Sifting through the old mails I came across an article that I had written looong back (in a cold November of 2004 I guess)... Fresh out of a B School, I thought I had answers to all business problems and wrote this piece, I dont know for what or for whom, Just wrote it... Felt like putting it up here... SO here goes...
This is the story of a corporate elephant that had eyes as big as its ears.This elephant grew enormously by usurping the smaller animals and showed a stellar growth skyrocketing its top and bottom lines. But this elephant's huge eyes made it possible for it look and admire and boast and brag about its huge size. It started making its own rules than playing by the rules of the jungle. Then a time came when the elephant stopped growing because there was no more smaller animals to swallow. After buying out the whole of the market that was on sale this elephant found itself in a position where its top and bottom line got stagnent. During its days of stellar growth
what the elephant didn't realise was that its legs had not grown stronger, only its head its trunk and its eyes had grown. There fell the elephant with a bang, crumbling under its own weight of expectation and performance record that it had created for itself.
Now it rests on four wise men's shoulders the responsibility to lift the elephant to its feet and to make it regain its past glory. Welcome the Corporate elephant, welcome HLL. After 10 years of stellar growth and 2 years of plateau the company is
looking good once again. After the restructuring and reduction of flab the elephant looks all poised and set to get up and run. But will this elephant learn from its past? Will it strengthen its legs this time or just feed its head and polish its ivory?
The step forward
HLL is a galaxi; there are stars and there are super stars. Among these there are young stars and old stars, small stars and large stars, and just like any galaxy there definitely is dust that sparkle in the friction,giving the impression of these being superstars. Its time the stars and superstars are seperated from the dust that merely sparkle. No store can sell everything under the sun and no company can market everything successfully. The time has come to prune. The days of core competancy might be over but one thing that never fails is sticking to basics. And the
basics is surely McCarthy's 4 Ps, product, price, promotion and place. Whereas product, price and promotion for HLL brands have been exceptional, the 'Place' has taken a beating. The place does not restrict itself to the physical place, channel, location, inventory and reach which one must admit HLL is wonderful at but includes the attitude towards the place.
There are brands that sell themselves and there are brands that have to be sold. The whole market can be divided into two. The first half comprises of urban and semi-urban market that has consumers who are knowledgeable who know the options available and use this to their advantage. Products that sell themselves find a place here.
Then there is a market largely in the rural segment where the market is trying to catch up to their urban counterparts but lacks the purchasing power. This market works not by the quality but by the brand name and word of mouth publicity. Even an automobile engineer prefers a brand that his 10th class failed mechanic suggests would suit his car better. This is India and this is Indian market.
HLL of the past made a grave mistake, flexing its muscles on the small shop owners, the kirana stores, that ideally should have been their partners to growth. It tried to bull doze its growth by squeezing their channel partners. The strategy should have been, like the Hyundai tag line; 'Togther to the top'. It is these small shops that sell your product. How many times have you seen a village lad go and ask for a Lux soap? He only asks for a soap!! So who decides that the soap that has to be sold is a HLL soap or a P&G soap? Its the shopwallah, the very same shopwallah whose margins were reduced, who was not given credit facility.
So what can be done? Nothing much. You keep him happy and he keeps you happy. You are not competitors, you are partners. How do you do this? How do you keep him happy? Give him credit, replenish his stock in time, promise him you will take back the unsold inventory but give him an incentive if he sells it all. Give him a couple of bars of soap extra with each box he buys from you. Give him a Diwali offer an Onam gift and he'll advertise your product for free for the rest of his life. The way HLL looks at their channel partners has to change.
Value for money has been a greatest promotional offer and the only offer that can be sustained through all the season. The superstar brands that sell themselves should be more quality oriented, where the brand promises that its the best the consumer can buy with the money he spends.
For the rural market which has a mix of slight quality consciousness and high price sensitivity; where the consumer is trying to grow up the curve and follow his urban counterparts but the lesser money at his disposal pulls him back. For such consumers the brand should be launched in two variants. The first variant is low cost, value for money with no frills attached. And the next range should be a better packaged and promoted, seemingly premium product that is not fully out of the reach of this
segment. The price difference should not be considerable. This small price difference pushes him to jump to the next level and then gradually you take him to the next level that brings you better profits.
The rural market in India is very attractive. The marketers should learn from eveything. Look at the poll debacle of the NDA. The India shinning campaign fell on its face when Sonia Gandhi asked the rural populace of India (that forms 75% of Indian population), 'urban India is shining but what have you got'? The message reached the people and as they say, the rest is history. What do we learn from this? Man is a hungry animal and an envious one too. The rural India like the rest is in a race with itself to catch up with their urban counterparts. So give them the feel of it. Give them the same products at lower costs. How? Sachets- smaller quanity,
smaller price but huge market and huge profits.
C K Prahlad says Indian company can reduce cost by upto 20 %. As the electricity board's advertisement says, one unit saved is one unit generated; one rupee saved is one rupee made. Think what this 20 % savings could do to the bottom line? One most important field that could bring in this cost reduction is logistics. By improving the logistics and streamlining the supply chain the company would gain a lot. If stocks could reach the customers at lower costs and if they could be replenished in a better way; consumers would get better quality products and the company could save some serious money.
Market research is one very powerful tool that the Indian marketers have been ignoring for too long a time. The western counterparts have gone so far that they know which customer will have a need for what product at what time? The market research does not always mean those highly paid research firms and consultants who borrow your watch to tell you your time. Your sales people are the best judges.They are in the market and their sample size is the full population itself. Listen to the sales people. They know the pulse of the people, they have a immense wealth of market knowledge, but who's listening? Develop a culture of encouraging new ideas, from which ever quarters they are coming. Not all great startegies were born in the
board room. Even a stopped clock is correct twice a day.Innovation is the word. Its good to milk our cash cows but its important to develop new stars also as stars of today are the cash cows of tomorrow. Keep milking the cow and one day you see the cow has died and there is not even a calf to grow it into a cow. Make it a policy that a certain percentage (say 30 %) of your sales comes from products that are less than 3 years old. Find if there is a gap in the market and then market your
product in that gap.
Another attractive market is the export market. But what can we export? Unilever and its sister concerns are present in other countries. What we can export is Brand India!! Yes India is shining but not in India but in the west. Ayurveda, herbal, natural and Indian products have caught the fancy of the whites and the yellows, so give it to him. Cash in on it. There is a large market there. Enter the processed food market. The achars and the papads. These are fast moving and surely fast money. And yes unilever or its sister concerns cannot make and market Andhra achars, only
we can.
So as the song goes... 'Its a new world ... Its a new begining'... Dance
elephant dance.. your time has come....
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