India is like an uncaged tiger now: Kotler

05 september 2006

Dr Philip Kotler, the marketing management guru was here in India recently. He networked and also launched an Asian edition of his marketing Bible 'Marketing Management'. In a freewheeling discussion with Founder of Great Lakes Institute of Management in Chennai, Dr. Bala Balachandran, Managing Director of Pantaloon Retail, Kishore Biyani and Managing Director of Titan Industries, Bhaskar Bhat, he tells them what makes brands stand out in a consumer's memory.

Excerpts from an interview given to CNBC-TV18

Q: In the first edition of marketing management, did you even think at that point how much the world would have changed in 2006?

Kotler: I was aware the world was changing continuously and people who forget that are going to be in trouble. But in 1967, I was interested in doing a better job for those people, who had marketing responsibilities to make better decisions. I don't think our textbooks at that time provided guidance because they were basically descriptive, they were not decision oriented.

Q: What do you think is the most significant change that the marketing function has had to confront over these 30 odd years or so?

Kotler: Two things. One is to move from mass marketing to a very focused marketing. We've even moved down from mass to segments to niches to each individual customer. The second big changed is a shift from transactions. When I wrote my 1967 book, it was all about how to make a sale and it didn't matter whether you kept the customer. Today, we can't do that and it is all about building a relationship and in fact it is moving to a third stage, which is to build a co-partnership with the customer, we called that co-creating value with the customer.

Q: Customer retention and loyalty - is that perhaps the key task for the head of a company?

Bhat: Over the last 20 years, we have seen it change so significantly. I think it is both. First of all, there is so much under-penetration in most categories in India, leave aside the categories we are in. That new customer acquisition and retaining old customers are equally important because there is so much under-penetration and it is not just retaining through loyalty programmes. I think the loyalty programmes that we have seen are on one side. It is what you do at the point of interaction and it is about customer affection, which is a big challenge and I have seen that changed so significantly over the years. So, in short, customer acquisition as well as customer retention - both are important in the Indian context.

Q: You have said in past that it's the customer who is giving you the ideas?

Biyani: Absolutely. We did not look at transactions. It is all about once you acquire a customer, he has to come into your store at least 12-18 times a year and how do we keep on increasing the ticket size and build on emotional relationship with him. Only because of that emotional relationship, the loyalty will come in. I think the emotional, empathy and the relationship which one builds with a customer is what is going to drive the loyalty.

Q: Do you think the companies are talking enough to the customers?

Kotler: First of all, there shouldn't be talking, there should be listening to the customers. In fact, there is a method called spin method for all salesman to be trained in, which really starts with having two ears and one mouth that's because you have to listen twice as much as you speak. But many companies unfortunately, used it as a kind of a statement that they are customer-oriented and all that and yet there was no difference between two or three entities in the market.

Take a bunch of banks - they are all customer-oriented but the real problem is to try to figure out how to brand yourself. It would mean something special to the kinds of customers you really want. I agree that we don't want a lot of customers and in fact we are going to do a good job of dissatisfying them, by claiming that we can serve them! So, we have to choose our customers and then give them such a service that they may say it's a wow service. Some of us think we must put our customers into a state of delight, astonishment, maybe even ecstasy.

Q: In your visit to India this year, you have met with a cross-section of the captains of the industry, what is the key concern that they are articulating to you, where their business is concerned?

Kotler: I have not seen concerns so much as just energy and enthusiasm here. We had a tipping point or what I prefer to called a takeoff in India. When I would come to India earlier, I would always say, you are acting like a caged tiger, let's open the cage and get out, you have a lot to offer - now it has happened. It started in the BPO sector and you have some great firms and they are known to business-people around the world.

In fact, they are just delighted with the choices they have between such great suppliers of business processing outsourcing. What's next from the development of India point of view? Further what are the other industries that are going to take off? Who are the next winners? We have to do more in the agricultural and textile sector. I have notice that India doesn't have brands that are global yet.

Q: What's your understanding of Indian brand marketing vis-a-vis global practices?

Bhat: Actually, as early as 1992, we chose to go overseas with branded products, Titan Watches. The problem really was with the customer in Western Europe, not so much in the Middle East and the Far East. We have done extremely well in the Middle East and the Far East. I think you are well aware that, Swiss and Japanese watches are known for technology and India was not known for engineering and technology, especially precision engineering.

Despite our good designs, despite very good pricing, excellent advertising and good distribution, it took us a while to establish the brand. But we have stayed with that philosophy, that we must take our brand overseas and are now very successful in the rest of the markets. So, initially we needed some India-friendly kind of markets. The country of origin, I think that paradigm has changed now. We are finding it increasingly easy thanks to the IT companies, pharmaceutical companies, our own knowledge workers working overseas.

Q: The head of a company called Mahindra & Mahindra was telling us that when they advertised tractors abroad in the USA, people asked why should we want to buy tractors made in India because we have got the big farms and the big tractors. But he said, they are smart tractors, they come from the country where the people are smart!

Kotler: That is a very good branding idea because Indian people are well educated and very smart and everyone knows that.

Bala: You can also embed a smart-chip if you want to have a customised kind of a product - that and this particular seat can be adjusted to whoever is sitting on the tractor, whether he is a lefthander or a right-hander - all those things can be programmed in. So, it is not only a tractor, it is embedded manufacturing. I think you are right, we should market smartness, put the 'smart' word upfront - just like Swiss cheese or German engineering, let us say 'Smart India'.

Bhat: In fact, Dr Kotler there is one idea which actually Kishore (Biyani) was talking about, that there are a lot of home grown brand categories in India, which is in a way is embedded in the minds of Indian consumers ? like Lucknowi kurtas

Biyani: It is embedded from the point of origin. They are big brands in India and all women identify with that kind of brand.

Q: Is that an opportunity that you think people are missing out?

Kotler: Some people say it's so expensive to brand because you are have to buy mass advertising, which is expensive. But many products make it without any of that because the word-of-mouth travels when it's really something new and something good, and so you can create a little buzz and all that. Don't worry in trying to build strong awareness of what you have got at too great a cost, because it can be done at lower cost as well.