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COVER
STORY: CONSUMER PRODUCTS
So
What's the Big Idea?
Why
the big rush? And why now? Part of the reason lies in the shopping habits
of the Indian consumer, their seasonality so to say. Traditionally, Indian
society planned its events allowing time for such activities as sowing
and harvesting. So most festivals are celebrated either before sowing
or after reaping. Convenience apart, this is also the time when funds
are flush. Pongal, for instance, is the marriage and shopping season in
the South just as the period between Dusshera and Diwali is in the North.
The practice has been continued by modern India too. Most people plan
house renovations, refurbishments and purchases during this period. It's
not just a joyous time but also with bonuses being disbursed during these
months, there's more money to spend. This is particularly true as one
moves lower down the income pyramid, the segments that most schemes are
targeting.
"It
is simply a question of maximising on opportunity," explains Venugopal
Dhoot, chairman, Videocon. "This is the season when most middle-class
houses want to buy stuff for their homes. This is also the time when they
are cash rich with bonus or ex-gratia payments. So it makes sense to go
all out to increase sales and consolidate our position in the market."
Harit Nagpal, vice-president (operations), Shoppers Stop, agrees and calls
Diwali "the most vital spending cog in the retail business".
Anand Bhardwaj,
executive vice-president, Electrolux, offers another rationale. "The
extra marketing effort must be heard in the crowd during the festival
season. And this is what we hope to achieve by combining promotional prizes
with strong brands like Kelvinator," he says. Dhoot reveals that
if Videocon normally sells around one lakh TV sets in a month, it notches
over 1.7 lakh sets monthly between October and December. Sony too expects
30 per cent of its Rs 720-crore annual sales to happen in the festival
season.
Ditto with
others. Even those who do not perceive the need to do a me-too number
in terms of festival melas thus find themselves in the chorus. Rajeev
Karwal, senior vice-president (consumer electronics), Philips, points
out that with increasing competition, the consumer has come to expect
festival offers from the brand. "You have to celebrate with the consumer,"
he says.
Some brands,
it appears, learnt this lesson early enough. BPL's famili 2001is a variant
of the scheme it has been running for nearly four years. Says Anand Narasimha,
head of corporate brand management at the company: "As a single-brand,
multiple-product company, we have been offering a basket of goods to people
through festivals. It's a value package that we provide by bundling products
with better deals."
It is not
just consumer goods manufacturers who are out to please. Between July
24 and September 24, HDFC Bank ran a unique scheme for owners of the newly
launched debit cards. The offer: every hour entailed five minutes of magic
moments when purchases made via the debit card was reimbursed. As Neeraj
Swarup, the bank's country head (marketing and retail), puts it, "The
idea was to increase awareness and promote shopping with plastic."
The result: rise in card membership and usage.
Apparently,
the efforts are paying off and people have begun to discover some benefits
in making purchases laced with whacky offers. Says Ram Prakash, who won
a Kenstar super mixer when he bought Manikchand Tea: "Sure, they
are trying to push products but when you win something unexpectedly, you
never forget the brand." It's a sentiment marketeers would kill for.
But what
is amazing is the sheer spread and magnitude of the deals in the market.
You could end up owning a house when you buy a fridge. Mumbai-based marketing
consultant Rama Bijapurkar finds the phenomenon simple to explain: "At
last, the consumer's luck has turned after years of bargaining with the
manufacturer. Producers are now bargaining with consumers. Earlier you
paid money, hung around for a car or television set to be made available.
Now they have to hang around you for your attention." Sanjay Dube,
general manager (marketing), Hindustan Lever, agrees with Bijapurkar and
adds, "The level of promotions will only increase with higher penetration
and intensity of competition. People will want to maximise the perception
of what their cash can get."
Of course,
not all the noise in the bazaar this Diwali will be drummed up due to
competition. This has not been one of the best years for white goods.
While 1999 did give an impression of recovery from the recession that
dogged the consumer durables market, 2000 is signalling a return to demand
downswing. And by offering various deals and discounts, companies are
trying to ward off the downturn.
The director
of a large consumer electronics outfit reveals, "The first six months
of this financial year have been a disaster for the consumer goods sector.
Growth expectations have not been met at all. Diwali seems to be the last
post on the frontier."
It's not
just bearish rhetoric. Witness the drop in production of some of the consumer
durables vis-a-vis last year. A study by the Mumbai-based Centre for Monitoring
Indian Economy states, "Decline in production was recorded in products
such as TV receivers, scooters, mopeds, wrist watches, time pieces, cars,
washing machines and refrigerators." In July 2000, the production
of television receivers was 80,000 units less than it was during the same
month the previous year. Production of refrigerators dropped by 17,000
units and washing machines by 10,607 units during the same period.
"We
know that the long-term market prospects are great," says Bijapurkar.
"It's the short term that is killing us. This-the spread and spate
of deals-is evidence of that." Whatever the cause or the consequence,
this is now truly a buyers' market.
-with Natasha Israni, Labonita
Ghosh, Arun Ram, Leher Kala, Ninad D. Seth and Stephen
David
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Relics
of old empires exist everywhere. Why can't the Mani Shankar Aiyars of
India let them be? asks INDIA TODAY Senior Editor Ravi Shankar in
