 "Thomas Varghese")
Thomas Varghese, one of the business heads at the Aditya Birla Group, is busy putting last touches to the 13th Confederation of Indian Industry marketing summit as the chairman of the National Committee on Marketing, 2013-14. As the CEO of textiles, acrylic fibre and overseas spinning businesses, worth $1.2 billion in aggregate, he tells Sayantani Kar the concerns that a CMO and a CEO have to battle together in the slowdown. Edited excerpt:
Heading the marketing committee for the CII, what are the main concerns of marketers right now?
Earlier if you asked CEOs about their main concerns at different points in time, it would have varied from customer churn, demand creation. Now it is surviving the uncertain times.The volatility has increased.
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We have read it as the need for capabilities to first survive a slowdown and secondly, do better than others and the industry. As the industry is growing at a minimal rate, growing in these times would mean gaining market share from other players in the same industry. After all, natural growth is very little, new customer growth is very little.
What are the insights the CII is helping them with?
We have partnered with McKinsey, which has developed an analysis that can tell where does an organisation stand based on eight capabilities and four enablers. It had done a survey with internal stakeholders within companies and the white paper will be released on Wednesday.
The different capabilities include consumer and shopper insights, brand and product portfolio strategy, innovation execution, marketing communication and activation, promotion in trade, channel strategy and sales management.
In the downturn, while some advertisers reduce ad spends, others advocate increasing them as the noise is less. As a business head, what is your take?
In a difficult situation, marketers will always ask for more money for promotions and branding from the CEO. But very rarely are they able to commit upfront the incremental returns. This is a big challenge.
There are somethings which are counter-intuitive, increasing spends during a slowdown is one of them. But money is going to be always short, so one needs to prioritise and look for returns. Marketers would always come and say, 'There are no returns, if I don't do this, they will stop buying from me'. So, we need to know whether that is a priority or not. Trying to think like the customer, and not just a trade insight could guide one better in that case.
But all good companies are doing a lot around measuring the efficacy of the business. Even metrics such as return on promotional income are being calculated now. In retail, for example, loyalty programmes can help track different segments of spenders and the changes in their share of wallet from time to time.
So, trade promotions, from what you say, are also actively pursued during a slowdown?
In a slowdown, there is always going to be value purchasing. These will be heavily-bent on channel and trade promotions, and may be not so much depend on the glitz of a television campaign. Everyone would have cut back to the extent possible. When a retailer says that it has the capability of selling the next batch of 100 units of a product, obviously, it will make a marketer go down that route. But it would be situation-based because even in trade, there has to be a good tangible reason given on why the additional sales will come from the promotions. There have been brands which don't depend on trade promotions so much. At a time like this, it could be counter-intuitive and hence, marketers need to rethink their strategies.
How often does one measure the incremental gains?
We need to look at the efficacy of both below-the-line and above-the-line marketing spends and look at the incremental gains and then prioritise the methods. This has to be looked at short time periods, six mmonths to a year, may be even shorter.
While some marketing gurus feel digital media is still nascent, others say it is integral?
Digital media has made shopping a different experience, for example. It may be different from the feel and touch of offline shopping but is equally interesting. If you see the youth today, they are moving more and more to the online space. By making smartphones affordable and available in large numbers, a good number of the Indian population are being moved on to a different channel of buying and communication. So, how can a marketer ignore the digital media?
But in the downturn, entire categories in consumer goods are being shunned. So, what do brands do?
You will want your customer to buy more of what she was buying before the slowdown, so make her upgrade and upsize. She might not consume the larger pack in a month but definitely will use more than what she would usually. So, combo packs are very popular during these times.
