Shashank Srivastava, Chief General Manager (Marketing) of car maker Maruti Suzuki is spending more of his marketing budget on digital advertising this year. At Rs 15 crore, digital spends will be double of last year. It’s a more efficient medium no doubt, but in Srivastava’s case, it’s the market conditions forcing the shift. “Per contact costs are measurable in digital and it’s not expensive,” he explains.
For the auto industry, till April 2001 the market was booming. But, subsequently, because of high interest rates, a weaker rupee, poor consumer sentiment and myriad other factors, the industry was staring at a slowdown. “All the manufacturers began cutting budgets. We at Maruti have done the same. Overall, we will be ending the year with 5-7 per cent less spend than last year,” he emphasises.
He says Maruti is now trying to get more bang for the buck on its marketing spends – but through innovations like optimising digital media and using radio more rather than bargaining for media space discounts.
It isn’t just Maruti the slowdown is pinching. Other auto makers too are tweaking strategies so that they spend less yet not lose impact. Instead of brand building campaigns, marketers are looking at tactical advertising and other strategies to pull in customers.
At Hyundai Motor India, the focus is on media initiatives that help create a buzz among its target audience. Arvind Saxena, Director, Sales & Marketing describes how the Eon promotional plan was done with Sony TV in order to make the Hyundai brand be seen in a new perspective. Characters from the channel’s top shows were integrated with the Eon commercial. “We were confident that our audience would relate well with these TV characters,” he says. Launched last year, Hyundai sold 24,000 Eons in the Oct-Dec 2011 period, says the company.
A Cautionary Recession
Across a swathe of industries, especially where consumer discretionary spends are higher, the drumbeats of a slowdown are getting louder. From insurance to watches, durables to apparel, marketers are looking at ways to keep consumers engaged, see value in their offerings when they make purchase decisions. Says brand strategy specialist Harish Bijoor, “What I call a “cautionary recession” is on. Consumers have money in the pocket but are sitting on the wall of a buy. Postponement of purchase is the syndrome.”
Sanjay Tripathy, Executive Vice-President and Head, Marketing and Direct Channels, HDFC Life believes that a slowdown presents an exciting challenge to marketers. While the most logical measures include building customer trust and spending enough to show muscle and maintain brand presence, there are many other innovative ways of marketing more efficiently and support business, he says. “While marketers focus on ATL activities during healthier market conditions, direct customer engagement is the best and safest bet during a slowdown. It not only builds trust in a measured and focused manner, but it also builds a direct link with business objectives by lead generation and customer acquisition,” he says.
HDFC Life followed this principle with initiatives such as its ‘Spell Bee’ which was introduced during the 2008 economic crisis. It’s on in its fourth season now.
Hard working advertising
Titan’s approach has been a bit different, though the objectives are same. Titan Industries’ COO, Watches, Harish Bhat, believes that during a slowdown one gets to see more hard working advertising where the price is used to convey the proposition and tangible benefits to the consumer, rather than brand building, which is why you see more discount offers. “This year you will see more such product-led advertising from Titan,” he says. Titan itself is running a discount offer for Tanishq jewellery and there will soon be one for watches as well.
Bhat says that the smaller tier 2 and tier 3 cities are growing faster than the metros and brands will focus even more in times like these to gain leverage in these towns. Titan itself, he says, is present in 130 cities and if one takes away the top 20, Titan is focusing on expanding its store network in the 110 tier 2 towns on a priority.
Apparel brand Indian Terrain did not want to tread the discounts path. Instead it tied up with TI Cycles for a contest at the stores which gave away high end cycle Montra bicycles to the winners of a draw. V. Rajgopal, Chairman, says the ‘tread for threads’ contest, tied in well with the Indian Terrain lifestyle brand and image. “We didn’t want to go in for a price war, and this offered real value for our consumers,” he says.
Treading the digital path
Digital too has emerged a major prong in most marketers’ arsenal in beating the slowdown. HDFC Life’s Tripathy says the focus is more on digital as it’s more cost effective and can be linked directly to business ROI. “We have launched our online buying portal as an extension of our online marketing efforts to capture and close the loop online itself,” he says.
Maruti too ran an interactive contest on FaceBook which invited Maruti owners to say how much they saved by using a Maruti car and to come up with novel ideas on what they could do with that savings. The best answer bagged a plum prize. A Maruti spokesperson says that all the ‘savings’ by Maruti users totted up to Rs 7.7 crore.
Raka Khasha, Director, Marketing, of chip maker AMD India, says that regardless of the slowdown, as a marketer, it is imperative to ensure that one achieves high returns on investment (ROI) on a given budget and the first step is to carefully plan the media mix keeping in mind the core target audience. “This needs to be backed by a 360-degree campaign, which will give you a platform to connect with the key stakeholders in the value chain.”
Hard look at logistics
Another spoke in the slowdown story is that of fluctuating fuel prices which has had an impact in the way FMCG and durable makers transport their goods. Many are now shifting to the Railways. “We are reducing our transportation expenses by moving slowly to the Railways, since it costs one-third of surface transport,” says Dinesh Agrawal, Chief Operating Officer, Dhara, the edible oil division of Mother Dairy. He says in the last one year, 17 per cent of the edible oil business has shifted from the road network to Railways.
Durable giant Videocon Industries, too, is moving track. According to Mr Anirudh Dhoot, Director, Videocon industries, “Fuel prices are definitely biting us and therefore we will be increasing our reliance on railways, from less than 10 per cent earlier to approximately 30 per cent.”
There are others like Pepsico, which have managed to cut transport costs by moving to bigger trucks. “Earlier we were using 14 feet trucks. Now we are using 20 feet trucks, and sometimes even 32 feet trucks. We now use larger containers and have done away with part loads,” says Anoop Sachdev, Vice-President (Marketing), Pepsico.
Brand always in focus
Central to the theme of marketing in a slowdown is protect and keep a tight focus on the brand because that’s what will stand a company in good stead when better times roll along.
HDFC’s Tripathy says that visibility of a brand in media, especially during slowdown is very critical to build credibility and trust among the target audience.
Hyundai’s Saxena agrees, “It is important to strengthen the brand especially when demand dips temporarily. We believe in smart marketing – focus on brand building efforts during periods of slowdown which pays off in the long-term.”
(With bureau reports)