distinguish yourself from competition through service, through branding, through technology and many other competitive variables?
We know that government regulation is keeping out the big giant chain retailers. But is that something that branded retailers are also going to have to deal with?
Biyani: We are not concerned as much because Wal-Mart or any other brand, which comes to India, will have to build up an emotional account or emotional empathy with customers. The customers will have to first experience their store or have to relate to that store before they start buying in that store.
I think they will also have to complete the work which we have done -- in terms of building up a brand in the country.
But we are seeing some thing unique when it comes to Indian brands. Take a Tata car or a Videocon television, they are not the best cars or the best television sets -- yet they are still the market leaders. We believe Indians have a lot of affinity towards Indian brands.
Is it because of the price proposition?
Biyani: Indians have an affinity towards Indian brands, that's what we have seen in our work till date.
Kotler: That's interesting because in a lot of other countries people prefer foreign brands. The reason was because foreign brands were better in quality. But you are saying something different -- that Indian people are satisfied with the quality or value they are getting.
Biyani: Absolutely. At comparable levels, if given a chance, they will prefer Indian brands.
Balachandran: I think that is a real statement. They will prefer it and are also proud of 'Made in India' kind of stuff. But that was not the case about 10 years back. The reason was quality. Now the Indian brands are also ensuring quality and listening to the customer, listening to the needs of the customer and just because American customers likes something, that doesn't mean that the Indian customers need to like the same thing.
So, I think listening to the voice of the customer is very important. Therefore, creating a value proposition is important, but not stopping there since value migration is even more important. What will be the need for tomorrow's customer? You don't need to eavesdrop, but you need to go to the malls or wherever they are buying the stuff from, and find what they are talking about.
Bhat: I agree with you that Indians are proud of owning Indian brands. But I think brands which do not deliver sufficiently on the quality, value, service equation won't go through the marathon race.
Kotler: So, you're saying that there are a lot of those brands in India that will lose out because they don't hit one of those things in the equation.
Bhat: That's right.
If they hit those parameters then you are saying that the 'Made in India' brand will ride home?
Biyani: There is an emotional affinity towards an Indian label or Indian brand -- that's what we have found out.
Balachandran: I think that's right. We are making a fundamental assumption, and all these points are taken care of and they are very happy now that they have a choice. Therefore, if you not only take care of their choice but also anticipate what they are expecting tomorrow, or one year from now, you can astonish them by giving it today.
Is this a trade peculiar to India?
Kotler: This idea that the people of a country prefer things made in their country differs in different places. There are still people, especially the young people, who are different than older people. They may glorify themselves in Western or European shirts and show off in being more western. So, you may lose out on certain groups, if you over-depend on their proposition that they prefer Indian.
I would think as a layperson reacting purely as a consumer that if I have the money and if I have the choice, I would just pick the best across the board.
Biyani: But what if we are able to offer you a similar product, similar in quality and at a much better price that fits into the equation, I think then the emotional account will come through.
Kotler: But would there be an Indian Mercedes?
Isn't India always getting beaten with the fact that it's not very good in the service sector, traditionally at least?
Biyani: We have not been able to market ourselves quite well as Dr Kotler said. I think we need to create our own PR agencies and need to create our own brand. I think we have lots of good things, it's all about the marketing. Ultimately we have not marketed ourselves well.
Bhat: I just wanted to say that I think fundamentally by attitude we are very good at services, we are hospitable and so on. I think the marrying of technology and then converting that into customer service will be a delight -- that is where we need to go. We have to marry this attitude of our being hospitable and service oriented and marry that with good technology.
The other point I think is that Indian marketing is truly global in one sense. You know India is many countries in one -- the diversity in India is huge. I think Indian marketers have mastered selling a piece of jewellery in Assam or in Kerala or in Kashmir or Delhi and the tastes are different.
The tastes, needs, seasons and festivals are different and to create a national brand like a Tanishq, let us say, and yet deliver at the local level is a challenge. I think that ability will stand in good stead for Indian marketers, as they go overseas.
We keep hearing about how the Internet has completely revolutionized the way you can connect with the consumer. Your thoughts on the digital consumer or marketing in the digital age?
Kotler: I think marketing will have to be a redefined and revised in many ways. The Internet gives power to the customer to look at the web page of different competitors and if they are buying things online, they could be even aggressive enough to say 'I want a certain automobile, I wanted it to be blue, I wanted it to be Ford, let's say and I want to only pay X, so, is there any dealer out there, who is desperate enough to sell that car to me.'
It just changes the whole search function, as there is always a product that someone might want and can now find it.
But the point is, the Internet also can be used by the suppliers as well, to study the other competitors and their prices. There is much more price transparencies and you can't get away. A bad company cannot last anymore because the word of mouth is going to kill it and the word of mouth will be from C2C -- consumer to consumer -- a customer can run a blog saying something bad about a company.
How is the retail sector using the Internet especially where Pantaloon is concerned?
Biyani: I think we are the first one to get into the e-tail business. We are just about to launch our site, it's in test mode right now. It's called www.futurebazaar.com and we are bringing in a virtual store inside the whole Internet place and are creating the same experience for our customers in terms of a trolley, and how they shop at various sections.
The biggest things which we are going to do is to have the lowest prices everyday, and every hour there would be promotions. So we are going to take promotions on the net and we are testing the whole site for 100,000 users at the same time.
What kind of investment do you need as backup infrastructure?
Biyani: I think we have used the entire backup of our existing infrastructure in our retail business, the distribution, the warehouses, and the categories of merchandise. So we have used the same infrastructure, while catering to the new infrastructure, and have developed technology for dealing with net consumers.
But we believe our whole idea is not only to sell to the net consumers, but we want to sell our products much cheaper on the net because the cost of operations will be much lower for us. We want to offer a mobile phone which will be cheaper on the net than what is available in our stores.
So, that's the intention. We want people who have never used the net to come and buy our product online.
Are you estimating the size of this target?
Biyani: Our test results have been phenomenal and we are scared that's why stress testing is going to be very important because the technology should not fail once 50,000 customers log in at the same time.
We have heard about how Wal-Mart and chains like that have changed the equation between organized retail and the big large companies, mainly the FMCG companies. Are you seeing that happening here?
Biyani: I think it's beginning to happen. I saw a Wal-Mart store two years ago and I found it to be a very insipid store. Everything was in the backend, while at the front end there was no emotion, it's like a machine.
So, I do not think an Indian would like to deal with a machine, we are used to sales staff. I have a very interesting example of the lingerie business, which we are just getting into. Lingerie here are sold by men in this country, They know the woman they deal with, they talk about the new stocks which comes in and they have one on one equation in terms of relationship.
We have never been able to sell lingerie off the racks so well as we can sell off the counter. So, I think we are all discovering new things in this country at the moment.
I just wanted to link the question about the Internet and the digital age. An advertiser like you, how much are you using the Internet to reach your consumers?
Bhat: Not very much, we still have a lot going for us through the normal networks, which is television and print. But our retail chains are now leveraging the internet because we have a large number of stores and using those stores to interact with the customer more deeply is what we are doing. The internet is used for youth brands a little more but it's used more for our backend operations for connecting with our distributors, for buying and for B2B a bit.
Would you say that advertisers would do better to not focus so much on the big commercials?
Kotler: On advertising! I would say there are new modes of communication and reaching people and they should pay more attention to the use of public relations, sponsorships, maybe product placement, blogs, community development, the internet, chatrooms and so on.
Dr. Kotler often quotes Peter Drucker saying that the purpose of the company is to create a customer. The business has only two functions -- marketing and innovation, they produce results and all the rest are costs. From your perspective are you seeing Indian companies doing that?
Biyani: I can talk about myself and we strongly believe in innovation and marketing -- internal as well as external marketing.
Are you seeing the people who stock with Pantaloons, are you seeing them doing that in all the brands and product categories from across sectors?
Biyani: Absolutely, if you look at everyone in this life, we are all in the business of sales, we are selling something right now. You are selling your channel, we are selling our companies. So we are all in a business of sales and marketing always.
In 2001, we saw how marketing was under tremendous pressure to justify the function. Are you seeing companies get over that? Are you seeing departments within companies understand that marketing is something that everybody needs to do?
Balachandran: Now I am positive people have understood, they may not use the word marketing but customer-centricity has completely come. I call both the same. Marketing is being customer-centric. So, the point I would like to say is when you say customer, you are trying to think of sales and maybe a one-time transaction, but I would like to make core customers into becoming clients.
Kotler: We are now saying that the job of a company is to create value, communicate value and deliver value and value innovation is as important as just value delivery. That's the key word for all of us. Value for the customer will generate value for us.
Source : moneycontrol
