Thursday, 28 January 2016

A billion plus irrational consumers!

Every big corporate honcho out there in the world is going to tell you she'll bet big on India and its colossal potential. Global names cutting across all sectors have been venturing into the country of late, sensing that India is going to be a big sprocket in their growth engine in the future. Some of the most established apparel brands and makers of the most exclusive vehicles have all tried their hand at getting their own piece of the cake. Some have stumbled upon an untapped treasure, some have fallen fatuously, and some are still waiting to hit pay dirt. But irrespective of which posse of companies you've turned out to be a part of, one thing; one realization has hit everyone pretty hard - It's one helluva job to predict how the Indian consumer will behave! 

Daewoo entered the Indian market in 1995 and bet big on the then burgeoning coterie of young car drivers. They made a perilous bet of pouring in a billion dollars into the yet to explode car market. They brought out their Matix and Ceilo models to compete with utmost thrust in the hatchback and sedan segments respectively. While the hatchback segment didn't really have any other player except for the Maruti ZEN(Zero Engine Noise) and an excuse of a hatchback(Maruti 800), the sedan segment just had the Maruti Esteem(then 1000) and a kindred of other players who were all pretty small. Daewoo would have thought they will rule the roost in India. With their offerings priced at just about the right levels, they were all poised to rock the markets. But they were in for a shocker.

Come 1997. Daewoo found out how captious the Indian consumer can get. Post an initial triumph in setting a formidable distribution network and disparate pockets of consumers going for both Matiz and Ceilo, something went woefully wrong. Daewoo as a company was already struggling because of mismanagement of operations and the 1997 Asian financial crisis. But their failure to tap in the growing consumer base in the most promising market of the east - India, was like a nail in the coffin. Daewoo group globally collapsed in 1999. But their run in India, despite a heavy infusion, couldn't bear any fruit and had its fate sealed in 1997 itself. For some reason, despite the initial gumption and despite the swashbuckler Daewoo models, and despite consistent advertising, Daewoo could never establish a rapport with the Indian buyer. It never got a Word of Mouth campaign buttressing its sales, it never had a top of the mind recall, and it definitely failed in getting any loyalty. It was supposed to have set an antecedent for no other foreign player to ever try their fate in India, because Opel and Ford, the other recent entrants, too faced the heat. But in 1998, something else transpired. 

Hyundai came into the Indian markets and started playing a brave bold game by pitching their Santro hatchback against everyone else. They roped in SRK as their brand ambassador and they took over the reins from Daewoo. Hyundai was an overnight success. Sales skyrocketed in not time at all. The typical Indian consumer fell in love with the Santro and a lot of families even contemplated buying two. The Santro suddenly came across as precisely what the Indian consumer was waiting for. And somewhere, in some corner of the planet, the Daewoo design team would have cringed and prowled on the fact that Matiz not only looked more cherubic and apt, but also delivered some solid performance. But Daewoo was gone, and Hyundai became the pioneer. So much so that even the behemoth Maruti finally woke up and brought out the Wagon R in 1999 to compete with Santro and then Swift in 2005 to compete with the Santro Xing. All in all, everything and every move that failed for Daewoo, worked brilliantly for Hyundai. Such is the story of many a brand in India. 

Why certain brands work, and why many others fail? It seems too tough for anyone to ever be able to answer that. The Indian consumer ranges from being aspirational at one end and goes for a Starbucks venti or Zara apparel because they're big names, to being aggressively parsimonious at the other end and seeking absolute value for money. And between these two ends of the spectrum is where the mystery lies. While certain consumers may lie somewhere in between the two ends, a lot of them can be made to simply flip the switch. 

Meet Rahul. He needs to get a new smartphone. His financial position is pretty strangulated and he lives on the edge all the time. Rahul is made to walk through the luxuriantly spaced counters with all kinds of gaudy handsets. Rahul zeroes in one a very basic handset and feels something propitious about his about to be smartphone. He feels happy because its also friendly on his pockets. And then just when Rahul was about to seal his deal, a resplendent saleswoman walks to him, and in a rather exultant and enrapturing tone, expatiates features and details of the latest iPhone. Rahul knows the iPhone is 5 notches above the bracket of smartphones he's looking for. More than the paucity of money, Rahul doesn't need a contraption of a smartphone which sizzles like a tamale. He needs a very basic phone. But something about this lovely looking lady mesmerizes him. And before he could notice, he has been ensnared in her pitch, and Rahul finally decides to buy the iPhone at an emi twice of what he would have paid to get his first smartphone home straightaway. Rahul is happy and elated, but when he walks out of the store, he has no idea why he screwed himself so badly!

Partially upbeat because he now has an iPhone that graduates his stature in the society and secures him a membership in the burgeoisue, and partially addled at his recent decision, Rahul walks to his departmental store to get his groceries. Now, the only thing on his mind is savings. He dumps his favorite brand of tomato ketchup for it costed 10 Rs. more. And all this while, he believes the cheaper one will provide him a better value for money. While the same value for money rationale went for an absolute toss just a few moments ago when he was making his biggest purchase decision of the year. So ultimately, Apple shall never know how they got this new customer, and his aggrieved tomato ketchup company will never know what they got wrong. That's what this mysterious Indian consumer can act like. 

India is a country with quite many contradictions when it comes to how a consumer is likely to behave. Slums whose owners chose temporary sheets over a permanent roof, have dish antennas adorning their tops. Many rural households which choose their women to defecate in the open, end up having 3 cellphone connections. And on culture induced flippancy, daughters who were denuded of primary education, are endowed with many grams of gold when they're married off. The Indian consumer forms the perfect case study for any analyst to make an attempt to decipher the mystery of. 

Nevertheless, there are certain things which both big and small players can do to ensure they're there to stay. The big players have to make sure they acquaint the Indian consumer with the fact that they are big names abroad and hence its good to be associated with them. A lot of initial iPhone users bought it just because Apple has a lot of patrons rhapsodizing it all over the world. Hence Apple needed no introduction. On the other hand, if an HTC, which is globally pretty small, is somehow able to convince the Indian customer that its a pretty cool brand to own, and that the name HTC is synonymous with ultimate luxury and class, then you never know! Maybe the Indian consumer may ditch the global belief of Apple being at the pinnacle of panache, and will form his own belief on HTC being at the zenith. 

On the other hand, for the smaller players, accessibility is the only key. The customer may not stay loyal for very long and doesn't give a damn about your brand name because you're too small an attainment to be flaunted. Hence you're not a necessity. You're simply just another item the consumer shall buy and if you're not there, you have an easily available substitution. Neither are you garish and glittery, nor are you a symbol of class. Hence you're not really having any benefits apart from the fact that you're merely consumed. 

While the mind of any consumer is a blackbox which is tantalizingly complicated to hack into, the Indian consumer's mind is too recondite to set a strategy for. You just have to be there in front of the consumer all the time, which will make some consumers try you, and then irrespective of how good or bad you were, some consumers would have sang your paeans of praise just because they had you, and this shall proselytize more consumers into trying you. That's just about it! At the end, I'd just like to say that while irrationality may not be the most appropriate word, if it managed to read you till this far, you do know I was somewhat right because you bought my idea, didn't you?

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