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When FMCG becomes SMCG – The Indian Context

Brand Strategies for a Slowdown

By R.Sathyanarayanan

GDP growth not as expected….fiscal deficit widens…tax collections doesn’t fill the
kitty…though the monsoons are better…the Food corporation godowns are already
full…the recessionary trend can’t get any worse!

When the purchasing power take a beating…it’s a serious problem for the marketers of
Consumer durables and FMCG. When the FMCG becomes SLOW moving consumer
goods, what can be the winning strategy for the marketers? Here is the way…

Plug the holes:

It is the time for the company to find gaps and fill it with variants. Recession makes
people to look for more and brand loyalty becomes secondary. Economically viable
variant is a must to maintain consumption. Its time for tactical measures to spread the
product line in all ranges. Though, there is a fear of cannibalization, if it is not
cannibalized by your own brand, it will be damaged by that of your competitor. Which
one do you prefer? But, we have to keep in mind that this is only temporary. But, in third
world countries like India, where the growth-recession cycle is like a saw-tooth, care
must be taken to undertake this tactics with a broad vision and strategy for long term
growth. You should have more focused segments and clearly tailor made new products.
Once, the slow down goes, stick back to the power brands. After all, soldiers play more
roles only in the time of turmoil. They have no (or less) active business once there is
peace and tranquility.

Expand

Quite an unusual prescription! When there is a sluggish growth, it is imperative to expand


the market reach. Yes, there are more outflows of funds than inflow. But, to maintain
volume market share, the Columbus attitude has to be there. Who knows…you may even
discover new lands!! But, this is the time your bean counters become real misers and
tighten the pockets. Fight and win for expansion.

Appreciate with incentives

Customers become a rare commodity for your brand in a slow down. Increase your
promotions and incentives to lure them. The Indian market has become so bad that every
player, including the local brand player has become intelligent enough to come out with
some scheme or the other. As a great brand builder and with principles of strategic
marketing, you may have a tendency to give a stoic smile on the lesser mortals. It’s a trap
and do not ever dare to miss the race. Its time to be a Roman in Rome!!
It is the same time you have to be empathetic with the channel members. After all they
are also seriously affected with the recession bug. If you try to increase your bottom-line
by limiting his share, you are giving still more pressure to him. It’s important for you to
give him a helping hand for a long term benefit.

Give that extra energy

The most important part is managing your sales force. The poor chaps who normally gets
affected more in these times. As such there will be company pressure, the distributor non-
cooperation and the rejection at retail level. Everything will have an added negative effect
on the morale and it’s the job of the company to tune and prune. It is also the time the
budgets are squeezed and the sales men are asked to sell more for less. The company‘s
strategy must be clear and it should take cautious steps to improve the morale of the sales
force. Practically, it is the time companies turn a nelson’s eye to this problem and the
whole organization will look like a heated steam cooker!

The ad madness

When the principals suffer in a slow down, the more sufferers are the service people like
the advertising agencies. The whole atmosphere will be in a state of despondency and
definitely not a right time for the best ideas to come out. The normal mistake companies
do is to reduce the ad budget as a first casualty. All marketers know that there is nothing
like half-advertising and still we get into this trap. Yes, these measures are required when
the top line stagnates. But, the decision has to be judicious.

Ask the agencies to come out with cost effective innovative media. Reduce spend on
variety and put it on frequency. This is possible and after all necessity is the mother of
invention. Its time for you to take up below-the-line activities and be more focused. Now,
since there is no drastic cut, the melancholic mood will be erased and you are giving
fresh air for the creative minds.

Be a Power Pricer for categories

Take a pricing plank for your tactical brands. This is purely a recession prescription. In
slow down, price is the most important deciding factor. It does not mean drastic under
cutting. It is VALUE FOR MONEY and forgetting the premium. Irrespective of the
target group, VFM is the lifeboat in recessionary ship-wreck. The drastic undercutting
will lead to more problems as customers are more intelligent to compare and understand.

Stream line the Operations

When the market is good, marketers will be busy in increasing growth and targets. In
slow down, marketers will be in a melancholic mood and are busy in arresting the
plateauing of sales graph. Marketers should remember the military principle. War or
peace, the garrison is equipped with right resources with constant improvements. So, it is
an important task for the decision makers to concentrate on non-marketing aspects like
logistics, InfoTech etc. to streamline the operations and research to get ready for the
boom. You will be there with all armours once the boom period sets in. Then there will
be marketing wars!!

Identify Opportunities

Slowdown may not be common for all categories. But, the marketers have the mind block
of generalizing the slow down and get into the trap of line extension or product extension.
Majority fail to look across the category. For example, in the past three quarters, though
soaps, talcs etc faced a negative growth, niche areas of hair dyes and shampoos emerged
as growth areas. Like the yin-yang of Taoism, there will be growth in every de-growth!
One who finds the opportunity reaps the benefit. Some time, slow down may be a
blessing in disguise for some companies. Upon compulsions, some companies may be
forced to enter some new categories and either knowingly or unknowingly they may end
up having hit the jackpot with some niche brand winners!

Not the least

Though these prescriptions are time and again told and discussed in forums, people forget
to take a stock in recessionary times. This is like the curse of Karan in Indian Epic
Mahabaratha, where Sage Parasurama cursed Karan that he will forget the mantra of
Brahmastra at the most crucial juncture. The organizational pressure, tight financial
control and overall dull ness make the marketers to sulk and squeeze. But, marketers have
to be more focused just apply themselves. Then they can rejoice that the spring will not
be too far. Apart from the usual 4Ps, its all in the recessionary 3P’s, perception, planning
and plundering of the market to find growth out of de-growth.

(As far as possible, the author has tried to avoid giving examples. Because, it may some
time distract the reader from crucial issues and limit the conceptual thinking)

The Author is a former New Product Manager with Cholayil


Group and currently in consultancy and teaching assignments.
He is a Gold Medallist for Academic Excellence in Marketing
in MBA programme of Sri Chandrasekarendra Saraswati Viswa
Mahavidyalaya, India.