Tuesday, November 15, 2011

Ajay Manrai, Professor of Marketing, University of delaware

An Interview with Ajay Manrai
Professor of Marketing, University of delaware

In this month’s Vartalaap we feature Ajay Manrai.He is a Professor of Marketing in the Department of Business Administration and Faculty Director of the Graduate and Executive Programs at the Lerner College of Business and Economics at the University of Delaware. With a Ph.D. in Marketing from the Kellogg Graduate School of Management, North western University, Dr. Manrai talks to Markathon about cross cultural and cross national consumer research, International Marketing and his stint as a research ambassador through the ‘Fulbright-Nehru Research Scholar Award’.

Q1: Based on your interest in cross cultural and cross national consumer research, what would be your advice to Indian companies expanding overseas? What key insights are important to be successful in developing countries of the Middle East and Africa?

Well! These are really two separate questions. Please allow me to take one at a time.
First, my key advice to a company expanding overseas: Work exceptionally hard in two areas namely, self-referencing criteria (SRC) on part of the company and deal with consumer ethnocentrism. There are two major obstacles to success in international marketing. SRC is an unconscious reference to one’s own cultural values, experiences, and knowledge as a basis for decision. Ethnocentrism is the other side of the coin – it is the resistance a company faces in acceptance of its products abroad because consumers prefer their own country products.
Remember that cultures are not good or bad, right or wrong but simply different. The company expanding overseas ought to develop global awareness and the ways to acquire the same are –
1. Knowledge of Cultures, History, Global STEP Trends, that is, Social/Cultural, Technological, Economic/Financial, and Political/Legal trends.
2. Tolerance of Cultural differences
3. Development of Personal Relationships in Other Countries
4. Culturally Diverse Senior Executives and Managers
While there are differences, I wish to point out that there are also similarities across cultures and nations. The challenge of international/global marketing demands a company to Globalize the elements of marketing mix (4Ps) to benefit from similarities in the domestic and international environments whenever possible, and adapt the elements of marketing mix to adjust to the differences in the domestic and international environments whenever needed AND TO KNOW WHEN TO GLOBALIZE AND WHEN TO ADAPT.
Your second question deals with specific regions of the world. For example, most countries in the Middle East have wealth (buying power) but culturally very different than India. Islam is the predominant religion in Middle East and it is pervasive in society, politics, and business. For example, Islam does not allow payment or earning of interest income on money and thus businesses have to find alternate creative ways of pricing to incorporate cost of funds. Likewise, knowing local culture could help avoid awkward situations which could ruin potential partnerships. For example, Islamic women may run a business but they do not shake hands with men as their Western counterparts. As another example, it is an absolute no-no to carry wine bottle (as you would do in the West) if you were visiting an Islamic family for dinner invitation. In contrast to Middle East, most African countries are not wealthy and thus many marketing ideas relevant to marketing to the BOP would be more applicable in that region of the world. There is also political instability in many parts of Africa and that needs to be factored in assessing the risk in entering such markets.

Q2: How is international marketing different from marketing within the country in terms of positioning and communication strategies?

The steps involved in designing the positioning and communication strategy in international marketing are similar to the ones employed in domestic marketing – that is understand the attributes/benefits critical to your target market and then effectively communicate and deliver the same. Like I said before, the key is to understand the similarities and differences across cultures and nations and then decide to globalize and/or adapt the marketing mix including positioning and communication. For example, McDonalds promotes the same high quality, clean, fast, reasonably priced fast food in USA and India and the golden arches are prominent in their advertising as well as in stores in both the countries. However, Big Mac in USA has been transformed to Mac Aloo Tikki or Chicken Maharaja in India. Likewise, Mattel, makers of famous Barbie Dolls incorporate the differences in cultures via adapting the outfits and appearance of Barbie Dolls to different cultures as illustrated in the pictures below. Interesting, Mattel had tried in the past using a standard (American Barbie) across cultures and nations and dearly paid for it in terms of loss of sales and profits.

Q3: According to you, what frameworks/models work best to capture and represent consumer perceptions and preferences? What tools are ideal for a marketer, given time and cost constraints?

Welcome to marketing research! We are fortunate that we have two pillars on which the marketing discipline rests – qualitative andquantitative. I think both are equally important. We could gain at least preliminary insights about consumer perceptions and preferences via qualitative techniques like focus groups and in-depth consumer interviews but these insights need to be corroborated by a follow up quantitative study with a scientific sample and using techniques like perceptual mapping via factor analysis and multidimensional scaling and preference decomposition techniques like conjoint analysis. For example, over time the conjoint analysis has become a very popular technique in business for market segmentation and product positioning. I think anyone concentrating in marketing ought to be familiar with both the qualitative (such as focus group) and quantitative (such as conjoint analysis) methods.

Q4: Congratulations for receiving the prestigious ‘Fulbright-Nehru Research Scholar Award’. During your stay in India as a research ambassador, you would be researching the similarities and differences in the marketing strategies of Indian companies, and multinational companies with origins in both the United States and abroad. Could you throw some light on the motivation for the research and expected similarities and differences you perceive, prior to the research?

Thank you! The international marketing literature points out the importance of comparative marketing studies and yet one finds very few such empirical studies with large samples. My guess is that it is hard to conduct such comparative studies on a large scale as it requires resources and access to the key managers in a foreign country. In short it a tough problem. That is a key motivation and driver for me, that is, to try and tackle a hard problem. Besides I am fortunate that I had access to companies and key managers via the alumni networks at IIM Ahmadabad (my alma mater) and IIT Delhi (also my alma mater) as also my contacts in the Indian industry because I worked in India for a number of years before going to USA to pursue PhD in Marketing at the Kellogg School, North western University.

Q5: With increased competition in the Indian markets, companies are becoming more sensitive to the strategies of competitors. What according to you is the way ahead in competitive marketing?

The key to success in the market is “Differentiation.” It is easier said than done because in this day and age when over time competition could mimic all your moves and try to commoditize the market. This makes it particularly hard to keep a balance among three things – brand equity, market share and profits. As the brand equity erodes and consequently the company’s ability to maintain market share at a premium price, the profits decline. One way to stay ahead in the competitive game is by rediscovering the product or “offer” constantly via innovation. It requires investment in building intellectual capital (R&D) so that new products could be introduced periodically to keep an edge over competition. No doubt it would cause cannibalization but that is better than losing out to competition. There are numerous examples of this phenomenon - Intel, Miller, Kodak, Auqalisa, Eli Lilly, Pfizer and so on. The companies, such as, Intel, which engaged in innovation kept their market leadership while those, such as, Kodak, which did not innovate fast enough lost market leadership and profits. A law of marketing is – “Nothing is forever.” Even Viagra (a little blue pill for Erectile Dysfunction, a quality-of-life drug by Pfizer) was hugely successful until 2010 (sales $1.9 Billion). The New York Times (April 14, 2011) reported that the new longer lasting Cialis (by Lilly, $1.7 Billion in sales in 2010) would take over Viagra in sales in 2011. How did Cialis achieve this (despite entering the market as a number 3 after Viagra, which led it by 4 years; and Levitra, which led by only a few months)? Cialis did it by creative positioning of promoting the drug as a way to relaxed romantic approach to sex (using its unique “extended duration” – 36 hours attribute) as compared to “rushed,” exciting, winning, “playboy” positioning of Viagra created via Mark Martin, NASCAR race driver in 40s and jokes in the popular media.

Q6: In the Indian context, which method of advertising and sales promotion works best?

In advertising as a rule of thumb TV is by far the most effective media in India but also expensive. It works particularly well in India because of widespread penetration of TV in Indian rural and urban markets and also for its appeal particularly to rural markets where the literacy rates tend to be lower. Of course, it varies from state to state within India. The social [Facebook], electronic [Internet], and mobile [SMS] media are also becoming popular but nowhere close to TV yet. I think the print media is the less effective in India as compared to TV and social/electronic media.

Q7: According to you, is marketing communication within the company lacking as of today? How can companies better in house communication?

No, I think Indian companies have made a dramatic progress in communicating internally compared to the state of affairs 30 years back when I was working in India. For example, let us take Anand Group of Companies. I worked for Gabriel India Limited, an Anand company, until 1982. We had good in house communication even then. However, now their internal communication is truly exceptional – five stars. In 1982 they used to be a group of four or five companies in Automotive ancillary field and today they are a group of 19 companies with more than 40 physical plants all over India ranging from automotive to water purification to hospitality industry and numerous collaborators all over the world. They have an impressive Newsletter about company activities and achievements, which is shared with employees, suppliers, and partners. In addition, face to face periodic meetings at various levels, Electronic Bulletin Boards, E-mails, Sports events for employees and their families, Community events around festivals and religious holidays, hostels for young male and female employees, bungalows in one location for senior managers, Intranet and Internet are some of the other ways Anand promotes in house communication. These methods may be useful to other companies looking to improve ways to promote internal communications.

Q8: What, according to you, are the key qualities of a marketer? Any Words of advice to our readers?

A marketer has a difficult role in a company. She/he needs to interface with internal and external publics relevant to the marketing decisions. As we capture it in Five C’s of marketing: understanding Consumers, Competitors, Collaborators (partners, suppliers etc.), Context (external environment – opportunities and threats) and Company (strength and weaknesses – internal analysis) is critical to marketer’s success in marketing decision making. Thus, the qualities, such as, individual attributes - analytical, perceptive, inquisitive, genuine, creative, balanced, passionate, motivated etc., leadership skills – interpersonal relations, communication skills - both written and oral, and empathy would make a person a good marketer. While “some” individuals may be born with “some” of these qualities, I think most of these qualities could be developed and improved upon with perseverance, patience and practice. Overall, I would say that both “nature” and “nurture” have a role to play in making a good marketer.

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