Why consumer insights matter

MY BIGGEST STRATEGIC MISTAKE AND WHAT I LEARNT FROM IT

Percy Siganporia

Tata Tea Managing Director Percy Siganporia tells Business Standard that it never pays to dictate terms to customers. Instead, tailoring strategies based on what customers want always pays dividends.

I make mistakes every day. I love making mistakes. And then I feel like a royal fool as I have to learn again. The biggest failure I have had dates back to the late 1980s.

It was in brand marketing "" the effort I put behind the Bramhaputra brand of tea. To begin with, it was a brand with a mission. Unilever had vacated the Guwahati auction.

As a large producer and marketer of teas, we stepped in to save teas of Assam origin. Tata Tea purchased several teas, prepared a marketing platform and entered the market with a very good value offer. We tried to grow a brand by promoting it as a tea of Assam origin.

The tea formulation was right and the pricing, too, was competitive "" marginally below both Tata Tea and Red Label. The origin story emphasised Assam, which is generic for good teas.

We had also ensured a good distribution for the brand "" we put the entire muscle of our own distribution channel, which may not have been in the leadership position in any case at that stage of my career, but was quite substantial.

We also spent money on advertising and merchandising. But what we never really drove through the brand was the consumer insight.

The point we missed was that a billion housewives were not asking for a product formulation made in that manner, offered at that price point, in that particular brand format.

Instead of focusing on the taste, flavour and colour of the tea "" which is, after all, where the customers' interests lie "" we kept going back to the "origin" factor. All our marketing and advertising activities centred on that.

Looking back at all the money spent on the Bramhaputra brand, it was not that it was a dead loss from day one. Tata Tea made margins "" even some profit "" on it.

The brand existed effectively for about five years. It was a brand of Assam origin but sold all over India. But eventually, if the brand is no longer in the portfolio, it tells its own story.

The lesson I learnt from the Brahmaputra experience is that we cannot dictate to our core target audience the pattern or behaviour we would like them to display, simply because we believe that we have a cause or a flag to fly.

But we can rally a flag and get them to become part of a cause when we strike a chord with them. It is easier to study behaviour patterns and redesign your strategies based on consumer insights.

Any other way you will waste a huge amount of resources trying to find ways to get customers to react the way you want them to.

I learnt another valuable lesson three years back, when the Tetley brand was launched in India. We believed we had all the answers because we had asked around a few questions.

But it was only later that we found out we had not asked the right questions to the right people in the right manner. And therefore, we went ahead with a proposition on the basis of what people believed in at Tata Tea rather than what consumers required in the environment.

When sales did not pick up, we asked ourselves why. When people make tea at home with loose tea leaves, they can create the taste they want. Teabags, on the other hand, will provide a standardised taste.

So, to get the formulation right, we delved into what consumers think, feel, know or don't know about teabags; what they wanted in the product and how could teabags be made to deliver that.

The task, therefore, was to understand this and know how to deliver income on it.

We soon realised that the problem was of taste "" tea made with bags tasted lousy. At the airport you may be willing to plonk a teabag into a plastic cup of hot milk and water and gulp the resulting drink "" but that's only because that is all that is available.

That's when we got into formulation, usage and other habits, attitudes and so on. The task on board now was how to surprise consumers. We had to tackle questions like why should flavours be lemon, earl grey, orange and so on when what Indian consumers want is cardamom, ginger or masala tea.

Typically, Indian consumers relish a certain degree of strength of spice in their tea "" the general belief is that spiced tea cures sore throats.

So, we understood that we needed to make teas with robust and bold flavours that would appeal to the Indian palates.

What went wrong was that our ambitions were not translated into reality. Instead, what we got was serendipity. We wanted Tetley to grow as a packet brand with some teabag sales.

We expected a large volume of packets to sell compared to teabags. But at the end of three years, what we have been rewarded with is a CAGR of 25 to 30 per cent for teabags "" while packet tea has gone nowhere.

The teabag sales, too, have been mainly in the institutional sector such as hotels, airports and offices, with very little franchise at home. That's what I call a failure.

Consider this. Tetley teabags sales are almost 95 per cent in the institutional space at present. We are now trying to get into the consumer space in terms of at-home consumption.

The company is at present using the teabag strategy to drive packet sales. To me, it was history repeating itself. I hold myself responsible for being party to failure and not having learnt my lesson from the past well enough.

We keep making such mistakes in life and we justify it based on new information or some other prerogative that comes through. It's never a black and white case of money well spent or not spent.

These are all shades of grey. And you can always blame execution, commitment or competitive resurgence but deep down inside, you know when you have a winner on your hand from the day he or she is born.