The Trade Of Small Things

Sujit Das Munshi

As we see the Indian middle class move from being the salaried service class to being the "Entrepreneurial Class", we see the emergence of a breed of individuals trying to make a mark on the marketing landscape. A variety of factors have come together to prop up their effort:

The reducing cost of capital

A more expeditious regulatory framework for the setting up of enterprises

Access to and affordability of technology

Finally, the multiplier of "Entrepreneurial Intuition" "" the ingredient that allows small entrepreneurs understand the needs of middle class consumers better

Our monitoring of over 385 towns and a 1,000-plus villages with a fine comb points to a healthy growth rate achieved by smaller players.

During the AC Nielsen Connect Conference we showcased the fastest-growing brands with a turnover of over Rs 100 crore (FY '02 and '03) in a list that was dominated by indigenous players.

Smaller players have the advantage of being able to ride the existing lines of distribution. Moreover, smaller players have managed to build strong relationships with wholesale traders to drive better reach and penetration, often almost circumventing the traditional distributor-dependent distribution model "" something AC Nielsen's proposed Wholesale Audit also plans to explore more elaborately.

With AC Nielsen's proprietary Modelling and Analytical Tools, we can actually pin down the reasons for the success of smaller brands "" what appears to be happening is the fact that smaller players have managed to drive purchase and brand consideration by ensuring availability and "feeding" the many towns (3,800-plus) in India.

The role of the retailer too, has gained prominence with retailers acting as a key component in influencing consumer purchase, regardless of consumer preference built by high-decibel advertising before they step into a shop.

Naturally, smaller companies have the advantage of leaner cost structures which allow for more consumer- and trade- friendly pricing and fatter margins to fuel communication and trade incentivisation.

Over the past few years, the proliferation of the local media has helped small brands focus their messages within concentrated geographies with more effective returns on support expenditure.

Smaller players however, may have innate weaknesses. While they may grow exponentially, if they don't build adequate systems and processes to enable them to sustain their growth, they run the risk of imploding under the weight of their own ambition.

Bigger, more established players may take more time to respond and retaliate, but they have the wherewithal to pulverise smaller players once they go after them.

Sujit Das Munshi is executive director,

AC Nielsen India (Retail Measurement Services)

Rashmi Varma

AC Nielsen's Winning Bra-nd's normative database dem-onstrates that the mean Brand Equity across Asia-Pacific is 1.87 (on a 0-10 scale, where 0 is effectively a "generic" product or service with no brand value).

Ever since Al Ries and Jack Trout expounded their theory of the emergence of positioning, marketers have resorted to emphasising the importance of positioning and brand imagery. But these do not necessarily tell the whole story.

Effective, well-targeted mass communication strategies adopted by large, more sophisticated marketers occupy the consumer's mindspace using these variables. A brand's positioning is, however, an abstraction: it is a concept or an idea representing a brand; the consumer may or may not choose to believe its claims. So what decides consumer loyalty? What makes consumers select one brand over another? Why would a consumer select a smaller, newer brand over an older more established, more advertised brand?

ACNielsen's Winning Brands' research indicates:

Consumers discern between brands on a few general criteria rather than specific rational comparisons between brands

Typically, the two biggest factors that account for 66 per cent of variance accounted for by brand associations tend to be assessments of product quality and/or general affirmations of brand reliability

More specific imagery attributes account for less variation in brand equity

Five per cent of FMCG brands have BEI's (brand equity index) above 5, another 9 per cent between three and five. Many brands are little better than "generic" vis-a-vis FMCG brands across Asia-Pacific.

It's these elements of cognitive psychology that perhaps allow us to better understand the success of smaller regional brands that occupy ACNielsen Connect's list of fastest growing brands.

Smaller brands may have smaller pockets but one thing they do have is a firmer handshake. While most large marketers are looked upon by retailers as being arm-twisters, smaller marketers engage retailers in a profitable relationship with fatter margins.

Encouraged by this, the retailer acts as a brand's endorser, often backing a small brand with his personal guarantee by promising to take back the product if his customer is unhappy with it.

A recent academic study showed that simply having looked at a brand on the shelf increased the consideration of that brand by 30 to 120 per cent!

The small-town householder is also not perhaps as individualistic as her big-city counterpart. In the case of Ghadi, for instance, we found that the typical Ghadi user was more a woman desirous of peer endorsement of her brand choice than any aspirational streak.

In a small-town setting, housewives discuss more mundane things like detergent usage, so word-of-mouth helps promote the small brands' success in any one household much faster and more effectively through referral.

The success of smaller brands within their limited geographies of origin like Ghadi (Kanpur) and the Nirma (Gujarat) of old can also be attributed to a strong sense of pride in promoting a local success.

Smaller brands have often looked into very simple consumer need-gaps and acted quickly to leverage that understanding.

Ghadi for instance, capitalised on the difficulty of washing clothes with hard water "" the single largest dissatisfaction with washing clothes in less urban areas.

Rashmi Varma is associate director,

Qualitative research, AC Nielsen ORG-Marg