Madhukar Sabnavis: Redefining competition

Changing consumers are forcing marketers to rethink their frames of reference

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Come the 2000s, with the influx of brands and options, marketers suddenly find themselves competing to offer the best value at lowest prices "" often competing within the category fiercely, on price, to stay afloat "" reducing their brands to commodities.

This is the "playing" generation "" consumers today have the power and luxury of playing one brand against the other and extracting the best deal. The world has come a long way!

In the 1980s, as competition started emerging, marketers defined their markets as categories. Tea brands competed with tea, chocolates with chocolates, TVs with TV brands and so on. This carried on into the 1990s.

This made competitive benchmarking relatively easy "" see what your competitor brands offered by way of product, pricing and positioning and attempt to beat or compete with them on the same parameters. Competitive marketing and advertising spends were benchmarked accordingly.

Things have started to change in the new millennium. This has been influenced by the following factors:

1. Influx of multiple brands in many categories. This has resulted in phenomenal growth of categories ranging from branded salt to consumer durables to automobiles to financial services. It has also simultaneously reduced brand differentiation and led to the commoditisation of many categories.
2. Emergence of new categories like mobile services and information technology products. This has brought new frames of reference to consumers, which didn't exist earlier.
3. A growth in the purchasing power of the average Indian. Since the mid-1990s the rich have become richer and hence have begun to buy products and enjoy lifestyles similar to their counterparts in the West. And with the availability of credit the middle class has also suddenly got more purchasing power in their hands too.
4. Growing exposure of the average Indian to the better lifestyles of the West through media and to superior products and services through their first hand experience through foreign travel.
5. A gradual shift of the Indian economy from an agricultural one to a service one. Typical product categories strong in developing economies like banking services, hospitality services, travel and shopping are emerging in a big way in India. And this brings with it a greater consumer experience of service.

This has resulted in the dramatic transformation of the average consumer's expectations in the country. His frames of references have changed, his consciousness of what is good and bad has been redefined and his demands have increased.

Clearly, he is no longer evaluating brands within categories as he did before "" but actually making cross category comparisons and defining his expectations from there.

It is most pronounced in the service sector. As he experiences better quality of after-sales service in one category, he begins to demand the same in another.

As he gets a higher quality of courtesy from an airline, he expects the same from a waiter at a five-star hotel. Or from a salesman in a shop. Clearly, a marketer who considers service standards within his industry as a benchmark is being clearly myopic.

Technology is converging and making categories come closer and closer. With the growth of PCs at home, the need for a CD player becomes redundant.

With the emergence of camera phones, the need for a conventional camera becomes unnecessary. It won't be long before a consumer can do computing, connecting, viewing and listening from a single gadget that is hand held "" thus threatening the very existence of PCs, mobiles, televisions, radio and CD players "" all in one. The challenge for a brand marketer in each of the category is to discover a way of re-engineering a role for his category in the consumer's life.

Financial products are also converging, breaking down traditional boundaries that existed between safety, liquidity and high-return products. Life insurance products are offering returns by having a component of equity investments. And banks are no longer the source of deposits but a centre of financial products ranging for savings deposits to mutual funds.

A more interesting development is in the area of consumer expectation of aesthetics. As consumers get exposed to more and more malls and shoppertainment, their demands from shopping ambience increase and get transferred across categories putting pressure on marketers to meet the exacting standards.

Not surprisingly, Bata, a retailer of high quality shoes, has had to take cognisance of this and revamp its chain to meet the growing consumer need for better shopping environment. Or it might have missed the bus.

The importance of aesthetics will put more pressure on durable, automotive and technology manufacturers to go beyond technology to deliver superior products that deliver to the five senses of the consumer. Brands that recognise this and cater to this need will reap the benefit.

As basic consumer needs get satisfied, the battle will be for consumer wants. After a household gets one television into the home, the second TV will compete with a second air conditioner or a second fridge and brands that are able to make their category value more fiercely felt are likely to succeed.

The same will apply for upgradation. Consumer decisions will be whether to buy a new fridge or a television A two wheeler will compete with a low priced car as a second vehicle in a household. A second car could compete with a foreign holiday. Who gets the final share of wallet will depend on which marketer is able to make his offer more attractive and exciting.

The FMCG category is already seeing this. The classification of beverages as hot and cold and within hot "" tea and coffee "" is fast becoming archaic. The battle is now for the "share of throat" and the sooner brands realise that, the faster they will be able to redesign their portfolios and realign their product mix appropriately to cater to the varied consumer needs.

The foods category is already converging "" chocolates moving into the biscuits category of snacking; and biscuits moving into the chocolate category of taste and indulgence. And more interestingly, snacking is facing competition from SMS and games on a mobile "" as both are competing for the consumer's nothing-to-do time.

In the world of entertainment, consumer's options for leisure and relaxation are ever expanding. From watching TV at home (channels) or surfing the net (websites) to going to a watch a film (multiplex) to just browsing in a mall (all the shops waiting to snatch a share of this consumer's wallet as he window shops) to just going for a drive (opportunity for a drive-in restaurant to tap some business) "" all vying for his attention.

Who gets his time and the business, will be the challenge for marketers, designers and communication agencies alike.

It is time to look beyond the narrow corridors of categories. And actually understand and evaluate how the consumer is spending his money and time, where a category fits in and what optional categories does he have to spend his time and money on.

That will give marketers and advertising agencies a better fix on what their real competition is. The playfield is getting complex and there is a need to get more sensitive about it. Else categories will disappear and with it brands. Or a brand's growth will be limited by their vision of their market.

The future will be a battle for the "share of consumer wallet" and not the "share of market".

That's something worth thinking about.

madhukar.sabnavis@ogilvy.com

(The writer is Country Manager "" Discovery, Ogilvy and Mather India. The views expressed are personal)