Thursday, July 30, 2015

Vartalaap- with Achal Raghavan || July 2015 Edition

An Interview with Prof. Achal Raghavan
Prof. Achal Raghavan holds the position of Strategic and Business excellence consultant based at bangalore. He teaches at IIM A and he has also taught in various other IIM’s as visiting faculty. His career spans 40 years of work experience including 8 years as a consultant. He also held board positions for over 11 years in Delphi Automotive, Ingersoll-Rand & Cramlington Precision. 

Markathon: As a marketer, what should you focus on? Continue building your expertise in the current industry you are in or identify a new need and try to come up with a product or service for satisfying that need? And if you want to satisfy new needs when should you do it?

You will find this out very easily. When you can see that increasing your market share is becoming more and more difficult and the sales and the marketing teams come to you requesting you to reduce the price to become more competitive, that is when you ask yourself this question. When people start resorting to price, price and price as the sole tool for the war that means that the other three Ps have been exhausted either due to improper research or lack of knowledge. When you start believing that further growth will only happen with price discounting then that is when you ask yourself if there is something more to this other than price that I am missing out. For example, we talked about current products or services fulfilling the needs of the customers and customers’ constantly evolving needs. They may be perfectly happy with what they are being given but then there are needs in his mind that are surfacing now which didn’t even exist when he bought that product 2 years ago, say a car. So improving this car is always good but will that solve your growth problem? Probably not. So when will you launch other services in addition to this product so that it gives a complete solution? It is when your current bundling doesn’t fetch you the kind of growth that you currently need. Adding new features will increase only the life of the product but will not necessarily give you the kind of growth that you are looking for in the longer run. If you don’t provide the additional services someone else will. Products are now increasingly getting enveloped by additional services which add value to the whole solution or bundle. If you don’t do it quick then your competitors will be stuck in the head of your target market while identifying that service even if you provide a better one but later than they did. 

Markathon: Which approach does the TATA group follow according to you? Because when we talk about ethics the first organization that comes to our mind is TATA in India.

It definitely follows the due care approach according to me, although I haven’t worked for the TATA group, from what I have heard they do actually believe in the wellbeing of the society. It is not a static group so I would like to believe that they would want to move to the social costs view in every industry they are.

Markathon: Do you think Maggi’s reaction to the issue of lead content was appropriate? Had you been in the position of the country head of Nestle India, would you have done things differently?

In all these discussions one caveat that we should keep in our mind is that we don’t have all the information and it is very difficult to pass judgements sitting outside. In any such analysis without complete knowledge of the facts and the situation it is impossible to come up to a conclusion. All that we know is what we read in the media which is not the complete story. Having said all this, I believe that there are very well accepted principles of crisis management. This isn’t the first crisis, many companies have passed perhaps worse crisis too. One of the things they say is that you need to be seen as responsive. You may be doing all the right things in house like working 24*7, making sure you do everything that keeps your customers satisfied but there is a continuous need of communicating with your current loyal customers and the potential customers that we recognize the issue and we are getting to the bottom of it. They also need to be told that we will need X amount of time to sort the issue and in the meantime these are the steps we are taking and we will keep you posted. Coming to Maggi from the facts that I know I would say the communication was less than adequate. Even we professionals wanted to know that what is the issues and what is being done. Obviously Maggi couldn’t say everything in the public because before they say anything they needed to be 100% sure that it is the right thing. I am not saying that come and say what you want every day but the volume of information that was made available to the society at large and the customers could have been better. They could have at least told the customers that this is the problem and this is what we are doing and we will keep you posted about further progress. This is not the first company which has got into a situation with inadequate information. Everybody knows about the Toyota issue in the USA where they had the issue of car accelerating by itself. In that case, Toyota went deep inside to figure out what the issue was but the American public was impatient and wanted to know what is happening from the very next day. So this cost Toyota tremendous amount of Goodwill. 

Markathon: So, does the target market actually make a difference, had the Maggi issue happened in the USA would the country head there reacted differently?

No, I don’t think so. I think that each company has its way of handling things, all the MNCs are hyper connected today so no matter which country you are in, you are completely wired with the corporate office 24*7. I don’t think so had this issue popped up in some other location, the country head would have reacted differently. There is a particular Nestle way of handling things. So I would say their communication could have been better because the lack of knowledge with the customers creates greater uncertainties.

Markathon: Do you think that the marketing approach followed by the Indian marketers is considerably different from their counterparts in the developed countries like the United States? And if there is why is it so?

In terms of pure knowledge the marketers in India are as knowledgeable as their counterparts in the developed countries. Marketers here have also attended similar business schools if not the same and have got the right concepts and they know what the latest techniques are etc. what determines their actions in the market are a factor of the level of competition they face depending on which product or service we are talking about. I have observed that sometimes in the developed world, the competition is X times fiercer than here and there are also some products and services which are X times more competitive here than there. If I were to speak in general, the more developed a market is the more the competition will be and more people want a share of the pie. That’s why you have to up your act as the techniques and the methodologies followed will be the state of the art. If it is a market which is reasonably not fully developed or it is developing then some of the more evolved marketing techniques may not be called for. You may not want to use fancy, sophisticated methodologies if the market is not asking for it. I think the Indian marketer is no way less prepared for the future battles given the situation requires him/her to.

Markathon: How to create an aspirational brand without using pricing as one of the tools??

I see a brand to be aspirational, if it seen to have Reach a level of sophistication and achieved something in life but this cannot be hardwired to the money. Many times, the product commands although ‘yes’ and the price is just an indicator of a brand being a successful. Customers now a days are smart enough not to give 100% emphasis to the money part. For a brand to be aspirational the pricing part is the secondary part, the primary thing is the brand personality; every brand builds its character over the years reinforcing it year after year in such a way that after few years people have a very clear mental picture of what the brand stands for. So as a company we must be very clear of what slot we want to occupy and what destination point we want to reach in order to make our brand aspirational. It could be contribution to the society, excellence in a particular field or reaching a desired income level. Once this destination point becomes clear the next part is the strategy that the brand should adopt in order to reach that point. For creating that positioning price may or may not play a role. I would like to explain this with the example of ‘Mahatma Gandhi’, he is as an aspirational brand whom most of us would like to follow but that does not have any real worth in terms of money. The brand need not be a luxury product like a car, or a bag, or a perfume. One should always look towards a brand as a personality although the money method to create an aspirational brand is an easy method as it involves putting a hard number and quantifying it. Another example I would like to take, would be of a training programme for rural people after which they would be fit enough to get a job in a company. These a lot of aspiration attached to it. The companies should start to focus upon a different dimension of combining products and services and see whether this combination can be branded or not and be positioned at a premium level of because what it offers rather than luxury products.

Markathon: Many times the consumers are not ready for the progressive moves the company takes, like green marketing? So what do you think should be the way forward in such cases?

The first thing that we need to check with ourselves, before launching a green campaign is to see if there is really any value in it. Sometimes we ourselves get green washed about the whole concept, and forget to clearly analyze what extra value it adds. Once that value is identified and you believe in that value, then you can convey that value to the customer properly. The next thing you need to see is, what is your motivation?  If your motivation is- let us go green because it’s sexy, because it looks attractive, then those are the wrong motivations to go green. If being green adds to your market share, if it gives you a significant advantage on production side, then it is the right motivation. In business terms, I will say going green and making profit are never mutually exclusive. There is a huge misconception amongst some people that being green only means addition in cost and it does nothing to your bottom line. But fortunately in many cases, this thinking has evolved and people have realized that being green just does not do well to you on the perception end but is good for your bottomline too. You need to find one core feature which you can improvise upon using the green factor.  The improvisation needs to offer a benefit, which could be anything on the lines of being less polluting or being more energy efficient. You need to conceptualize such a thing from the initial stage and incorporate it in the design stage. No product could be made green once it’s produced. Simultaneously you should start communicating it with customer, using various channels. So most importantly you need to find out if your proposition have value, you can do that by talking to more and more people and if they find value in your offering, then that reinforces the worth of your product. Secondly, you need to identify if you can properly communicate it to your customer. If the explanation of the value that you are offering, is way too technical and complicated, then that too might be a problem for you.

Markathon: What would your advice be to the budding marketers?

I think the marketers need to be very curious, curious about what is happening outside, requirements of the customers are. Most of us think that we know that and that’s how we create a product or a service and roll it out and it may or may not succeed. Therefore the marketer needs to be relentlessly curious about the evolving needs of the customers. This is done by being out in the field. Yes, there needs to be coordination with other departments too and I am not saying just pick up your bags and go for market visits very often. For me half an hour conversation with a good customer is worth more than 20 pages of a consultant’s report or 200 pages of a sales report because you are experiencing that interaction. Marketing by definition is interfacing with your customer both current and potential. Marketing is such a field that what was valid yesterday may not be valid today and what is valid today may not be valid tomorrow so it is always better to stay in touch with the customers.

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