[July 22, 2006] Shoppers' Stop Tweet (Financial Express Via Thomson Dialog NewsEdge) Cajole consumers, don't try to buy them Indian consumers aren't any less loyal than they were before. The difference is that they are now discerning Alokananda Chakraborty Time was, not so long ago, producers ruled the roost. The consumer was left hankering for the next innovation, the next new soap or washing powder, or the next big thing in technology. But that was then. Today there are more products than consumers, more niches than you can even imagine; and the producer/marketer is left splitting his hair to find new ways to reach out to consumers or scrounging around in search of that magic strategy to sell the wares. Want proof? A decade back, Bisleri was the only packaged water we knew of. Naturally then, we were very loyal to it. Now most of us still ask for Bisleri and accept any of the half-a-dozen brands in that category. In other words, the first casualty in the era of choice has been brand loyalty. Mind you, it's easy to label the consumer promiscuous. But if you to look at it carefully, you'll realise that the consumers have simply moved up the ladder - from being driven by price and be mesmerised by brandnames to being what many marketers call "value maximisers". At times, they are repertoire consumers - using a number of brands at the same time. The high-end Samsung plasma TV for the living room and a 14-inch Onida Igo for the bedroom, for example. No justification sought. None given. This transition, however, hasn't happened overnight - it's come in waves. It wasn't a product of the '90s - ask your neighbourhood vegetable vendor about the "loyalty" of middle-class housewives and you immediately sense that even in the most mundane markets, customers have traditionally looked for value and never baulked from experimenting - but it sort of skyrocketed in that decade. Any category, where the supply has risen dramatically, where service standards are poor, products and services relatively undifferentiated, consumers are beginning to flirt more. Perhaps, it is more pronounced in technology markets such as automobiles and mobile handsets etc, where product innovation plays a major role. Low-risk categories include foods and beverages - your morning cuppa is firmly ensconced, isn't it? - and certain high involvement personal care categories such as toothpastes and shampoos. Ultimately it is also a factor of demand and supply. Where consumers have choice, they often exercise it. There is nothing surprising about that. In the past, choice was limited, whether in cars, televisions, banks, TV stations or even telephony services. Over the last decade, especially after the opening up of the Indian economy, that has changed. Marketers misread the consumer behaviour arising out of the lack of choice in the past as loyalty. Now that consumers have choice and are bold enough to try out new things, many have started getting upset and perhaps call that promiscuity. In a way, this approach betrays the marketer's fear or loss of control. This insecurity, in part, stems from the way marketers have traditionally dealt with consumers. "Marketers don't think twice before launching products that are me-too, use similar sounding communication messages as their competitors, do not bother differentiating the brand and the experience it delivers to the consumers. Why should consumers give a d*** before switching brands?" asks Ravi Kiran, CEO, South Asia, Starcom MediaVest Group. The fact is the market benefits from the so-called consumer profligacy, points out Harish Bijoor, CEO, Harish Bijoor Consults. "Gone are the days of assuming the consumer to be hooked once a whole lot of repeat purchases kept happening. Today, the marketer needs to be on his toes. This is good for marketing as it calls for a very proactive marketing environment rather than the old reactive environment which all of us have been through." Agrees Jairaj Jatar, research director and head of Synovate Loyalty (customer satisfaction division of market research firm Synovate): "On the whole, such behaviour on part of the consumer is a sign of the dynamic character of the marketplace. It shows that customers are looking for alternatives. This is the bedrock for product and market innovation." But can customer loyalty be bought? What explains the promos and bonus offers flying thick and fast? "Customers can only be cajoled, not bought," says Jatar. Marketers must ensure that the "value-added" that is being provided is really relevant to the changing needs of customers. The cornerstone for "buying" loyalty is to understand the emotional triggers that feed consumerism and shopping behaviour. So let's face it. Empowered by technology and fuelled by the innate human tendency to be experimentative, consumers today have the control and they are exercising it. That's the lesson marketers need to learn from it. When the consumer brand switching behaviour appears rather random and illogical', marketers need to reflect on their own mindset, their tools and tricks. Are they getting a little rusted? In journalism, we say one is as good as one's last story. In a world where consumers are less tolerant of mediocrity and are not deprived of choice, the marketer/seller is only as good as yesterday's brand or service experience. It's as simple as that. Change with continuity Loyalty is won by the brand's ability to identify trends and grow with the consumer Sulekha Nair Fickle-minded Rohit Kumar, a BPO employee, doesn't hesistate when it comes to trying out new brands. From the latest jeans to fragrances, Kumar has used them all. But yet, when it comes to something as ubiquitous as a toothpaste, he can't resist the taste of plain old Colgate the first thing in the morning. "I have grown up using Colgate," says Kumar. "It's been a habit. It is also a childhood thing. I still remember the first time mom squeezed it on a toothbrush and brushed my teeth. That's a dear memory. I'd rather not disturb that by using any other brand. At least not with my toothpaste." In these days of multiple brands and mind-boggling products, when it is considered hip to be seen with the latest, does something like brand loyalty' exist? A Mahendran, managing director, Godrej Sara Lee Ltd, is convinced that brand loyalty still exists. "When a consumer opts for a product, appreciates the innovation, that is a proof in itself of his loyalty towards the brand. Another prominent reason in terms of brand loyalty is with regards to the values the brand communicates. The credit also goes to the distribution of the product, making it available as close as possible to the consumer." These factors then make the brand a generic word for that category. But why is it then that certain brands have a loyalty edge that eludes others in the market? And what exactly constitutes consumer loyalty? R Chandra Seker, category head, Marico Ltd, says, "Consumer loyalty is won by the ability of a brand to identify changing trends and grow with the consumer. For instance, Saffola has had a loyal consumer following because of its strong brand proposition and also because it has constantly kept itself updated with the changing consumer needs." It's the functionality principle that works for most consumers when they plump for a brand, especially, when it relates to electronic gadgets. Says Saket Ranade, a 32-year-old lecturer, "I use a Nokia mobile. Even when I upgrade the model, I still buy a Nokia simply because it is a widely used product and is user-friendly. The clincher for me is that its charger is available whenever I need it." Yet, some experts opine that brand loyalty has changed over the years and is even losing its old meaning. Says Sunil Alagh, chairman, SKA Advisors, "Loyalty today is different. A decade ago, trust was paramount. Today, any brand that delivers a surplus on its promise, can command what is called loyalty' - which is truly sustainable." Avers Dr Meera Kaushik, chairperson, Quantum Market Research Pvt Ltd, a qualitative research company, "Today's consumer is a smart shopper. He goes by the experiential value. For instance, if a consumer goes to a cosmetic counter and the assistant there is helpful, then perhaps that could be a deciding factor for his loyalty' to the brand. How a product fits into a consumer's lifestyle is very difficult to replicate. When a consumer says I like this product as it stimulates me', the stimulating' factor becomes a difficult component to replicate. It then becomes an experiential thing. That is loyalty'." Beyond the happy hour rush A freebie helps in short-term, but don't hurt your long-term goals Sudipta Datta CALL it the Great Indian Loot. On the way to the Phoenix High Street Mall in Mumbai's erstwhile mill district (where everyone from McDonald's to Marks & Spencer are stationed) are a row of shops that sell branded stuff, from shirts to shoes, at huge discounts, with freebies. We are spoilt for choice and companies are doing everything and more to lure us. Yet there's no guarantee that the consumer will stick to the brand, whatever the bribe (remember Big Bazaar's sabse sasta din' offer?). A friend, longing to buy an Onkyo music system settled for Bose when it offered a music system free with its home theatre system. So does it work, and in the long-term? Says Jagdeep Kapoor, managing director, Samsika Marketing Consultants, "Boosters are a very powerful weapon, to be used judiciously. If any brand is offering a scheme throughout the year, it smells of trouble." Harish Bijoor, CEO, Harish Bijoor Consults, adds that while bribing doesn't take the brand very far, gifts and freebies have their value in "early-development" markets. For example, in the early days of detergents, bribing the consumer with a freebie ensured trial for a product that was not really a mass-market product. But, says Bijoor, as one enters the "developing" market phase, these consumer-bribes work less and less. In developed markets, lures don't work. "Imagine getting a free thermos on the purchase of a Swarovski crystal!" He says that the marketer must make wise choices from his menu of consumer bribes. "We have to give consumers more and more reasons to buy our brand and consistent quality is one of the bedrocks for loyalty," points out Vinita Bali, managing director, Britannia. "The consumer is value-conscious, not just price conscious. There has to be intrinsic value or distinctiveness in the offering. When that doesn't happen, value tends to get eroded and discounts become the norm.'' "We have to give the customer more than s(he) is expecting,'' says Neeti Chopra, marketing head of Rs 400 crore Trent, which owns Westside. "Besides loyalty programmes, we find innovative ways to delight the customer. Whether it is a Beyblade competition for the kids, 3-minute free shopping for winners of a lucky draw, free movie tickets for a year for a contest . the idea is for the customer to expect the unexpected. There is a lot of delight in discovery, which has customers coming back for more." Discounts help always, but in relevant formats, says Chopra. In fact, in lifestyle products, say experts, continuous discounts and markdowns reduce the equity of the product and most companies have realised that these do not serve as a lure. Godrej consumer products' H K Press observes that whatever the push, it's important to be true to the brand's core values. "Discounts and offers can be used in a tactical manner to achieve short term objectives such as trials but they cannot form a basis for the existence of the brand."As Bijoor puts it: "Stop thinking short-term. You are hurting long-term equity." Diary of a bargainaholic Shopping is not as easy as you thought, insists Alokananda ChakrabortyYOU are a shopaholic," my colleague barked into the cell phone. He was trying to palaver me into writing an article for him one Saturday afternoon while I was at a seconds tile outlet. I am a bargainaholic. Bargain shopping is my weekend routine (see, I didn't say pastime or habitthis is not something I look forward to). Doing grocery, home linen, fruits and veggies, spotting the stuff my in-laws and parents never thought they would need but now swear they can't do without at eyebrow-raising prices are what I consider my strong suit. And I call myself a larder lout. I buy in bulk, shove them in my kitchen larder and consider the mushrooming supermarkets and malls as one of my biggest blessings. Believe you me, they tuck away the best bargains in their nooks and crannies. But then you have to do some advance planning and a lot of scanning of weekend papers with a hawk eye. There are enough offers - one-offs and regular (festival/end-of-season types) - to test your planning skills. Take the Big Bazaar raddi (scrap) offer I came across earlier this year. Big Bazaar has something it calls the Bring anything old and take something new' deal. It begun a few years back, but now they say it's an annual affair across most of its outlets. The company offers four times the prices for raddi items like newspapers, plastic items (including toilet seats!) than the local kabadiwala. Suppose you sell your old newspapers for Rs 4/kg at the local kabadiwala. At Big Bazaar you get Rs 16, but not in cash - in the form of vouchers. A consumer can redeem these vouchers when she makes a purchase four times the value of the gift coupon (in this case Rs 64). During the offer period the coupon can be redeemed against most things sold at Big Bazaar except food items. I picked up five very attractive sets of bed-sheets and bed-covers at Rs 399 a set in February for all the raddi I disposed of. But first questions first: Which supermarket/department store should you shop at to get the most for your buck? Instead of hopping from one store to the next, trying to extract the absolute best price. I try to save time and money by adopting one as my "home base". Mind you, my home base isn't the first store I come across. My supermarket has to pass through a rigorous review process. First and foremost, it has to stock what I want to buy. Second, it has to be conveniently located. Third, the store should have a good farm (eggs, fruits and vegetable) and diary (milk, ghee, paneer) produce section. Last but not the least, it should have store labels (as a general rule, I've found most store brands to be of great quality and are priced less than local/national brands) and offer a good price (like 5-kg pack of rice free on the purchase of any 5-kg pack of basmati rice priced upwards of Rs 300 in other words, Rs30/kg!). This is like 95% of the job done. Reserve the balance 5% of your negotiation skills to deal with colleagues who browbeat you into working on your off day. Talking technology CRM is important for success, but the key is to use the data intelligentlyJyoti Verma MARRIAGE changed everything for 24-year-old Payal Sharma, a Delhi-based website designer, including, of course, her last name. However, her penchant for buying clothes from a particular store didn't change. Old habits die hard, they say. Experts call this a classic case of great customer relationship management or CRM. "After hunting the entire market, I normally end up buying my saris and suit pieces from Nalli," she says. What makes her go back? "The moment you enter, a smile greets you. This is different from the artificial familiarity shown by most high-end outlets. Soft drinks follow soon. And the best part is that they know your likes and dislikes. Why then should I think of any other option," says Payal, remembering her last visit just before marriage. Clearly, more than the variety offered, it's also the atmosphere that keeps Payal going back, and buying. Department stores like Shoppers' Stop, Lifestyle and apparel majors like ITC Wills Lifestyle already boast of special swipe cards for customers who provide redeemable points for the purchases made on every visit. Every time you visit and present your mobile number, your points are adjusted automatically. Now Woodland is also planning to integrate its stores to offer these benefits. Says Harkirat Singh, managing director, Aero Club (Woodland), "We are taking some time off to link all our stores with each other so that we can put up a software that can help us get the details on CRM. We have set aside a budget for acquiring the software for the purpose and we expect the system to be in place within a year or two." While it makes sense to have a CRM-based programme for the apparel industry with high footfalls and everyday sales, auto majors are the new kids to give in to its lure. Maruti Udyog, for example, has joined hands with Citibank and Indian Oil to bring in a credit card-based loyalty programme to keep it customers within the brand umbrella. This despite the fact that the company is a leader in the Indian auto sector with over 5 million cars of the 9 million on Indian roads today. Explains Ravi Bhatia, general manager, sales support, Maruti: "At MUL, we have a five-year relationship with the customer. Once the car is sold to him, we support him with service, accessory buys, insurance and other schemes. After five years, comes the time of replacing the old car and buying a new one. So, if a customer goes for a new car after every five years, in the 40 years of the motoring life (beginning with 25 years to 65 years of a person's age), the same person will come to us and buy at least eight cars. Besides, the same customer goes and tells his friends and family about the brand, thus bringing in more customers." A loyal customer is very important for a car company, especially for Maruti whose customers run in millions. Building and retaining a customer is a daunting task for marketers. According to Gartner Research, the cost of acquiring new customers is 4-10 times greater than simply providing good service to existing customers. CRM provides an easy way to gauge customer expectations. But today, CRM can be effectively applied at various physical touch points where the brands engage the customers, and also when the customer surfs the web. In fact, the latter turns out to be economical and provides extensive data mining and data capturing opportunities. Online surveys that pop up are an extension of this philosophy. Sandeep M, a principal analyst at Juxt Consult, a Bangalore-based research firm, says, "Any B2C company with a customer relationship management system, be it toll-free number or the old-fashioned snail mail system, needs to migrate to web-based CRM simply because it is cost effective and fast. The entire history of the interaction can be archived and retrieved at any give point of time." A survey conducted by Juxt Consult last year revealed that most Indian companies score poorly on the online yardstick. For example, the turnaround time for replying to emails send by customers was too long to be of any good. Srikant Shastri, MD, Solutions Integrated Marketing, says even ground-level CRM needs improvement, "Few companies have been able to do a good job with the data collected on the theme on CRM. Most of the companies here are using this data just as a list or catalogue to inform the customers about the next sale at the stores or while launching a scheme or a new product. There is not that kind of intellectual usage of the information." India is still at an early stage of CRM implementation. But as they say, well begun is half done. [ Back To TMCnet.com's Homepage ]