Monday, February 15, 2010

Marketing Strategy to Clinch Defense Deals of India

Ankit Chordia | XLRI Jamshedpur

Marketing strategy to clinch defense deals of India

The purchase of a high involvement product is fairly different from the purchase of a low involvement one. Marketing strategies talk about post purchase dissonance for individual customers but rarely about the dissonance when the customer is a Nation. Incidentally, no government would display any post purchase dissonance due to the fear of facing the nation’s wrath. So a big ticket deal by a developing country does not end up being the dream script of movie writers. In India, defense deals become a topic of mass consumption only when there are stories of kickbacks associated with them. For the billion plus of Indian population, the wedding at a politician’s residence is a more popular read than a multi billion deal concerning the security of the nation. Many defense equipment manufacturers have been lobbying along with their respective governments to persuade Indian government to buy their products.

In a product as sophisticated as a defense equipment and a deal so complex, is it actually possible to influence the decision makers? Well, we cannot comment on other nations but it is possible in India. A media campaign can create enough fury and flurry of responses to ensure that a Jessica Lal murder case is reopened. A Tata Nano can make the nation feel proud and sell without advertisements. The catch lies in connecting with the ordinary citizens of the Indian Democracy-they react, comment. Decide and deliver. India does not take a referendum on defense issues, but once a topic connects emotionally to Indians and comes in media glare, it becomes very difficult for the decision makers to take a decision favoring some Company or nation. Surprising but true, appealing to the emotions of the Indian citizens is the key to strike the defense deals in India.

This brings us to one of the biggest defense deals in the world .The sale of MMRCA (Medium Multi-Role Combat Aircraft) fighter aircrafts to India in a deal which can go up to US $ 10.5 billion. The decision makers in this MMRCA deal are the bureaucrats, Indian Air Force and finally the Government of India. So is it possible to influence them by marketing? I believe if the Aircraft manufacturers want a fair chance, they need to re- think their strategies. India defies conventional wisdom when it comes to many things. So who is the aircraft manufacturer that should be actually worried? The manufacturers like Saab from Sweden which is pitched against the likes of Lockheed Martin, backed by the US government.

The article will present the marketing strategy for Saab which is also in the race for the MMRCA deal. The timing could have never been better for Saab. As the deal gets into the ‘Slog overs’ it is the ideal time to fire the final salvo. But guess what, the likes of Saab have to take the battle to the living rooms of India, something unheard of with defense deals. For an average Indian, a MMRCA is like a commodity, he wouldn’t know much about a twin engine or single engine aircraft. But if the uninterested Indian can be influenced, Saab will definitely have a fair chance in the game.

Among all the competitors, Saab is a small fry which is facing financial difficulties. Among the six types of aircraft in consideration, only a deal with one of the two-Gripen and F-16 IN can leave India with a consumer surplus against the sanctioned budget of US $10.5 Billion. Amongst all countries in the race, Sweden is the least aggressive ones in selling its case. Indian government may be sensitized into diversifying its risk given that Boeing is now being awarded the contract of C-130 aircrafts. No other defense equipment excites Indians the way a fighter aircraft does. Fighter aircrafts stir emotions in the rich and masses alike in India. I recommend the following objectives of the marketing strategy for Saab:-
  • The campaign should portray the legacy of European companies which produces the world’s most coveted automobiles even though they may not be the biggest automobile makers in the world. It should depict Saab as a class apart and how it produces legendary brands which have no correlation with its balance sheet size.
  • Saab should focus on the fact that it wants to offer its best to India and how a relationship with Saab is for a lifetime (Unlike that with US which is susceptible to future sanctions and arm twisting).
  • The campaigns should portray Saab as an underdog amongst the bigger names.

The stepwise plan to implement these objectives:-

  • Build up: Saab’s Gripen NG will go on trials in March 2010.A build up with teasers should be showcased in the print media. An excitement wave should be created in Delhi during Defense expo 2010 peaking during the aircraft trials and continuing till the time of allotment of deal. The campaign has to be very subtle, much like the launch of a luxury automobile but still appealing to the entire nation.
  • Online presence: A new website should be opened up, which should talk about the highlights of Saab’s offer for the deal without going into great deal of technicalities and financials. It should showcase Saab’s strong lineage and how the present training of pilots in India prepares them for single engine aircrafts. Without mentioning it explicitly, the website should bring out that unlike deals with the US, which can be easily be manipulated by the US and can get into a limbo as a result of US sanctions, Saab offers a partnership for a lifetime. It should also draw attention to the fact that Saab has agreed to transfer of technology with India unlike other players. A contest can be launched, open to students in India. Winners of the contest will be given free ticket to come to Delhi and special passes for the Gripen exhibition.
  • Exhibition: Saab should arrange for a month long display of an actual Gripen aircraft in New Delhi in a prominent exhibition ground, starting 15 days before the actual trial and lasting for a total of one month. In case Saab does not get permission to land and display an actual aircraft, it should attempt to transport a real/full size model to India, even if it involves re assembly of an actual aircraft in India. An event management company should be hired. The Gripen should be made available for display to selected public which include all government officers, bureaucrats, media houses and defense personnel. Other than them, students of premier colleges and schools should be allowed to come for the exhibition after selection through a lucky draw. The journey of Saab and its facilities should be displayed by screening of movie/picture corridor. The visitors should be educated about the world class stature of Saab and Saab’s proposal for the deal. All visitors to the exhibition should be given free gifts like posters/key chains. Needless to say, the exhibition should be covered explicitly by tie up with media and most of the publicity should be generated through public relations and not advertisements. All the clippings of the exhibition should be displayed on Saab’s website and actively advertised on internet on Facebook, YouTube etc.
  • Public Relations: Ex defense officers of Indian Air Force should be hired to give opinion on the deal on major news channel. These programs are normally automatically aired on the News channel as the day of the deal allocation comes closer. National and regional magazines and newspapers should be selected to ensure that Saab’s case is published in them.
  • Competition: There is a strong possibility of the other Aircraft Companies to come up with similar marketing campaigns. Saab should plan the campaign discreetly so that it can have a free run of as many days as possible before other Companies come up with their campaigns. Saab should adequately plan for any negative advertisement campaigns which might come up. Equally important is to ensure that the planned marketing strategy till the exhibition should be successfully implemented lest the government of India comes up with a directive prohibiting advertisements by parties to the defense deals.

All this will entail an expenditure of around US $ 25-50 million which can be justified. The Sweden government cannot match the political might of America in lobbying for Saab. The only way Saab can try to clinch this deal is to establish a rapport with the Indian public especially in New Delhi. The campaign will definitely affect the decision makers of the deal but more importantly, it will provide an equal chance to Gripen to get selected.

In a country like India the defense deals can be influenced by politics and corruption. But this disadvantage can be surmounted by the Companies by using the combination of India’s powerful media and emotional population to ensure that the competition remains fair.

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