The Indian Retail market—ranked the fourth most attractive amongst 30 emerging markets—has caught the global market attention by storm in the last few years. Still heavily tilted towards traditional retail, times seem to be changing with the introduction of 100% FDI for single-brand retail and 51% (currently under debate) FDI in multi-brand retail. In fact, the organized retail market in India is expected to grow at 25% and reach a size of US$200 billion by 2020.

India’s retail boom is driven by a plethora of reasons–from increasing disposable incomes and changing lifestyles, to growing demand in rural areas and smaller towns, and the rise of the global consumer. Indeed, global retail giants are trying to tap into this vibrant market but their core business model seems to be failing their aspirations.

The reason behind this change—the unique purchase drivers of the Indian consumer. Think–Value for money (through deals and bargain-hunting), convenience (e.g., deep rooted system of home delivery of purchases) and relationship based customer service (legacy of “kirana” or corner stores).

So, to survive and grow in such a market what are retailers doing? Tweaking their business models and making their stores locally relevant. Take a look at how global and local companies are adapting and innovating for the Indian consumer in the organized market. Read More »

“Uh, ‘Tiger-Goat’ isn’t what your modern day brand consultants would come up with for a tea brand.  What’s the story?”  So began my recent conversation with Yogesh Shinde, the General Manager in charge of Marketing for Gujarat Tea.   Yogesh explained the origin of the name roughly as follows:

Over 100 years ago, the founder of Wagh Bakri wanted to create a tea that would unite all Indians.  ‘Wagh’ means ‘Tiger’, standing for Indian upper classes.  ‘Bakri’ means ‘Goat’, and represents the lower classes.  The idea is to bring the Tiger and Goat together over tea, an important and shared ritual. Read More »

“Oil companies need holes, not drills” - Old Sales & Marketing Saying

This post was written by former colleague Andrew Kent of the Sales Executive Council. Visit the original here.

The utilities business faces a looming crisis—if not today, then in the decade or two to come. Simply put, the industry’s current business model is set up such that smarter use of its product threatens its profits, and this tension between supplier and customer can’t go on forever.

But utilities companies need not view this as a threat. On the contrary, leading utilities are already capitalizing on one of the biggest megatrends in Sales today: the need to make more money by selling less stuff.

The root of utilities’ problem is this: their ability to grow depends on selling more kilowatt-hours each year, but consumers and society have an urgent need to use less—and are waking up to the fact that they actually can. Peter Fox-Penner writes in the Harvard Business Review (July-August 2009): Read More »

By Ana Lapter

Dealing with the future is a difficult task by nature, but this year’s planning process is further complicated by the tremendously uncertain global economy.  Recession fears, slow economic growth, lower consumer spending, feeble employment rates and depressed housing markets across much of the developed world are some of the factors that are weighing on executives, adding a new layer of volatility to any strategic planning exercise.

Uncertainty was the main modus operandi for marketers during the 2007-2009 recession. But even though the recession is technically over, recent stock market swings exemplify the uncertainty that is quickly becoming part of the new norm.  From a strategic planning perspective, dealing with uncertainty means allocating resources for two critical human capital capabilities: organizational flexibility to cope with unexpected challenges and opportunities, and change management.

To cope with uncertainty, a great human capital strategy should consider the following ten principles: Read More »

For a decade now — since the rise of the global economy — political pundits from Mumbai to Madrid, Hamburg to Honolulu have argued about “American exceptionalism”: the idea that the US is unique and can hold itself to different standards than all other nations. When it comes to love and war, you can argue both sides. But when it comes to the hard facts of economics, not so much. Last week Standard & Poor’s downgraded US creditworthiness from a top rating of AAA to a less-than-top AA+. That’s the first downgrade in America’s credit rating since credit rating began, early in the last century (WashingtonPost.com, 8 August 2011). It also puts the US behind many of its European allies, not to mention Canada. (Canada!) Read More »

Summer, for most of us, is a time to recharge our batteries, to relax, to enjoy some calm before the demands of life pick up again.  Unfortunately, investors have made that a good deal harder recently as they collectively removed over a trillion dollars in value from financial markets over the course of a few days.

Why the sudden volatility?  Consumers haven’t suddenly changed spending behaviors, nor have business customers. And suppliers look healthier than in some time, beating earnings estimates and sitting on plenty of cash. Credit availability has drastically improved. Inflation is hardly threatening.

The answer seems to lie in the health of developed economies. While many appeared to be on the mend for the past year (albeit slowly), it’s become clear the recovery is far more fragile than was thought, especially in the US.  We’re not in a recession, but we’re also not in a recovery that is self-sustaining.

In such an unstable place, most signals (economic data) are too weak or confusing for investors to proceed with confidence.  Even small pieces of information have outsized impact and prices gyrate.  Markets, after all, are just groups of people trying to discern future value and in this case they are struggling.

So, what are executives doing in the face of this volatility?  Some are being tougher on discretionary spending.  Many are revisiting assumptions for 2012 planning.  But the executives we’ve spoken with are not deviating from the strategies and tactics they put in place following the recession.

There is one thing all executives should be doing right now – getting used to operating in an uncertain environment.  Fortunately, that doesn’t require telling the future.  It does require, however, a structured exploration of what could be, and flexibility to respond regardless what becomes.

Most companies can stand to improve in this area.  Want to learn more? Join your peers in our upcoming webinar, Taming Uncertainty, on 25 August at 11:00 am EDT.  We’ll clarify why volatility has become “normal” and how the best companies are working around it.

I thought we were done with this recession stuff!

Recent activity in the financial markets – not to mention news trickling out of policy-making bodies like the US Congress, Federal Reserve, and the European Central Bank – strongly suggests (but does not guarantee) that at a minimum, a period of soft growth lies ahead for businesses. At worst, we could be facing down another recession; InTrade suggests a 44% chance of the US entering a negative-growth period in 2011, and in Europe, commercial bank exposure to bad sovereign debt might be contagious enough to tip many countries into recession.

So: that’s the bad news. And it’s pretty bad; it could even be catastrophic if policymakers can’t (or won’t) come up with the right answers. But here’s the thing: even in the darkest throes of the last crisis, business and consumer activity continued. Most people remained employed, even if they didn’t get their usual raises and bonuses. And there was still an opportunity for B2Bs to grow. But how?

In our recent B2B research, we identified four kinds of business buyers: Number Crunchers, Service Seekers, Innovators, and Risk Avoiders. We used these profiles to identify the kinds of marketing communications each was most likely to respond to, but each group also reacts differently to slowdowns in the growth environment.

For instance, we defined Innovators as buyers whose prime driver is growth: they make strategic purchases to improve their capabilities, and they’re more interested in learning opportunities provided by their supplier than any other group. But in many businesses, this profile will be inconsistent with diminished opportunities for growth; stronger bottom-line pressure on these buyers will leave many struggling to justify innovation-oriented purchases.

Service Seekers, on the other hand, are highly-satisfied, long term customers making smaller, more transactional purposes. Their biggest priorities are customer service and a great rapport with sales reps, and they tend to be very stable customers. Bottom-line pressure will also result in service seeking buyers struggling to justify their supplier relationships.

I think, if the worst predictions about the economy come true, we’ll see customers begin to crowd into the “Number Cruncher” and “Risk Avoider” categories: customers who are extremely focused on bottom lines and lifetime values, and who want to make absolutely sure that the supplier and products are reliable. They’ll do it because budget pressures will be up and tolerance for risk across the enterprise way down.

So how do you reach Number Crunchers and Risk Avoiders? Our discussions with marketers around the world have unearthed some hints on how to tailor marcoms to these groups. Autodesk enlists fellow customers to calm fears of supplier risk, FedEx uses a tool to quantify customer concerns, and our risk tool will help suppliers understand which risks they should message about.

But the most important element of staying afloat in a bad economy is psychological: resisting the urge to excessively scale back, keeping risks in perspective, and understanding that even in the worst economies, there’s still room to survive and thrive.

For B2C marketers, in many respects, it’s as if the 2007-2009 recession never ended: the key indicators of consumer health remain stagnant, and post-recession growth has been anemic for all but the leading brands.

But recent activity in the financial markets – not to mention news trickling out of policy-making bodies like the US Congress, Federal Reserve, and the European Central Bank – strongly suggests that, at a minimum, a period of soft growth lies ahead for businesses. At worst, we could be facing down another recession; InTrade suggests a 44% chance of the US entering a negative-growth period in 2011, and in Europe, commercial bank exposure to bad sovereign debt might be contagious enough to tip many countries into recession.

So: that’s the bad news. And it’s pretty bad; it could even be catastrophic if policymakers can’t come up with the right answers. But here’s the thing: even in the darkest throes of the last crisis, consumer activity continued. Most people remained employed, even if they didn’t get their usual raises and bonuses. And there was still an opportunity for brands to grow if they could offer the right value and strike the right message for the times.

MLC’s 2011 B2C study focuses in on the overloaded, frazzled, easily-distracted consumer, and the consequences that overload has for brands. We noted that overloaded consumers are highly associated with brand-disloyal behaviors, and were less likely to recommend or advocate, even for brands that they like. The result for consumer brands is commodification and, increasingly, no purchase at all, as the purchase decision complicates itself to the point of indecision.

Bringing things back to economic instability, what effect does loss of income (or the threat thereof) have on consumer overload, stickiness, and ultimately the bottom lines of consumer brands? It’s not good. Consumers with less money, or who think they might have less money in the future, begin to view purchases as more important or involving significant tradeoffs, sending them on the research spiral:

And they aren’t wrong. Small purchases do take on an inflated importance in times of economic trouble. The best brands are the ones that recognize this and figure out how to communicate value without overloading an already-anxious consumer. Brands like DeBeers, P&G, and Netflix are returning control to consumers by providing transparent buying guides and schemas, allowing people to rest easy and know that a better deal isn’t readily available. Buy-back programs, like Best Buy’s and Hyundai’s, allow consumers to more easily face the buy now-buy later tradeoff, knowing that the decision is at least somewhat reversible if hard times strike.

But consumer brands have one silver lining – many recession-era behaviors have yet to recede, consumers are still buying an elevated amount of private label brands, and so the potential transition from slow to negative growth might not be as difficult as it was last time. Regardless, though, smart marketers with good products still have a chance to grow their brands in the coming months, even if the worst does happen.

Last week, The Economist ran a thought provoking piece on the future of news.  As I read it, I was struck by the parallels to some consumer goods and services categories, like apparel, quick service restaurants, electronics and even some kinds of fast moving consumer goods.

If you believe that what is happening to the news industry may be playing out in these other industries, marketers should be fundamentally reconsidering the role of brands and therefore the way they do branding.

To boil down the Economist’s 14 page report on the news industry into six bullets: Read More »

Whither the U.S. consumer? If that’s not the question on all marketers’ minds, it should be: for B2C companies, the amount of consumer dollars available is the most important driver of revenues and profits; for B2B marketers, consumer spending accounts for around 70% of the American economy, and indirectly drives business investment and purchasing.

What’s more, we’ve observed that consumers typically retain habits they form in bad times for a significant period of time after the economic situation improves. The longer this goes on, the longer consumers will remain austere.

So what’s the outlook? We don’t pretend to have a crystal ball, but I think it’s fair to say that the prognosis is mediocre at best. A number of indicators of consumer health are trending up, but others suggest some risk of problems in the mid to long term. In all, the data suggest that, at best, the consumer spending pie is growing very, very slowly, and may in fact be stagnant or shrinking.

Brands can grow in a recession or consumer spending downturn, but it’s generally zero-sum growth, coming at the expense of other brands. Making product and brand messaging as simple as possible is one way to maintain share of wallet during downturns, and we’ve also got some thoughts on resource allocation and optimization during recessions, as well as some ideas on how coupons and incentives in particular can shore up market share in bad times.

Here are three indicators that suggest consumers might be holding their own, as well as two that suggest trouble ahead: Read More »