Consumer brand’s handicap

With whatever experience I have gained in sales, this article sums up my observation.

What is Marketing?

– Simply put, speaking in product terms, it is a process which begins with a concept or an idea originating in someone’s mind & ends with the customer holding the end product in his/her hands. 

If it is indeed that simple, why do people spend so much in order to get a Marketing degree from Ivy League B-schools or for that matter, why get a degree in the first place?

– The answer is you are not alone. Sounds like Will Smith’s radio broadcast from I Am Legend?

Every product or brand, has competition right upto the SKU level. Gone are the days, when mineral water meant Bisleri, Glucose biscuit meant Parle-G, TV meant Onida & fan meant Usha.

Marketers in inaccessible market have the cheek to dole out brands like Parle C, Barle G & what not. As I am writing this, I have sipped water from two different bottles labled Oxymore & Oxydew (the well known brand being Oxyrich). The market is being cluttered & local brands in upcountry markets are feeling the heat with major players reaching till the interiors & being competitive on rates, given their economies of scale.

As differentiation between products from different companies began to diminish, the focus moved towards relationship based selling. Here, the 5th P of Marketing – People came into the limelight.

If you remember a movie named – Rocket Singh. The protagonist tells his boss, that he did all other things right, but forgot the main element – People. So, companies splurged handsomely on trainings for their team, rolled out attractive incentives, promoted internally, but failed to capture their archaic mindset.

As a result, people quit their jobs after getting a promotion, joined a smaller company & got a double promotion. An executive in a large organization, had become Regional Manager in a much smaller company within an year. Companies decided to pull the plug on manpower spends. Focus again shifted towards hiring freshers & training them from the grassroots.

Let us see how retailer behaviour has changed.

Retailers earlier had to be nice to company representatives during the time of a monopolistic economy. Reason being that they needed the company’s products to sell & earn their margins. Once retailers started having an alternative (point in case is Brittania Tiger against Parle-G), they no longer had to, rather, felt the need to bend over backwards to entertain the category leader. New entrants competed either on price or promotion to generate a pull for their products. The original player, realized where this was all heading, again became aggressive in the market, but was losing market share.

By the time the situation stabilized, the market leaders share was half of what he had, with the other half going to several other players in the same category. Retailers are now spoilt for choice. They have the audacity to not pay for a company’s goods & start selling its competitor’s goods. They keep switching between brands 

The market is hyper competitive, retailers are not trustworthy. How do I do business?

Think for a minute. We buy a certain company’s milk, when several other companies are present in the market. Why do we do that? The answer to this question, is the answer to the main question above. When we go to a dairy, we have 10 options of which milk to buy, but when the dealer of a certain company comes to our doorstep, we only have the option of what he is offering.

We, looking after our convenience, buy from him. What the milkman is doing, is that he is killing the competition at the point of consumption! By offering superior service(in his case, free delivery on time every morning), he has made competition & pricing redundant. The company is spared from exhorbitant ad spends. If I am used to Amul Milk now, I will go to the dairy & demand Amul milk, so will others in my locality. As a result, the dairy owner has to stock Amul & maintain good relations with the company. With operating costs going up, lack of quality manpower in the field & budget overruns, this is the one mantra which will guide market forces until e-commerce takes over the Indian Market.

Learning: Kill competition at the point of consumption, not at the point of sale! This way your dependency on retailers & highly paid employees is reduced.. It has its pros and cons which is needless to say…