When Hard-Sell Is A Soft Option

In the eighties, most big consumer companies in India earmarked less than a quarter of their marketing budgets for sales promotions. This didn't even begin to compare with the 60 per cent that companies in the West set aside for the same purpose. Of course, Indian companies didn't need to match their western counterparts in those days. Relatively closed markets meant that companies could afford to use sales promotions sparingly. This suited most companies. Though marketing theorists tend to pay it little attention, the sales promo is probably the most potent tactical weapon in a marketer's arsenal. But to be successful, it requires an exceptional degree of planning and organisation. Today, though there are no ballpark figures available, it would not be wide off the mark to say that consumer companies in India are probably much closer to western norms in terms of spends on sales promotion. It is hard to escape the hard sell these days: free butter with the cheese you buy, the promise of thousands of rupees if you buy a soft drink, mouth-watering exchange offers on everything from mosquito mats to refrigerators and television sets ... even the humble packet of tea and atta comes with a freebie attached. Marketing consultants will tell you that this is all a sign of the growing competition, that companies have to constantly "agitate" the market to stay in front. Margins are being squeezed, the cost of new launches is soaring, so it is a fair bet that more and more companies will increasingly turn to the sales promotion as a standard combat weapon. Ironically, the problem now is that the crowds are growing in the sales promotion business. That means that companies will have to work even harder to make their schemes successful, and the costs of failure will be higher than ever before. The biggest problem for companies in sales promo mode is to make sure a product's brand values don't suffer. After all, shorn of the hype, whether it's a price-off, a freebie or a coupon, a promotion scheme is basically an extra incentive to a customer to buy the product. The trick lies in pacing the promotions, and this will become a significant issue as markets turn more competitive. There are no hard and fast rules, but Philip Kotler's prescription is that a strong brand shouldn't go on promotion for more than 30 per cent of the time. "When a brand is price-promoted too much of the time, the consumer begins to think of it as a cheap brand," he wrote in his book Marketing Management -- Analysis, Planning and Control . To understand the dangers, consider Akai's entry into India. Akai was first launched with an engaging TV ad campaign that announced that the Akai TV, the popular Japanese brand, was now available in India. Though the TV campaign was a memorable one, it did little to push the product off the shelves in a market that now had almost a score of new brands, each backed by high-voltage ad campaigns. That's when Kabir Mulchandani's Baron Electronics, which was responsible for marketing Akai in India at the time, launched the famous exchange offers. Within months, Akai had garnered a 10 per cent market share -- no mean feat in this crowded and aggressive market -- and had rivals scuttling for cover. Exchange offers weren't novel by any means, but not all of them were successful. Philips tried an exchange offer soon after but failed because it was hedged in by many conditions. As Mulchandani explained, he succeeded because he did two things. One, by offering to exchange old TV set, he was selling customers a solution plus a new product. Two, he was careful to keep the mechanics of the exchange offer simple -- any TV set could be changed. Less than two years ago, Mulchandani was feted for rewriting the rules of TV and, later, audio marketing in India. And indeed, for a time it looked as though Mulchandani had succeeded in achieving the impossible -- turning the short-term sales promo into a long-term marketing strategy. But Akai's biggest strength was its biggest weakness too. Akai's later slump is attributed to unfavourable changes in sales tax rules and then to Mulchandani's problems with Akai. Actually the strains of being in permanent promo mode are beginning to show. Akai's new marketers in India, Videocon, are struggling against the strong cut-price image that the brand has acquired. The simplicity of the Akai exchange offer also impinged on the brand values. In Japan, Akai is a value-for-money brand. In India, it's just a cheap TV, and even here there are feisty competitors in China's Konka. In contrast, consider the current and hugely entertaining Pepsi campaign Mera Number Kab Ayega . A strictly off-season scheme that offers generous prizes for winners, the promo is being accompanied by a humorous campaign starring the popular MTV veejay Cyrus Broacha. At first glance it may look as though a heavy-duty TV campaign is overdoing things a bit for a simple promo. But there's clearly a method in Pepsi's overkill: it is looking at pushing its values as a fun brand. Since the promo is to run till the festive season begins, it is hard to say how far it has helped push sales. But there's no doubt that in terms of sheer brand values, in Broacha's losing ways, Pepsi has a winner.