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Cover Story

- India's cigarette industry - the 5 P's





Dear Readers, The course on Consumer Behaviour last term probably hasn’t made it easier to understand today’s consumer, in fact, it only made me realise how complicated consumers are. As Marketers, no matter how hard one tries to decipher the psyche of the customer, the customer almost always behaves unpredictably. The one person who went against all odds, and got most of this products bang on target with the customer’s needs and their

Our May 2011


behaviour was Steve Jobs. Apple Inc. will surely miss Jobs who has been called the ‘shrewdest marketing brain’ of all time and is often talked of in reverent tones even by his fiercest competitors. Some categories make consumer behaviour an even more interesting and bewildering subject

The tobacco industry and cigarettes make up one such product category. India does not allow Cigarettes and other tobacco related products to be advertised in any of the mass media formats. The cigarette giants have often used the Surrogate Advertising concept to create awareness about their brands. Our Cover Story for this month – ‘Smoky Realms’, takes a deeper look into the 4P’s of the cigarette industry and also an added 5th P – Popular Culture – which has played an influential role in creating the ‘image’ that cigarettes have in the mind of the common man. We have tried staying away from the health and legal issues, instead focussed on how companies operate in this hyper-competitive and one of a kind industry. Our other articles in this month’s issue also relate closely to consumer behaviour. The article on NeuroMarketing takes us into this rapidly emerging field which tries to understand how the consumer’s minds react to various stimuli and how this is useful for a marketer. The other article discusses how some companies have managed to manipulate the consumer to the companies’ advantage and capitalise on some of their ‘guilts’. We also have a very special article contribution for this month. The article on Strategy for Inclusive Growth by Samaresh Shah (Sr. Business Manager at Capgemini) discusses how holistic development holds the key to the future.

We thank Mr.Shah for taking out time from his busy schedule and penning down his thoughts for Markathon. Our Anniversary Edition, which was a Vartalaap Special was very well received by one and all. We thank the readers for their feedback. Taking cue from the fact that the interviews were enjoyed by all our readers we have decided to have two Vartalaaps every month. One each from the Corporate world and the leading marketing academia from B-Schools around the world. For this month, we have Mr.Hasit Joshipura who is currently VP South Asia and Managing Director, India for GlaxoSmithKline Pharmaceuticals Ltd. He gives us wonderful insights into how GSK has managed to sustain a leadership position in the Indian industry over the years. From the world of academia, we have Mr. Venkatesh Shankar, Coleman Chair in Marketing, Mays Business School, Texas A&M University and also a visiting faculty at the Indian School of Business, Hyderabad. As always, do send us your feedback and suggestions for the magazine on . Sit back and enjoy this edition!

Jitesh Pradeep Patel Jitesh


SUB EDITORS Gaurav Ralhan Kaustubh Rawool Rahul Mantri Ritika Nagar Sria Majumdar

CREATIVE DESIGNERS Yashwanth Reddy Mandipati Sana Parvez Akhtar



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Government has opened up 51% FDI in multi brand organized retail how will this move affect the existing players in the Indian Market? ARUN LEO|XIME, MADHAV KANDUKURI| IIM S

SILENT VOICE Centennial Celebration of NIVEA





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NeuroMarketing: Inside the Black Box Gaurang Khot, Ashish Parekh & Anshul Talokar | Nirma University NeuroMarketing: Inside the Black Box The subconscious is motivated by emotion not reason. - Inception The contemporary sci-fi thriller Inception shows how an idea could be planted in the mind of an individual. A seed planted in the subconscious grows into an idea which then defines the individual. Marketers have to perform a similar task of planting an idea in the minds of the consumer. In order to achieve this marketers today are trying to understand what goes on inside the human “black box”. The human mind cannot be opened to “look inside” and monitor its internal working. However, it can be analysed in terms of its inputs which are the stimuli to the brain and outputs, the reactions to those stimuli. Marketers are making use of science and technology to make educated guesses on what goes inside the black box. NeuroMarketing uses clinical information about brain functions and mechanisms to help explain what is happening inside of the “black box” something so prevalent in many explanations of consumer behaviour. Neuromarketers attempt to open the black box of the consumer’s mind to locate consumer’s ‘buy buttons’. What is neuromarketing?? NeuroMarketing is where science and marketing meet. It is the study of how people's brains respond to advertising and other brand-related messages by scientifically monitoring brainwave activity, eyetracking and skin response. Our unconscious mind -not our conscious mind -- drives how we respond to ads, brands and products and, ultimately, drives all our buying decisions. Customers don't really know why they buy what they buy. Neuroscience shows us that the consumer’s brain develops preferences on the basis of the intuitional relation with the product’s brand and not on the basis of the advertising message. The brain cannot make the distinction

between the messages of the marketing department and the rest of the messages. Each experience related to the brand becomes part of our perception about this brand, and in the end it determines the for or against attitude regarding the brand. Marketers track these preferences by taking real-time electronic images under an experimental task and a control task. By comparing differences between the images taken during the performance of the experimental task and the control task, marketers can see what part of the brain is differentially activated by the experimental task. The basic set of techniques used to generate these neurological images is electroencephalography (EEG), magneto encephalography (MEG), positron emission tomography (PET) and functional magnetic resonance imaging (fMRI). For example, Dr. Read Montague, a neuroscientist at Baylor College of Medicine, used MRI to study what he called "the Pepsi Paradox". The study was inspired by a series of TV commercials from the 70's and 80's where people were asked to take "the Pepsi Challenge." In the commercials' blind taste test, Pepsi was usually the winner. However, in Dr. Montague's study, when the subjects knew what they were drinking, 75% said they preferred Coke. This indicates that our subconscious mind drives our purchasing behaviour, probably a reason why Coke has been able to dominate the markets. Thus, NeuroMarketing proposes to understand the motivation from the sub consciousness (positive or negative), motivation which impulses the individual to act or which stops the action, determining a preference, a purchase or a behaviour. If organizations understood the consumer and the way he thinks, they could offer him what is necessary and would reconsider the way of communication with the consumer.


perspective perspective The “three brains” According to neuroscientists, there are 3 main parts to the brain. These "three brains" nestled inside one another are as follows.

markathon||august august2011 2011 markathon products, services, marketing strategies and advertising. These aspects from Morin's argument are made subconsciously, in the nether regions of the “old” brain. These aspects help us to take the right decisions 1. We're self-centred: To make decisions, egotism is an important landmark. The old brain is the centre of “ME”. Morin opines that people are completely egocentric and choose something that concerns their lives or well-being.

The "Human" (New) Brain: Most evolved part of the brain known as the cortex. Responsible for logic, learning, language, conscious thoughts and personalities. The "Mammalian" (Middle) Brain: Also known as the limbic system. Deals with emotions, moods, memory and hormones. The "Reptilian" (Old) Brain: Also known as the R Complex controls basic survival functions, such as hunger, breathing, flight-or-fight reactions and staying out of harm's way. Although NeuroMarketing is an emerging field, one finding is clear. The “reptilian” or "old" brain drives the customers' buying decisions. The "old" brain often overrides our “voice of logic” and drives all buying decisions for reasons beyond conscious awareness. To influence customer's buying decisions, marketers must learn how the "old" brain operates and speak its "language." The most solid and logical message, though it may be of interest to your customers, will still not trigger a buying decision unless the "old" brain understands. Hence, marketers, in order to gain an edge need to deliver their messages with maximum impact to influence the real decision maker, the "old" brain. Keys to NeuroMarketing Christophe Morin, co-author of “Neuromarketing: Understanding the Buy Buttons in Your Customer's Brain” emphases some keys points of NeuroMarketing through which the organizations can improve their

2. We crave contrast: Sometimes our actions can be explained due to inedited things. Contrast is a safe decision engine. It allows the "old" brain to make quick and safe decisions. Thus, the contrast is a significant way to captivate people. 3. We're naturally lazy: Simplicity is a substantial tool for advertising messages. It is recommended to keep the message simple, but strong. The “old” brain is constantly scanning for what is familiar and friendly, what can be recognized quickly, what is tangible and immutable. 4. We like stories: Advertising and marketing with strong beginnings and ends create a catchy reaction. The “old” brain forgets almost everything in the middle. That’s why, Christophe Morin advises entrepreneurs to sum up and recap their strongest selling points at the end of any promotional material. 5. We're visual: Visual memory can create a higher impact than a hearing one. Several times we make decisions visually, without being aware of them. The “old” brain is visual. “Reading is much more a function of the “new” brain. The visual processing enters the “old” brain first which can lead to very fast and effective connection to the true decisionmaker. 6. Emotion trumps reason: We don't remember anything if there isn't an emotion attached to that experience. The “old” brain is strongly triggered by emotions. Neuroscience has clearly demonstrated that 'emotional cocktails'- create chemical reactions that directly impact the way information is memorized and processed by the “old” brain.


perspective perspective

markathon||august august2011 2011 markathon

Practical implications of NeuroMarketing

Celebrity Endorsement

Having understood the effect of the emotional component behind any purchase decision, marketers today are emphasizing on emotional content in advertisements. Several fundamental marketing areas, superimposed with the neurological findings are researched and explored to understand and affect consumer behaviour. Some of the marketing areas have been explained below where NeuroMarketing can be helpful to the marketers.

Marketers have always believed that celebrity endorsements help them in selling their product. But, until now, they were not able to say what visual and auditory actually stimulates consumer to buy products endorsed by the celebrity. Neurologists have found out that when we see a familiar face i.e. celebrity, a particular hormone named dopamine secretes which triggers the positive emotional state. Marketers can check which celebrity endorser would perform the best by measuring the secretion level. Higher secretion level would mean more trust and more positive effect.

Testing advertising effectiveness In one of the methods, testers are wired to imaging devices while viewing video clips or images of a new advertisement. Different brain areas of testers are being monitored and depending upon the area which lights up while testing, marketers can view which kind of emotions are generated. Generated emotions are mapped with intended emotions to see whether marketers have successfully conveyed the intended message. If not, necessary changes can be made in the ad to achieve the desired result. Related research areas work on neurological responses to senses such as smell, touch and sound. The only shortcoming about these results is that they measure the kind of activation generated in response to different images but they are unable to explain ‘why’. Testing product appeals These findings mainly focus on what different neurological appeals do the products generate in human brain. What are the different neurological effects generated when a person looks at a branded product and a normal product? What effects are generated in the brain when a person especially a male sees a sports car, a sedan and a hatchback? Marketers can use the appeal generated by the product in ads to influence customers.

Logo/Brand selection fMRI technique has been used to find the relationship between the brand logo and functions associated with the affected area of brain. If logo/brand is of personal relevance to the viewer, his brain will show higher level of activation in that particular area. For example, when a person wears a branded t-shirt he automatically starts feeling good as he knows about the brand beforehand. Without the label, that same shirt might not have induced similar feelings. This suggests that, for marketers brand development is as important as product development. Marketers also try to impose human-like characteristics such as fun, discipline, etc. on their brands. But studies have shown that human brain evaluates a human and a product through two different areas. So, such marketing practices do not make very high impact on consumers. Media Selection NeuroMarketers are also researching on emotional and cultural connection consumers have with type of media selected for brand endorsement. Till now most of the marketers believed that right side of the brain is associated with emotional aspect and left side with cognitive or logical aspect. So, most of the TVCs are made to generate the emotional arousal in short duration of time and print ads were filled with more cognitive information about the product. But, recent studies have found out that complex interaction between the different areas of brain is more likely. So, NeuroMarketing is not just focused on specific regions but also on internal brain circuits which connect these 6

perspective perspective regions. Research has shown that the primary organ behind decision making is visual. So, marketing stimuli should be more visual than verbal for better recall of the product. Risk Assessment and Future Benefits Neurological findings have suggested that economical decision about long term and short term gains and loss can be more emotional than predicted. Consumers face dilemma of ‘instant pleasure’ versus ‘delayed pleasure’. Two different brain areas work on these feelings. The area which operates on benefits in the future is fairly rational and the one that operates on immediate satisfaction is very much emotional. It has been proved that tenor of emotional feelings generate significant influence on cognitive information that follows. So, a marketer who is concentrating on rational information should deliver them right after the brain is emotionally charged. Role of Satisfaction Since last five decades marketers are putting emphasis on customer satisfaction. But it has been found that even satisfied customer can easily switch brands. So, research on NeuroMarketing has found out that marketers need to motivate the customers to the point wherein they deliver the value back to the customers by repeat purchases. Satisfaction of customers is connected heavily with emotional aspect and past memories. So, marketers should create deep rooted feelings such as trust, fairness, integrity, etc in consumer’s mind. Critics of NeuroMarketing Organizations using NeuroMarketing to peek into customer’s mind in order to predict consumer behaviour are accused of biological voyeurism. Consumers fear that neuroscience could lead to the discovery of a "buy button" that when pressed can turn them into buying robots. Recent opinions on NeuroMarketing within the neuroscience literature have strongly questioned the ethics of applying imaging techniques to the purpose of finding the ‘buy button in the brain’ and creating advertising campaigns that will be unable to resist. NeuroMarketers are being accused of entering the realms of autonomy. One could argue that the essential objective of marketing as a discipline is to

markathon| |august august2011 2011 markathon manipulate consumer behaviour - effectively, a "soft" attack on autonomy. However, the question arises whether NeuroMarketing will provide sufficient insight into human neural function to allow manipulation of the brain such that the consumer cannot detect such manipulations and result in the desired behaviour in at least some exposed persons. Such stealth NeuroMarketing is not possible with current technology, but if developed would represent a major incursion on individual autonomy. Some question the very use of NeuroMarketing. Researchers opine that people behave differently when they are test subjects. Also, that there are no hard and fast rules about the relationship between brain activity and behaviour. NeuroMarketing does not have the capability to infect other variables like life-stage, peer group influence which are likely to influence consumer behaviour. Conclusions At this point, NeuroMarketing is mostly a set of intriguing but far from conclusive experiments linking internal brain activity with external behaviours. For this field of study to become legitimized, it would be necessary to construct frameworks or behavioural models that would predict the types of consumption related problems that brain structures under study need to solve. Organizations are attempting use NeuroMarketing like Superman’s X-ray vision. NeuroMarketing is upon us and will evolve as a technique to peek into the human black box. The question that arises is whether NeuroMarketing will help marketers plant an idea inside the human mind or will be useful only when it is skilfully combined with other analytical techniques?


specials perspective

markathon | august 2011

guilt: an opportunity for marketers Chetna Sharma, Madhukar Anand | iim k Sigmund Freud's structural model of the psyche gives three parts of the psychic apparatus Id, ego and super-ego. Id: It is the dark, inaccessible part of our personality, what little we know of. It has no organisation, and is filled with energy reaching it from the instincts; it strives to bring about the satisfaction of the instinctual needs on the basis of pleasure principle. Super-Ego: The super-ego works in contradiction to the id. The super-ego strives to act in a socially appropriate manner, whereas the id just wants instant self-gratification. The super-ego controls our sense of right and wrong and guilt. It helps us fit into society by getting us to act in socially acceptable ways Ego: The super-ego's demands oppose the id’s, so the ego is the one reconciling the two. Ego seems to be more loyal to the id, preferring to gloss over the finer details of reality to minimize conflicts. But the superego is constantly watching ego's moves and punishes it with feelings of guilt, anxiety, and inferiority. How a marketer gets benefitted by these concepts of Sigmund Frued? Extending on similar lines, consumer guilt has been defined as a negative feeling resulting from a consumer decision that is against one’s ideals. The psychological models of consumer decision making generally concentrate on cognitive processes like

goals, motivation, influence etc. to make a buying decision. Melissa S. Burnett and Dale A. Lunsford in their paper Conceptualizing Guilt in the Consumer Decisionmaking Process explored the guilt quotient in decision-making. They classify guilt as given in fig 1. Let’s see some of the ad campaigns that utilized this concept: Nescafe: Nescafe’s first marketing campaign launched it as an instant coffee brand. The campaign was expected to give successful results because this was a breakthrough product, several marketing studies were conducted but no result came up in market research about less sales of instant coffee than expected .A motivational research was done on random list of ladies. They were divided into groups of two and each group was given a shopping list of 10-15 items, the only difference was that one list had instant coffee as a shopping item the other had normal house coffee. A separate group of people were given these two shopping lists and were asked to rate the ladies with these shopping lists of certain attributes. The women with instant coffee on their shopping list were rated 48% on laziness and the women with normal house coffee were rated only 4% on laziness parameter.(Haier’s study) The results clearly reflected

Fig 1

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that women had a feeling of guilt while buying an instant coffee. The guilt of not being the perfect lady of the house, the guilt that she is shirking of responsibilities of work, and paying extra for her comfort.

already in place, a double-edged promotional campaign. In spite of these advantages; it has not been able to make an inroad into the Indian health drinks market. This failure could be attributed to a number of strategic causes.

This insight to marketers was shocking. They launched a new branding campaign that was focused on taste and aroma of instant coffee rather than functional utility of saving time. Though there was no much of difference in aroma and taste between a regular and instant coffee. Consumers bought that idea and sales of Nescafe increased.

One such cause was, women in India generally consume health drinks when they are ill or during pregnancy. They feel guilty to spend money on their health. In a family where Horlicks for children was consumed because of its nutritional content Women Horlicks was rejected. Marketers on first place felt that women in India are anaemic and nutritional drink would fill the need gap women Horlicks will give them a legitimate reason to justify themselves to take care of their nutritional requirements like they do for their children. But the strategy failed. It is therefore open to debate whether Women's Horlicks is ahead of its time in the Indian market.

Maggi noodles: Nestle (then known as Food Specialities Ltd.) in 1982 considered launching Maggi instant noodles. The company had several options of choosing from several alternative positioning. The product could have been launched as an alternative for ‘Chinese dishes’ at home or as a ‘mini meal’. Consumer research showed the company would fetch profits if it were positioned as a tasty, instant snack, made at home and initially aimed at children. The insight was used by Nestle India Limited, it never positioned its ad on time saving or effort saving activity of cooking instant noodles. The whole Maggi campaign focussed on satisfying immediate hunger of a child by his mother. Nestle aggressively promoted Maggi with taglines such as “Mummy Bhook Lagi”, “Bas 2Minute”, through several advertisements. The instant noodle food concept was successful using this positioning of satisfying hunger of ‘your’ child rather than saving time for mother in the house. To save the mother from guilt it also kept the option of adding vegetables in Maggi noodles. It is also argued in consumer behaviour that cooking for women is like delivering a child; they always see it as their creation, to give them something to add in the instant noodle like “masala taste maker’ or vegetable gives them a feeling of creating something and saves them from a lot of guilt!

So Sigmund Frued helps us to find a possible explanation of consumer buying behaviour which cannot be unveiled by any marketing research. It is because marketing research assumes that consumer is aware of the reason of his/her purchasing decision. It is not always true!! In fact most of the time we buy things based on likes and dislikes. We don’t know why we like a particular colour of why we hate a particular smell. We just do it! Guilt marketing becomes changes for these reasons. Finding an answer to why consumers buy is the toughest task for a marketer!

Horlicks: GlaxoSmithKline Consumer Healthcare’s Women Horlicks appeared to have a hit combination a winning brand, an excellent distribution system

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Strategy for Inclusive Growth Samaresh shah | Capgemini The world today is faced with a choice, a choice between holistic development and absolute anarchy. We have chosen to walk the thin line between economic and social growth and if we are to realize our dreams it is only through the harmony between the two. India is poised today to become afore runner in the global economy mainstream. As pointed out by our Prime Minister in his charter we need to invest in worker’s welfare, be proactive in offering jobs to the underprivileged, give equal status to women, invest in people and in their skills- because high rates of growth mean nothing for those who are unable to find employment and fight corruption at all levels. Today we have the responsibility of creating a culture of caring, sharing and belonging and being the eternal optimist I’m certain we will not fall short and that the motto ‘vasudheve kutumbakam’ will indeed resonate the world over. India’s growth since 2003 has been phenomenal and represents a structural increase rather than a cyclical one which indicates that inclusive growth has been on the agenda. India’s sustainable growth rate resulting from increased openness is projected at an average of 8.4% until 2020. This openness has provided access to superior inputs by domestic firms and encouraged a shift in employment from the less productive agricultural sector to more productive sectors. This has thus has created a demand for more skilled labour, leading to focus on the significance of education. Perhaps the best example of inclusive and holistic growth can be provided by the experimental township of Auroville where people of all countries live in progressive harmony above all politics and all nationalities. Here the very meaning of progress is to take everyone with you in your march forward. Surely Utopia is not on the cards right now but the fact of the matter is that society develops only if every individual in it develops in their unique way. We cannot sit back and

harp on how the world is witnessing unidimensional progress because that won’t solve the problem anyway. We as humans have realized the need to be equitable in our actions because otherwise we would be a race perpetually at war with each other with anarchy all around. Since these are luxuries we can ill afford inclusive growth is the only way forward. For instance it is heartening to see that the Asia and Pacific region has made remarkable progress in reducing poverty. In the 1970s, more than half of the region’s population lived on $ 1 or less per person each day. By 1990 that population had reduced by around 900 million people. The figure is projected to fall to 350 million by 2015. The very fact that absolute poverty levels are declining indicates our commitment towards a holistic society. The question to be asked is if it is possible to include the most disadvantaged in the production and distribution of products and services? It is, and innovation is the way. At the bottom of the pyramid access to real opportunities to create wealth has the potential to transform lives in an inclusive way. Sectors such as healthcare, energy, clean water, education, and housing present opportunities that are ripe for innovation. By continuing with the tried and tested; do we in our developmental journey visit the same problems and challenges as the developed nations of today did or do we learn, innovate and leapfrog? In a vibrant democracy such as ours it is important that the better-off sections of society realize their wider social responsibility. For India to be a global player it is essential to understand the need to make our growth process as the PM said in his recent CII address more inclusive; to save more and waste less; to care for those who are less privileged and less well off; to be role models of probity, moderation and charity. If so be the case then what can each one of us actually do about it? Let’s come forward with our ideas and simply apply ourselves. We do not need to wait for a nationwide programme to make a difference. India is 10


poised today to become afore runner in the global economy mainstream. As pointed out by our Prime Minister in his charter we need to invest in worker’s welfare, be proactive in offering jobs to the underprivileged, give equal status to women, invest in people and in their skills- because high rates of growth mean nothing for those who are unable to find employment and fight corruption at all levels. Today we have the responsibility of creating a culture of caring, sharing and belonging and being the eternal optimist I’m certain we will not fall short and that the motto ‘vasudheve kutumbakam’ will indeed resonate the world over. India’s growth since 2003 has been phenomenal and represents a structural increase rather than a cyclical one which indicates that inclusive growth has been on the agenda. India’s sustainable growth rate resulting from increased openness is projected at an average of 8.4% until 2020. This openness has provided access to superior inputs by domestic firms and encouraged a shift in employment from the less productive agricultural sector to more productive sectors. This has thus has created a demand for more skilled labour, leading to focus on the significance of education. Perhaps the best example of inclusive and holistic growth can be provided by the experimental township of Auroville where people of all countries live in progressive harmony above all politics and all nationalities. Here the very meaning of progress is to take everyone with you in your march forward. Surely Utopia is not on the cards right now but the fact of the matter is that society develops only if every individual in it develops in their unique way. We cannot sit back and harp on how the world is witnessing unidimensional progress because that won’t solve the problem anyway. We as humans have realized the need to be equitable in our actions because otherwise we would be a race perpetually at war with each other with anarchy all around. Since these are luxuries we can ill afford inclusive growth is the only way forward. For instance it is heartening to see that the Asia and Pacific region has made remarkable progress in

markathon | august 2011

reducing poverty. In the 1970s, more than half of the region’s population lived on $ 1 or less per person each day. By 1990 that population had reduced by around 900 million people. The figure is projected to fall to 350 million by 2015. The very fact that absolute poverty levels are declining indicates our commitment towards a holistic society. The question to be asked is if it is possible to include the most disadvantaged in the production and distribution of products and services? It is, and innovation is the way. At the bottom of the pyramid access to real opportunities to create wealth has the potential to transform lives in an inclusive way. Sectors such as healthcare, energy, clean water, education, and housing present opportunities that are ripe for innovation. By continuing with the tried and tested; do we in our developmental journey visit the same problems and challenges as the developed nations of today did or do we learn, innovate and leapfrog? In a vibrant democracy such as ours it is important that the better-off sections of society realize their wider social responsibility. For India to be a global player it is essential to understand the need to make our growth process as the PM said in his recent CII address more inclusive; to save more and waste less; to care for those who are less privileged and less well off; to be role models of probity, moderation and charity. If so be the case then what can each one of us actually do about it? Let’s come forward with our ideas and simply apply ourselves. We do not need to wait for a nationwide programme to make a difference. Samaresh Shah is a Senior Business Development Manager with Capgemini. An Electronics Engineer by profession, he is an avid quiz host, keen cricket enthusiast and an environment champion. Samaresh is known for his versatility, high energy and creativity on stage. Over the years he has conducted several business quizzes, workshops and guest lecturers for premier business schools like IIM–Calcutta, IIT-Kharagpur, IIFT,ISB, SXC,NSHM ,ISB, IBA-Bangalore to name a few. You can reach him at



markathon |august 2011 markathon |february 2010

An Interview with Venkatesh Shankar Marketing PhD program Director, texas a&m university

Venkatesh Shankar is the Marketing PhD Program Director and Colemain Chair in Marketing at Mays Business School, Texas A&M University. He is an undergraduate from IIT Kharagpur and has done his graduation from the Indian Institute of Management Calcutta. Dr. Shankar completed his Ph.D in Marketing from the Kellogg Graduate School of Management. Dr. Shankar's areas of specialization include Marketing Strategy, Innovation, International Marketing, Digital Business, Pricing, and Retailing. He has corporate experience in marketing and international business development. He has made over 150 presentations in diverse countries. He is a visiting faculty at the MIT, INSEAD and ISB, Hyderabad among others.

Markathon: From IIT Kharagpur to IIM Calcutta to Kellogg Graduate School of Management- what, according to you, was the turning point in your career? What is your biggest takeaway from a long and illustrious career as a marketer in the industry as well as academia? Mr. Shankar: I had two career-changing points in my life. First, I was to pursue graduate studies in engineering at Rice University in the U.S. after my B. Tech. My original plan was to be at IIMC until I could get my US visa. However, during that short period, I enjoyed learning about management so much that I decided to continue my PGDM (MBA) at IIMC. Second, I was doing well as Business Development Manager at HSBC before I decided to do a PhD at Kellogg mainly to feed my intellectual curiosity. The biggest takeaways for me are: Pursue with passion what fascinates you; Be flexible and be willing to learn; and Aim for high impact in whatever you do. Markathon: In the Indian context, what is your take on disruptive innovation and marketing? Do you feel

India is(has) been a pioneer in this field or a late adopter? Mr. Shankar: India has many ingredients that enable disruptive innovation—large and growing middle class, increasing aspirations, and low ability to pay. Because of the large customer base that needs/desires affordable goods and services, many innovations have to be developed outside the current customer mainstream (top end of the market), that is, they have to be disruptive. Many of the solutions are coming in the form of affordable/frugal/reverse innovations. GE's Mac 400 and Mac i, ultra-portable electrocardiogram (ECG) machines were made for India, all ground-up, to be sold at 1/3-1/6 of the price of similar imported machines. Markathon: How is international marketing different for a domestic company going abroad and a MNC setting base in another country? Does standardization of campaigns work or is it better to have individualized campaigns for each country? 12


markathon |february markathon |august 2010 2011

Mr. Shankar: Many principles are similar for both types of firms. All companies have to do a triadic market entry analysis (analysis of three dimensions: market attractiveness, competitive advantage and risk). Even a MNC must have started out as a domestic company at some point in time in its history. However, there are differences. Relative to a MNC, a domestic company typically has no international exposure, fewer resources, and little brand recognition overseas. The standardization vs. adaptation of product decision depends on a number of factors such as product and marketing costs, speed-to-market, brand equity and its transferability across countries, culture boundness, satisfaction of target segment needs, and competitive intensity. An iPad is standardized to benefit from scale economies, similar global needs (touch-based communication, entertainment, and bookreading), outrace competitors, and cash-in on Apple’s hip image. A fast food chain like McDonald’s store is adapted because what it sells is culture bound (e.g., hamburger in the US, Teriyaki burger in Japan, McVeggie in India), with differing customer needs and limited marketing/production cost economies due to localization. Advertising campaigns can be standardized if there is a global resonating theme, but are mostly adapted (at least in execution). Sales promotion campaigns are adapted. Consumers may clip coupons in one culture but may want to bargain in another culture.

Markathon: What interests you the most in the field of branding? How can a brand stand apart, according to you?

Markathon: Given a task of launching a new product, how would you proceed? What are the key considerations and parameters to keep in mind?

Markathon: What is the most effective way of engaging the customer through interactive marketing?

Mr. Shankar: First, a firm has to be sure that the product should indeed be launched. To pursue a business opportunity, there should be both productcompany fit (internal analysis of strengths and weaknesses) and product-market fit (external analysis of opportunities and threats). These fits could be assessed using the strategic window analysis tool. Second, the firm has to develop a strong marketing plan with the right amount of resources. Once a firm decides to launch a product it needs to consider multiple strategic factors such as scale, scope and timing of entry, likely reactions by incumbents, targeting gaps, positioning spots, etc.

Mr. Shankar: I am doing research in brand equity and brand extension, working with companies such Allstate insurance and Colgate Palmolive. To standout in a sustainable manner, a brand needs to create a point of difference that resonates with its target customers. However, that alone may not be adequate in today’s competitive world. A brand should continuously build its value to those customers and should continuously measure, track and improve its equity and extension potential. Markathon: You are known for your expertise in digital marketing. Could you throw some light on its applications that we see in our daily lives? Mr. Shankar: Digital marketing is so interwoven into our lives today that it is hard to imagine life without it. Even a cab driver or panwala or dhobi in India starts the day reading his/her SMS or checking the voicemail. We all use digital applications---SMS, email, online search, social networking, online banking, or stock trading. Effective digital marketing comprises anticipating (not just understanding) consumer needs and touching the consumers appropriately through the right touch points (e.g., the Web, mobile phone, kiosk).

Mr. Shankar: Successful engagement of customers requires a deep understanding of issues of interest to customers, of the relevance of the brand to these issues, and the triggers for customer action. A sound interactive marketing strategy should continuously engage the customer through creative programs using multiple digital touch points. Markathon: What would be your word of advice to MBA students? Mr. Shankar: Dream big. Tomorrow’s world is full of opportunities to do be different. Follow your passion. Be creative. Embrace new insights. To succeed, be prepared to fail and learn from mistakes. Your learning of management principles and ideas doesn’t stop with your MBA. Fasten your seatbelts for a ride of lifelong learning. 13

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Shubhajit Lahiri | Somjeet Behera


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To cease smoking is the easiest thing I ever did. I ought to know because I've done it a thousand times. ~Mark Twain

Scientists, researchers and medical practitioners alike are in complete agreement as to the harmful effects of smoking. Ask a doctor about it, and, irrespective of his level of education, qualification, specialisation, location and experience, he would list down a series of fatal and non-fatal diseases, including various forms of cancer, that are caused by smoking cigarettes. He would not in fact stop just at listing down the numerous adverse psycho-somatic effects of smoking, but would also mention the effects it tends to have on non-smokers (passive smokers). Further, every cigarette pack comes with a warning that is difficult to miss. So it would be fair to assume that every smoker is more of less aware of what smoking can lead to.

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Cigarette Industry Therefore, the question that arises here is, despite such universal condemnation of this particular activity, and despite the fact that nearly every smoker tends to be aware at some level of the health hazards, how does cigarette smoking continue to proliferate and the tobacco industry continue to earn big money? The answer to that might very well lie in the truism that cigarettes are among the best marketed products in the world. But wait, how could that be possible? Insofar as we know advertising of cigarettes in masscommunication channels like televisions, radios and newspapers, is banned in most countries, including India. Anyone who has ever grabbed a copy of Kotler would know that Advertisements are just one of the many facets of marketing. As we will see in this article, marketing of cigarettes extends far beyond the direct confines of the various bans in place, not least of all being its undeniable presence in popular culture. The article has followed the classic 4-P framework, viz. ‘Product’, ‘Price’, ‘Place’ and ‘Promotion’, with a bonus 5th ‘P’ added by us in the form of ‘Popular Culture’.


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Product Cigarette is one of those rare products that begins its journey for the consumers as a hedonistic merchandise, yet before long transitions into a utilitarian one for them. The reason is simple, a person starts smoking for a variety of reasons, ranging from peer acceptance to trying to be a rebel (albeit without cause); however, once he becomes addicted to it, it inevitably takes place alongside his other innate needs. Therefore, despite all the social stigma, political opposition, legal barriers and medical ill-effects that come with it, cigarettes continue to be among the highest-selling and fastest-moving consumer goods, and a major revenue source for most governments through the taxes imposed upon them, not least of all being India. Consequently, cigarettes cover the entire gamut in terms of product variety in order to target the widest possible spectrum of customers. ITC Ltd (formerly known as Indian Tobacco Company, and Imperial Tobacco Company before that) ranks as the undisputed market leader in India insofar as cigarette sales go; in fact, for all practical purposes, it might very well be considered as a monopoly in this line of business. It has under its umbrella a broad range of products targeted to reach a wide group of income segments. Its most popular and highest-selling brand is Gold Flake, with Navy Cut being close on its heels. Other popular brands under ITC’s wings are Classic, Insignia, India Kings, Silk Cut, Flake, Scissors, Capstan, etc. People who are aware of the brands named above would know the diverse range of consumers they cater to. Thus, while Insignia and India Kings have highend consumers as their target customers, the targets are upper and upper-middle classes for Classic, middle and lower-middle classes for Silk Cut and Flake, and lower-middle and lower classes for Scissors and Capstan. Gold Flake and Navy Cut stand out as oddities though. The “classic” Gold Flake cigarette, being the smallest in length (and thus, filter size) among the variations

markathon |april 2011 markathon |august available under the larger Gold Flake brand, should ideally have had middle and lower-middle classes as its target. The same would ideally hold true for Navy Cut, which is too is smaller in length (and filter size) than other premium brands of ITC like Classic. However, quite interestingly, these two cigarette brands enjoy patronage among the upper-middle and upper classes as well. It would not be uncommon if one were to observe an executive-level employee with a sevenfigure salary smoking a Gold Flake or a Navy Cut – such is the brand loyalty it has developed over the years. The reason perhaps lies in their distinctive tastes and strengths, as opposed to the more “neutral” tastes that are common to, say, Classic. A key marketing strategy that ITC has followed with its popular cigarette brands is line extension, in order to expand the market by leveraging on their popularity. Given that ITC cigarettes have presence in nearly every incomesegment, one might wonder at the kind of encroachment that some brands have made into the spaces occupied by other brands – thus leading to possible cannibalization. It would however be worthwhile to remember that, cigarettes are unique in the kind of fierce brand loyalty they enjoy. Thus, with that pointer in mind, one would realise that line extension has not really led to cannibalisation, but rather to expansion of the market. Gold Flake Kings and Gold Flake Lights are up-market stretches of Gold Flake, intended to target loyalists of this brand who wish to move to premium length cigarettes (for status reasons, health reasons, or both), and not surprisingly, both these extensions have become very popular themselves. Navy Cut (or Navy Cut ‘filter tipped’ to be more precise) has not just gone for up-market (Navy Cut Duotec) but also down-market stretch (Navy Cut regular size). While the intention for the former was similar to what it was for Gold Flake, that for the latter was to target those who aspire to smoke Navy Cut but cannot because it is beyond their affordability. Classic similarly has been extended to include Classic Milds and Classic Ultra Milds, in order to ensure that those who like 16

Cover story smoking Classic, but are planning to go easy on smoking, can move on to the latter variations as they are progressively lighter in tone and strength. Brand name, brand extensions, and product line extensions apart, three other facets of the product ought to be briefly dealt with. The first two facets are the overt emphases that ITC, as any other cigarette manufacturer, lays on packaging and quality. Packaging is a vital aspect for cigarette brands. Every brand pack enjoys a unique look, design and feel, in order to make association easy for consumers. Further, cigarette makers also ensure that consistency is maintained – subtle changes might be made from time to time, but overall look and design of the packaging for each of the brands are rarely tampered with, unless of course they wish to give it an image makeover in order to counter flagging sales. The second aspect is quality, or rather a conspicuous effort to let the world know how quality-oriented the cigarette brands are. Cigarette manufacturers thus make sure that statements are put on the package extolling the quality of tobacco or the exceptional processing that the tobacco has gone through. The third facet pertaining to this product is length, and consequently the filter size. The longer the cigarette, the lesser its ill-effects are deemed to be and the higher its cost tends to be (as taxes are levied based on the stick length). The popular cigarette lengths are 84 mm (e.g. Classic, Classic Milds, Classic Lights, Gold Flake Kings, Navy Cut Duotec, etc. as also other foreign-

markathon |april 2011 markathon |august imported brands like Marlboro, 555, Dunhill, Benson & Hedges, etc.), and 69 mm (e.g. Gold Flame, Navy Cut regular size, Flake, etc.). Exceptions however do exist; cases in point: Navy Cut filter tipped, which stands at a middle-of-the-range 74 mm, and Insignia, which stands at a massive 97 mm. Despite the nearly all-encompassing presence that ITC has in the cigarette market in India, it would be incumbent upon us to briefly mention its competitors too. Godfrey Phillips India Ltd is the second largest player in the Indian cigarette market, and includes such brands as Four Square, Red and White, Stellar, Cavanders, Jaisalmer, etc., catering to premium as well as lower segments. Another competitor for ITC happens to be Vazir Sultan Tobacco Industries Ltd., which has

two reasonably high-selling brands, albeit among the low-end consumers, in the form of Charms and Charminar.


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Price The prices for cigarettes are based on their lengths. As dealt with earlier, the two most prevalent sizes (lengths) for cigarette sticks are 84 mm and 67 mm. Most of the cigarette brands belonging to the former category (e.g. Classic, Classic Milds, Gold Flake Kings, etc.) are priced at around Rs. 100, while those belonging to the latter (e.g. Gold Flake) are priced at around Rs. 50. There are many variants of cigarettes on the basis of flavours and ingredients (product line extensions), but list price continues to be on the basis of stick length and filter size rather than on other parameter. Thus, Classic Menthol, which is a variation of Classic (regular) where flavour and ingredients go, is priced at par with the latter. During special events like World Cups or other events, companies come in with special packages to attract the lovers of those events, but price continues to remain sacrosanct.

Place Cigarette outlets tend to be highly concentrated around offices, hotels, restaurants, cafeterias and malls. And, in all these locations, the stocking of cigarettes in shops and kiosks differ in accordance to the brands, sizes and flavours that have the best fit with the corresponding customer profile. For instance, near office spaces, majority of the outlets stock cigarette packs preferred by males since males constitute the highest percentage of people smoking in public in India. Also, these outlets do not usually stock premium

markathon |april 2011 markathon |august cigarettes, rather concentrating on popular brands which are affordable for middle and upper-middle class consumers. In areas where high-end hotels, restaurants and private clubs are located, the outlets stock high end (premium) cigarettes as well, and focus tends to be on flavoured cigarettes too along with the standard ones, as target audience for them includes both males and females. Many cigarette companies display large hoardings near busy malls on their outlets not only to increase sales but also to reinforce the brand image on the consumers. Similarly, when it comes to residential areas, the cigarettes kept in stock are in sync with the general demographics & income profiles of the residents. In other words, the kind of cigarettes on offer depends on whether the area comprises principally of high-income population groups or low-income ones. The distribution channels of the cigarette industry needs to be exceptional ly strong as the biggest motivation for companies is ensuring that smokers never leave an outlet without his cigarette of choice. Their distribution channels are backed by precise forecasting of various regions in a city and customer profiling in order to avoid stock-outs at all cost. Further, the distribution channels have been fortified by employing a large sales force base. Intensive distribution is led through these sales forces since the number and distribution of outlets and the brand range available in those stores have a very high bearing on cigarette sales and in turn the revenue of the tobacco companies. 18

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Promotion Generally smokers come for a “drag” with their peer group consisting of both smokers and non-smokers. The motivation for a smoke in such cases involves trying to find a short break where people socialise with each other over a cup of tea and a cigarette. In this group, discussions over brands of cigarettes are inevitable and at times even intense. This mode of communication concerning the various brands of cigarettes, and smoking in general, is understandably not led by the cigarette manufacturers; rather, through this kind of ‘word of mouth’, information about the product gets filtered to a large audience with no additional promotional investment by the companies. There sure is nothing better than free advertisement! With numerous bans, blanket or otherwise, imposed on various kinds of promotional activities related to cigarettes and tobacco products, the major emotional motive for a smoker is therefore that of a rebel with his attitude being one of defiance rather than merely to indulge in fad or to relieve oneself of stress. And, more importantly, given the addictive nature of cigarettes, consumers themselves take the onus of getting hold of the product, thus making the job of tobacco companies easier. Smokers do not need be regularly bombarded with advertisements as long as cigarettes are within easy reach. However, that said, it does not mean that cigarette companies have been sitting idle. They have in fact been following many innovative and even subtle ways of promotion where the consumer is targeted in numerous mystic ways, through a curious form of promotional activity called Surrogate Advertising – a tactic resorted to by alcohol companies as well.

markathon |april 2011 markathon |august ITC has been promoting greeting cards from their stable, branding them as ‘Gold Flake Expressions’. These greeting cards carry a logo similar to the cigarette brand on the back. This ensures that the spectrum of audience willing to buy greeting cards can be leveraged upon. Godfrey Phillips organises a social initiative called Godfrey Phillips National Bravery Awards (formerly, as many would remember, it was known as Red and White Bravery Awards) through which they award ordinary citizens who have shown courage and bravery, thus setting an example for others in the society. Movie producers too get paid to showcase smoking in order to influence prospective smokers. ITC has entered into the retail sector with its Wills Lifestyle chain of exclusive stores, offering various clothing lines like Wills Classic (formal wear) and Wills Clublife (evening wear). Through this they are targeting the youth who wish to own a piece of clothing or other items with a famous cigarette brand logo attached to it. After all, these youths could be their prospective future consumers. Thus, on one hand, the iconic brand name is being levered in the retail sector to generate sales, while on the other, this is ensuring “Wills” continue to remain in the consumers’ minds. Another massive brand building effort carried out by ITC for the Wills brand is through the Wills Lifestyle India Fashion Week where the Wills brand manages to seamlessly reach out to the glitterati and celebrities. Most of the promotional activities for cigarettes happen at the point of sale (POS) given the numerous bans and regulations imposed on other modes of promotion. One of the most important factors for the success of this kind of promotion is that majority of the smokers buy loose cigarettes as compared to buying a whole pack. Thus the more he comes to the outlet for a smoke, the more impact happens on the smoker and his fellow colleagues by the different point-of-sales promotions


Cover story and above the line (ATL) marketing through the hoardings placed above the cigarette stores. Many innovative ‘point of sales’ promotional methods are employed to showcase the brands through carefully planned cigarette placements on the shelf space, brand colours painted on walls near the outlets, signage, etc. Accessories like lighters and ashtrays with the brand logo are placed at some of these outlets. Shop-keepers are educated that followers of certain brands might be interested in buying a newly launched product, and incentives are provided to them to informally promote the new brand when a smoker comes to buy cigarettes from them.

Packaging is also a very important factor in point-of-sale promotions. Glitzy design with eye-catching colours on the packets is enhanced by the back-lighting of the gantries or shelves, in order to catch the attention of smokers and to provide them with a whole new experience. Usually free signage is provided by the companies to place on the outlet, and additional items like display racks and functional items are supplied to the retailers free of cost. The intent for such grandiose displays is to remind a casual consumer passing by the store that it is time for a smoke Many retailer incentive programmes form the primary mechanism through which the cigarette market

markathon |august markathon |april 2011 operates. Incentive programs include sales enhancement schemes like giving volume discounts to the retailers, extra payments for prime shelf-space positions, and in-store displays. The margin on each cigarette for a stick for a retailer can be as low as 10 paise for a Rs. 4 stick, and only volume sales would allow the companies and retailers to achieve the required margins, and hence these schemes. ‘Best Retailer’ programmes are run by many companies wherein incentives are provided to retailers for selling beyond a certain volume of cigarette sticks. In return for all these favours, the companies gain a high degree of leverage in terms of product placements and opens

up further channels to target their customers. Many of the cigarette companies employ sales forces, as mentioned earlier, whose job is to visit different outlets in the most potent areas and conduct surveys through interviews in order to gain insights into reactions to new products launches as well as other qualitative behavioural patterns of cigarette consumers. In return, they oftentimes gift a pack of the new product or another version of what the smoker is using. Through such means, the cigarette companies gain knowledge about their target consumers, as also make the customers brand aware about new products.


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Popular Culture Cigarettes have found, over the years, an indelible presence in ‘pop-culture’. Active as well as prospective customers of the cigarette industry, as a result, have always been heavily influenced, even seduced, by the various symbols associated with the product. Yet, to think of it, the incredible presence that cigarettes or the act of smoking have garnered in popular culture, be it in literature or music or cinema or pop-history, or for that matter the associations that seem to have formed, true or otherwise, between consumers of cigarettes and personality dispositions or intellectual abilities, could not have been formed had the act of smoking not been practiced in various forms over the course of human history in the first place. Proliferation and glorification of smoking therefore appear to be the two ends of the same string – each preceding and following the other. It is indeed quite akin to the classic “chicken and egg” story. If we were to go through the various art-forms that are in existence today, we would continually stumble upon glorified and even romanticized depictions of smoking. For instance, whenever we think of sleuths who need to exercise their brains far more than normal beings, cigarettes (or tobacco to be more appropriate) have been used as an important weapon for stimulating ideas by the authors. Thus, irrespective of whether one is reading stories of Sherlock Holmes by Arthur Conan Doyle, or Phillip Marlowe by Raymond Chandler, or Byomkesh Bakshi by Saradindu Bandopadhyay, or Feluda by Satyajit Ray, iconic detectives lost in thought with a pipe in his mouth or a half-burnt cigarette held between his fingers forms a recurring thread. Cigarettes have also been associated with various other personality tropes like masculinity (as in Captain Haddock in Tintin comic strips), charm and “cool” (as in film noirs and Westerns, with Humphrey Bogart and Clint Eastwood, respectively, being classic icons for these genre), rebelliousness & revolutionary characterizations (pictures of Che Guevara and Fidel Castro smoking cigars), creativity and irreverence (iconoclasts like Vincent Van Gogh, Sigmund Freud,

Bob Dylan et al), bohemianism and counterculture (Beat Generation and Hippie Culture), to name a few. If one were to narrow down to a few symbols, cigarettes have most commonly and popularly been associated with intellectual discourse and artistic expression. Consequently, in cities like New York or Paris, or for that matter Calcutta back home in India, which have come to be associated with the above two activities, cigarette smoking has/had become a part of their cultures, with pictures of intellectuals and artists debating or thinking or working in smoke-filled cafes and pubs and rooms having become common identifiers for these cities. Therefore, as can be fairly gauged, popular culture has played an enormous role in the way cigarette is perceived and consequently in its mass appeal. How cigarettes came to develop such seductive power and enduring appeal is beyond the scope of this article. The important point remains, this chain of occurrences did wonders for the cigarette manufacturers in terms of having innumerable loyal customers who continue to defy their doctors’ advices, government endeavours, and other obstacles, and thus keep filling the coffers of the likes of such giants as Phillip Morris and ITC.

Suffice it to say, unlike most products which can be thoroughly studied and suitably analysed through the prism of the 4-P framework, as it is known in marketing parlance, popular culture has turned out to be a vital, and seemingly a crucial fifth “P” for this particular consumable good called cigarettes – and thus in turn something that no marketer or researcher involved with or interested in this particular line of business can afford to ignore or be oblivious of.

It has always been my rule never to smoke when asleep, and never to refrain when awake. ~Mark Twain 21


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An Interview with HASIT JOSHIPURA VP South asia & md, INDIA, glaxo smith kline pharmaceuticals ltd.

Hasit B. Joshipura has been Managing Director of GlaxoSmithKline Pharmaceuticals Ltd. since January 1, 2007. Dr. Joshipura served as Vice President and General Manager of GlaxoSmithKline Pharmaceuticals Ltd. since October 2, 2006. After having spent about three years at Tata Administrative Services, Dr. Joshipura spent about 16 years with the Unilever Group of companies in India and held positions of increasing responsibility in commercial, sales, marketing and business management functions. Dr. Joshipura is a graduate in Electrical Engineering from VJTI - Bombay University and a Post Graduate from the Indian Institute of Management - Ahmedabad. He has completed his Doctorate programme at the School of Management at IIT Mumbai. Markathon: Tell us about one incident/moment from your college days at IIM Ahmedabad that has helped shape your career. Mr. Joshipura: There isn’t one particular incident or moment; rather it is more of a collective experience. Most people those days who ended up in IIM A, and it is true even today, not just for IIM A but for Shillong and

everywhere else, were from backgrounds where they had done reasonably well in their careers and when you enter these institutes you see people who have done as many things as you have or even more and that’s a great leveller. The moment you step in you realise that most people around you have excelled in academics or some other activities and then you realise that what you’ve done was good but a lot of people have done 22

vartalaap similar things and that is the defining moment for most people who get into the IIMs because that is the time when you either decide to renew your efforts and excel or you think that you will course through these two years. Markathon: You have had a long and illustrious career in marketing and management- from TAS to Unilever to Johnson & Johnson and finally GSK Pharmaceuticals- what attracted you to the pharmaceutical industry? Mr. Joshipura: I never wanted to be a specialist marketer. Right from my campus days my interest lay more in general management. I had options with pure marketing companies, I had options with banks. Those days there was no IT and no consultancy. I chose TAS because it offered a kind of exposure which would help me build a general management career. In those days, you were given an advisory role in TAS which I also worked on and at the end of it I felt that during the early part of your career it is important for you to work in the trenches, so to speak, and really get some operating experience. Therefore, I had an on-going conversation with Hindustan Lever which was well known for pulling people through their bases in terms of operations and that is why I decided to move to Hindustan Lever. Having spent 16 years in Lever, in the consumer industry, it made no sense for me to continue in the consumer industry in some other company when Hindustan Lever was the leader. But when Johnson & Johnson came along which was a pharmaceutical company and in some point in my life I had aspired to be a doctor, I switched to pharmaceutical with J&J and later moved to GSK. Markathon: How is marketing in this sector different from other sectors? Mr.Joshipura: In the consumer industry the marketing process is a one-to-many communication process. You have an operational side and a marketing strategy side. Number two, the functionality which is built into your product is not of the same order of magnitude as in the pharmaceutical industry. In the pharmaceutical industry all the advertising is at the single point, on a one-to-one basis between the rep and your consumer. So, you cannot really separate strategy and operations as much as you can do in the other industries. Your product will of course have to deliver absolute functionality because

markathon |august 2011 markathon |february 2010 if the patient does not do well then you will never get another prescription again. Markathon: What has been the most challenging task in your career till date? Mr.Joshipura: I have always taken jobs that have been challenging, in the sense that through my time in Hindustan Lever most of my assignments have been on the business building side. Moving to the pharmaceutical industry I suppose was one of the biggest challenges because I was moving to a domain which requires a high degree of functional expertise. Most people have spent their entire careers in the industry and when you come from outside and deal with people who have a great deal of expertise in the industry, it requires you to be superior in terms of domain knowledge and functional expertise. Markathon: Could you tell us how the pharmaceutical industry has changed post opening up of the economy in 1991? What lies ahead for the sector in the coming decade? Mr.Joshipura: Unlike the consumer business where I was since the beginning there hasn’t been a direct impact in that sense. There has been an indirect impact in the sense that with the opening of the economy, the GDP has increased and other drivers for the pharmaceutical industry have been set into motion. For example in the year 2000, the insurance sector opened up which enabled virtually every global insurance company to set up shop in India and health care insurance became the driver of growth and it is growing at about 35%-40% a year over the last several years. Insurance is a big driver in a country like ours where there is no reimbursement. So, that has been one driver of growth in the pharmaceutical industry. The second is, and this is widely known across the world, that consumption of health care increases with the improvement in GDP. There is a greater degree of affluent people who are willing to spend more on health care. The third driver is the presence of a trickle-down effect. About 50%-60% population of India has access to modern medicine and as incomes grow and as government policies like NREGA put more money into the pockets of the Indian rural class, it brings more people in the hold of modern medicine. These are some 23


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of the implications of the opening up of the economy as far as the pharmaceutical sector is concerned but more importantly, the real drivers came when the new intellectual property laws came into place in 2005.

the Indian business to carve out strategies that we think are appropriate. At the same time we have the advantage of leveraging the global expertise of GSK worldwide to improve our efforts in India.

Markathon: What lies ahead for the sector in the coming decade?

Markathon: How do you think healthcare can become inclusive in India? What steps can be taken by private companies for this effort?

Mr.Joshipura: In a country like India where health care penetration is so low, I and my colleagues in GSK do believe that we should see sustained growth in the industry over the next several years in India supported by the fact that there is a slowing down in the more developed markets of the world because of budget pressures and so on and so forth. Markathon: In a sector driven by research and development, patents, generics etc. How does GSK deal with the competition? Could you throw some light on the strategy adopted by GSK for business growth? Mr.Joshipura: GSK is somewhat better placed because we have been in this country for over 75 years and we were the first company to make a long-term commitment to India GSK actually moved manufacturing of their products which were not patented in India and moved to a model which provided products which were appropriate for the country. Such initiatives coupled with some judicious acquisitions that we made globally enabled GSK to acquire a leading position. What we have done has enabled us to build strong capabilities in the area of building branded genetics. Although we are an innovative company, we compete in a market of branded genetics and that is the competence that we have built over the years which has helped GSK reach the position where it is now. Markathon: What kind of synergies does GSK Pharmaceuticals India have with the parent organisation and with other worldwide companies? Mr.Joshipura: First of all, GSK Pharmaceuticals India is one of the top 10 companies for GSK worldwide in terms of scale and size. Our CEO has recognised the validity of the Indian business model and in many ways it is an inspiration for the emerging market strategies that we have put in place. He also recognises that in India you have to do things that are appropriate in the local context and to provide a fair degree of freedom to

Mr.Joshipura: In the case of GSK, we developed an India specific business model so that we provide products at prices that are India friendly and this is reflected in the fact that GSK, until not very long ago, was the market leader in rural India in terms of market share and even today is the number two company. So, that’s what we have done and going forward, our worldwide CEO has put in place several strategies to continue this approach. GSK has been the number one company in their efforts to provide medicines worldwide. We have moved to a new higher pricing model where the price for medicines in each country is based on the GDP of the country, economic factors, access, etc. We have contributed to making healthcare inclusive and we are innovating in our efforts to making healthcare inclusive in India as well. Markathon: What is your advice for graduates in Bschools looking to make a career in sales and marketing? Mr.Joshipura: I have always believed that there are no quick routes to success. You can get a job very quickly, you can get good positions very quickly but your ability to hold on to those positions in an uncertain environment and your ability to deliver on your commitments, is a function of the kind of experiences that you have chosen to acquire during the course of your career. It helps to be clear on what your end aim is. You can’t plan for your entire career but you can break it up into 10 year slots. You can say that at the end of your campus years where you would like to see yourself. Then think, that to be able to do that job effectively which you want to do or that business that you want to run, what are the kind of experiences that you need to go through, not to just get that job or business but to be able to run it successfully. You can also always take charge of how you run your career, whether in the company or in the business that you start, and make sure that you acquire those experiences. 24

war zone | eye 2 eye

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Over 90% of the retail market in India is dominated by the unorganized sector. The organized sector is focused on the cities and driven by giant retail chains like Tata’s Trent, Reliance Retail, Landmark Group, Arun Leo Pantaloon Retail, etc. Indian XIME Government is now mulling the option of allowing 51% FDI in multi brand retail, in 6 metro cities. FDI in retail has been a much debated topic with worries that entry of global retail giants like Walmart, Carrefour, Tesco, etc. will lead to the extinction of domestic retail players. On the contrary it must be mentioned that this apprehension is often unfounded. The entry of global retail chains, which have leaner supply chain management systems, is indispensable for a country like India, which is reeling under the pressure of inflation. Apart from supply side constraints and an inefficient public distribution system, hoarding by domestic retailers and improper storage has escalated the inflation scenario. Multinational retail chains bring with them technological advancements in bulk and cold storage, desperately required in a country with a lot of wastage. FDI in retail will ensure a healthy competition in the retail market with job opportunities for lakhs of people. Domestic retailers will not be driven into extinction, but forced to mend their ways. To remain competitive, domestic retailers will need to change their business model by introducing technological advancements and drive the need for innovation. The need to maintain profitability will spur the domestic retailers into expanding their business and providing employment to a lot of people. The average kirana store will not vanish, but become leaner in providing value for customers at the bottom of the pyramid market.

The issue of opening up FDI should be seen as a question of weighing the perceived benefits with potential repercussions of the decision. In this case, the benefits seem to be less certain to Madhav Kandukuri materialize than the ill IIM S effects. Unorganized retail is the second largest bread winner in India after agriculture and employs over 22 million people. Opening organized retail for FDI in this scenario might indirectly force the unorganized retailers to close their business and lose their livelihood. The kirana stores usually employ a whole family which has very little vocational expertise they can fall back on, if they lose their livelihood. To make matters worse, there are no attempts made to support or fight for the Indian retailer in this battle for his survival. There has been a complete absence of skill development, networking, financial and institutional support. Coming to the issue of benefits, the average productivity in Indian organized retail is 53% of that of the US industry. The corresponding number for the software industry in India is 95. This points to the existence of deeper problems in India’s supply chains, which investment in retail alone seems not to be able to correct. Most of the problems with low productivity in India stem from inefficiencies at the source, most glaringly in agriculture. Without taking steps to correct these problems, it may be impossible to realize the benefits foreign retailers entering India are purported to bring. In a way, what has stopped organized retailers in India from reaching their full potential may stop the international retailers from doing the same. In other words, do we need to stake the future of millions of small entrepreneurs who have supplied what India needed for decades for a new shiny system, especially when the benefits themselves seem uncertain?

“Opening of organized retail for FDI will force the unorganized retailers to lose their livelihood”

“The entry of global retail chains is indispensable for India, reeling under the pressure of inflation”

Government has opened up 51% FDI in multi brand organized retail how will this move affect the existing players in the Indian Market?

Topic for the next issue’s Eye to Eye: “Will Hero Moto Corp's new identity prove to be a hit with the Indian consumer? ” Your opinion (view/counterview) is invited. Word limit is 250-300. Last date of sending entries is 16th September 2011. Include your picture (JPEG format) with the entry.

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markathon | august 2011

war zone | silent voice


Theme: “Centennial celebration of NIVEA”

WINNER: Divya Sanil, Priyanka Thaker | Welingkar, MUMBAI Congratulations!!!You receive a cash prize of Rs 500!


Raveesh Mayya, Eva Chikara |FMS

NEXT THEME FOR SILENT VOICE: “The launch of Brio - The small car from Honda ” LAST DATE OF SENDING THE PRINT AD: 16th September, 2011 EMAIL ID: Send your entry in JPEG format named as SilentVoice_<Your Name>_<Institute>only.

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markathon | august 2011

specials | bookmark

WE ARE LIKE THAT ONLY Understanding the Logic of Consumer India: Rama Bijapurkar Review by sria majumdar Penguin Books India| Paperback Edition, Price Rs. 399 approx. I have seen the book in bookstores many times, and passed by the stand, making a note to buy it the next time. The next time came only when the professor in my Consumer Behaviour class recommended it as one of the best books to understand the Indian consumer. I decided the time had come, and picked up the 2007 edition of the book from the library. I mention the year specifically because half of the book deals with numbers and statistics, and that kind of a book loses its relevance in 4 years. But not this one. Read on to know more about one of the most interesting books I have read off late.

Summary The book stems from the single idea that MNCs and most marketers do not understand India. To them it is the country which promised a consumption explosion, only to deal a blow to all the financial projections and expected sales volumes of companies. Rama Bijapurkar, one of India’s most respected thought leaders on market strategy and consumer behaviour, talks about how a multi layered schizophrenic India needs a multipronged customized strategy- not a direct transfer of the global best practice. Winning in India, she says, requires companies to accept that all emerging markets are not the way developed markets were in their infancy, and in India’s case- one should forget about thresholds of income above which consumption ‘takes off’. The question that MNCs should ask is not ‘When will this market be ready for my “global” strategy?’ but ‘What is the right strategy to unlock the potential of this market?’

Organization The book is wonderfully organized, with beautiful writing style interspersed with numbers to lead authenticity to all the arguments. From the mixed messages consumer India sends out to marketers, to understanding the diversity in demography, psychography and social cultures- the book discusses the purchasing power of India, why consumer India cannot be neglected, how to predict and read change in India and understanding the ‘Bottom of the Pyramid’. The book explains apparent contradictions in consumer behaviour such as rising incomes leading to downgrading to cheaper FMCG products, and poor monsoons leading to reduced sales of toilet soaps but increased motorcycle sales in rural India.

Verdict The book has a foreword by C.K. Prahlad and an afterword by Narayana Murthy. Do I still need to give it a verdict? Rama Bijapurkar has a way with words that makes all the heavy information ridden text an interesting and even gripping read. If you are interested in history, economics, culture, philosophy or marketing, you will appreciate how the book tries to decode the inscrutable Indians.

Bottom-line Must Buy! Grab the latest edition, and read it at leisure. I guarantee that it will worth your time, and definitely better than that consumer behaviour book you are reading. Be it understanding the SEC classifications, or the myriad behavioural issues of Indian consumers; in Narayan Murthy’s words ‘It is highly recommended for students who need credible insights and data to understand and prepare themselves for the creative market called India’. Bibliophile or not, don’t miss out on the book!


specials | brand story

markathon | august 2011

Brand Story: raymond Sana akhtar | IIM S What started off as a modest mill manufacturing cheap and coarse woollen blankets and low priced woollen fabric has come a long way to become India’s largest branded fabric and fashion retailer. The Raymond Woollen Mills, as it was then known, was acquired by the Singhania family in 1925 in Bombay. Raymond Group today is one of the leading producers of worsted suiting fabric in the world and includes the brands Raymond, Manzoni, Park Avenue, ColorPlus, Parx, Notting Hill and Zapp!. Raymond was one of the first companies in the Indian textile industry to use advertising in a major way to promote its products. All of Raymond’s marketing revolves around its ‘The Complete Man’ campaign. The campaign started as an attempt to create a man with whom the target audience could connect. Raymond’s research revealed that men did not really aspire to be muscular and well-built. The Raymond Man is thus portrayed as a caring, sensitive, fun loving man with a deep sense of accomplishment in the way he carries himself. Raymond also focused extensively on distribution aspects and set up its exclusive retail showrooms. ‘The Raymond Shop’ boasts of being the largest retail store in the country with more than 500 stores in prime locations, in more than 200 cities in India. In 1986, Raymond launched Park Avenue, its first ready to wear men’s formals targeting the young middle class corporates who are fashion conscious but need to wear formal clothes on a daily basis. Later, ‘Park Avenue Woman’, a range of business wear for women was also launched. The brand leveraged its expertise in clothing and the association that consumers make with looking good in a corporate environment to extend its line to include accessories and men’s toiletries to evolve as a brand that stands for complete grooming.

Having focused on formal wear for a long time, Raymond launched Parx, premium casual lifestyle brand targeted towards the age group 22-30, in 1999 to extend its image to that of a free-spirited leaping stag, endorsing the philosophy of ‘living easy’. Recently Parx decided to enter the emerging deodorants category. To create distinction is an already cluttered market Parx executes its brand essence in a playful tone. It stays away from overt sexual imagery that is prevalent in the category and gives its campaign a fresh, youthful and relaxed tone. While Parx was positioned at the lower end, Raymond acquired ColorPlus to target the premium customers which gave it a strong foothold in the Indian ready to wear segment. Seeing a need gap in terms of availability of a greater range of branded and quality merchandise for children and infants in India, Raymond entered the kids apparel segment in 2006 with Zapp!. Zapp! designed an exclusive kids' loyalty programme to carve a niche for itself in a segment which saw top-of-the-line brands stepping in with aggressive marketing strategies. Zapp! Club, the customer loyalty programme, gives an individual experience to each child, making them a part of exciting events and offers them gifts such as bandanas, wristbands and tattoo stickers. The latest from the Raymond Group is the launch of ‘Raymond Finely Crafted Garments’ and ‘Neckties & More’. While ‘Raymond Finely Crafted Garments’ offers top of the line fabrics to the complete man, ‘Neckties & More’ adds flair to a man’s outfit through other accessories like ties, tie-pins, belts, cufflinks and bags. Raymond with its fine offerings and consistent personality based advertising has made a place for itself in the Indian market. What remains to be seen is whether ‘The Complete Man’ will be able to tailor himself according to the demands of the new generation without compromising on his values.


specials | updates

BRAND ADVERTISEMENTS Taproot's first Airtel TVC now on air Airtel has recently launched a new TVC ‘'Har Ek Friend Zaroori Hota Hai' which is created by Ad agency ‘Taproot’. The Advertisement targets the youth focusing on the theme of friendship. The TVC was specifically aimed at the youth audience considering that at their age, the youth are more attached to their friends than the family and also since the youth are the early adopters of latest technology and high end devices. Airtel aims to leverage this fact considering that it is coming up with countrywide launch of 3G services and other communication services. Extensive market research was done with youth in multiple cities before arriving at the concept.

Pizza Hut TVC goes back in time to reveal new menu Pizza Hut has launched a new TVC which tries to shrug off an outmoded perception that the restaurant solely sells pizza. The TVC takes us back to the 1930s and the ad begins with four friends arriving at Pizza Hut. The Ad shows the four characters as wearing black and white clothes representing the wrong past perception that they were having. As the friends see a variety of food on the menu, they morph back from the 1930s to the modern world emphasizing that now they had the right idea about Pizza Hut. The campaign will be promoted using 360 degree marketing campaign combining television, social, and digital media.

BBH India creates tongue in cheek ad for Vaseline Vaseline has launched a new TVC trying to leverage the recent controversy in which former England Michael Vaughan had accused Indian Batsmen VVS Laxman of applying Vaseline on the outside edge of bat. BBH India has created the teaser ad for Vaseline which lists out the different advantages of using Vaseline such as cracked heels, elbows etc. Further it also mentions that in no way Vaseline can be used for applying it to the outside edge of a bat. Vaseline saw this as a wonderful

markathon | august 2011

opportunity to market its product considering that the controversy had the whole world gauged to it. The Ad was published in leading publications of India as well as on social media such as Facebook etc.

Hero MotoCorp debuts ‘Hum Mein Hai Hero’ campaign Post its separation with Honda Limited, Hero MotorCorp has launched a new TVC to establish its new identity. The new campaign is created by Law & Kenneth and the music is created by AR Rahman. The campaign was launched on Independence Day featuring a theme song called “Hum Mein Hai Hero”. The TVC tries to strike an emotional chord with the Indian Audience by featuring individuals who have relentless spirit and enthusiasm in them which makes me a “Hero”. The film features certain individuals such as a person determined to climb a mountain despite exhaustion, gymnast representing India at International level emphasizing the relentless spirit that Indians have within themselves. The campaign is being run in all leading newspapers and outdoor media publications in all languages.

UTV Stars launches new brand campaign 'Touch Feel Believe' UTV Stars new brand campaign “Touch Feel Believe” has been created and conceptualised by Taproot India. The main drive behind the campaign is to increase the viewership base of the channel. Considering the glamorous positioning of the channel, the TVC is based on the idea that knowing your Bollywood stars up, close and personal is experiential. The TVC tries to bring alive the magical moment for a fan when he comes up close and personal with its favourite Bollywood Superstar. The campaign is a 360- degree one engaging television, print, radio, internet, Billboards etc. and the logo packaging has been done by ‘Thank You’, a Denmarkbased agency.


markathon | august 2011

specials | updates



Spikes Asia launches Innovasia

Network18 ties up with Avani TV for live business news in cars

Spikes Asia has introduced Innovasia, a new technology zone showcasing latest technologies emerging from Asia. This technology zone will provide delegates opportunity to talk with the people behind these technological innovations and will include exhibitors such as Microsoft, HTC, LG, Netville etc. Innovasia is an important step ahead in technology collaborations considering the impact of technology advancements on Brand communications in today’s digital world.

Dulux launches new global brand identity in India AkzoNobel has launched a new brand identity for its consumer paint “Dulux” as part of its strategy to reinforce its market position and aggressively grow its market share. India is amongst the first global markets to adopt this new brand identity. The identity has been designed by UK based design agency design Bridge and features a human figure and a colour flourish which will appear on all the product packs. This new identity is being seen as an attempt to reemphasize its colour leadership amongst all the other competitors.

Vodafone launches ‘Vodafone Race to Fame’ Vodafone Essar has launched contest ‘Vodafone Race to Fame-Life in the fast lane’. The winners of the contest would get once a life time opportunity to get up close and personal with the Vodafone McLaren Mercedes Team. Vodafone aims to leverage this global association to give the Indian customers an exhilarating experience as well as increase its brand recognition in these testing times of immense competitiveness in the Telecom space.

In a bid to maintain its leadership in ‘Out of Home’ TV viewing, CNBC TV-18 has entered into a partnership with Avani TV to launch ‘Live CNBC-TV 18’ in vehicles. To make this service available, customers need to invest in car kit provided by Avani TV. This service provides access to Live TV, movies, internet radio, Youtube etc. Considering the channel’s philosophy of providing news 24*7, this partnership would definitely prove to be of strategic advantage to Network18. At present, the product would be available in 15 major cities across India and would soon be extended to other Tier-II and Tier-III cities as well.

BBC sells its stake to UK-based private equity firm Exponent BBC Worldwide has sold its consumer magazines division to UK based private equity firm Exponent. BBC expects to raise about $200 Million through the deal. BBC had planned the move to focus better on its core competencies. According to BBC, the transaction would bring about focus and degree of investment that BBC worldwide alone cannot provide. BBC believes that the deal puts it in a strong position to meet the impending challenges and explore the opportunities that exist in this rapidly changing market.

Philips signs on Shankar-Ehsaan-Loy as brand ambassadors Philips has signed on musician trio Shankar Ehsaan Loy as brand ambassadors for its lifestyle entertainment category. According to Philips, they were a perfect fit since they embodied Philips Lifestyle entertainment values of authenticity, originality, passion and creativity. Philips believes that the association would help strengthen its connect with the target audience considering the huge fan following that the musician trio command.


markathon | august 2011

specials | updates

BRAND RELAUNCH ‘Lokmat Samachar’ revamps itself

navigate. Lokmat Media had also created a campaign ‘Utsah, Urja and Umang’ to communicate the new brand identity to the readers.

Lokmat Media rolled out a new look for its Hindi daily, Lokmat Samachar on 15th August 2011 across five cities in Maharashtra. The new look was an endeavour to suit the product to the changing needs and expectations of the readers. The new Lokmat Samachar has a contemporary and elegant style which makes it easy to

Articles are invited “Best Article”: Chetna Sharma, Madhukar Anand |IIM K They receive a cash prize of Rs. 1000 & a letter of appreciation. We are inviting articles from all the B-schools of India. The articles can be specific to the regular sections of Markathon which includes: • Perspective: Articles related to development of latest trends in marketing arena. • Productolysis: Analysis of a product from the point of view of marketing. • Strategic Analysis: A complete analysis of the marketing strategy of any company or an event. • International Column: Articles covering latest marketing trends, innovative practices, branding strategies etc. in the global perspective. Apart from above, out of the box views related to marketing are also welcome. The best entry will receive a letter of appreciation and a cash prize of Rs 1000/-. The format of the file should be MS Word doc/docx. We’re inviting photographs of interesting promotional events/advertisements/hoardings/banners etc. you might have come across in your daily life for our new section “The 4th P”. Send your self-clicked photographs in JPEG format only. The last date of receiving all entries is 16th September 2011. Please send your entries marked as <ARTICLE NAME>_<SENDERS’ NAMES>_<INSTITUTE> to


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IIM Shillong Markathon August 2011  

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