Let me start with an anecdote once told to me by an Indian marketing guru. The country is Brazil. Product – tissue paper used in toilets. The association of tissue paper manufacturers of Brazil was staring at a problem. After a few years of rapid growth, the market was slowing down – so much that the industry was stagnating for the last few years and was facing negative growth in current years. After a lot of brainstorming, they decided to appoint a young Stanford MBA to solve their problem. The young graduate joined, and immediately decided to run a market research. The objective was to understand the cause of stagnation in the industry. The young MBA understood that the answer is camouflaged somewhere in consumer behavior. His research showed that the favorite habit of Brazilians was to read comics while using the toilet. So, his suggestion to the association was to print comics on tissue paper. The association accepted his recommendation and the industry immediately started growing, as consumption of tissue paper went through the roof.
This is just one example, among many, that shows how marketing has been instrumental in turning around the fortunes of organizations.
Now let us take a look at another marketing strategy, closer to home. India was liberalized (economic) in 1991. The buzz in the western world, faced with slowing growth, was the immense potential of the Indian middle class. According to their estimates, India had more than 500 million middle class people, which was double of what United States had at that point in time. So, there was a beeline for foreign brands to enter India and exploit the huge potential of the middle class here. One of the brands was Ray-Ban. They built a factory and went aggressively in marketing and selling their brand. Expectations and enthusiasm was sky high. Within a few short years, expectation gave way to despair. The numbers realized fell far short of expectations. As usual, trouble erupted and heads rolled. But, the core question remained – why? And, where did we go wrong? Ray-Ban went through its marketing effort in copybook style. They employed the most modern techniques of marketing – in a way; they were pioneers in some areas of modern marketing techniques in India. Root cause analysis showed that the reason was very simple, something which was common knowledge of every executive in the organization. The reason is that of wrong pricing. The market was just not ready to accept sunglasses for upwards of rupees fifteen hundred a piece. The headquarters in Rochester (USA) failed to apprehend that middle class in USA and that in India were very different in their purchasing power capacity. Fifty dollars were equivalent to fifteen hundred rupees, but in purchasing power parity and also in terms of consumer behavior, they were widely different. The result: Ray-Ban was a big failure in India and had to be sold off.
This is just one example where marketing mistakes and lack of consumer insight virtually ruins the potential of a brand and brings in the decline of a venerable organization.
The real life anecdotes serve only one purpose: the importance of marketing in today’s organizations. This comes at a time when questions are being raised from many corners about the importance and efficiency of marketing. Marketing has been the favorite whipping boy of financial whiz kids for a long time. Finance views marketing as a cost center, whose ROI is a question mark? I recently attended a conference where one domestic consumer company claimed that they have been immensely successful in the Indian market without any effort on brand building. They emphasized the importance of distribution and good product quality. I guess these questions will remain for some time to come. However, as the examples above demonstrate, there is no going back on the belief that what separates the men from the boys in the fiercely competitive market place, is marketing.
We all know that there are many facets of marketing and employing the right marketing mix is of paramount importance. In some markets, product quality and brand building may be the only solution, where as in other markets, distribution is of significant importance. Whichever factors are employed, consumer insight will remain the key to success or failure of organizations across the globe.
Author: Rahul Gupta Choudhury
Mr. Rahul G. Choudhury is currently an Associate Professor – Marketing at IFIM B-School, Bangalore. His fields of expertise include Marketing Management, Marketing Strategy, Sales and Distribution and Business Research. He has over 15 years of corporate work experience and 9 years of academic experience.