CASE STUDY
Brand Kingfisher : Creating a Lifestyle Brand
-- Lekha Ravi
Team Leader,
The Icfai Research Center,
Chennai.
The author can be reached at lkhravi@yahoo.co.in The United Breweries (UB) group today (2008) boasts a diverse portfolio of businesses - alcoholic beverages, life-sciences, engineering, aviation, agriculture, chemicals, information technology and leisure. The man behind this potent diversity is none other than India's flamboyant tycoon Vijay Mallya (Mallya). Mallya's association with the rich, trendy and the luxurious seems to have rubbed off on his brands. All through his glitzy forays into various fields, Mallya has fastidiously endorsed Brand `Kingfisher'. His entry into aviation with the glamorous launch of Kingfisher Airlines drew a lot of its brand equity from Mallya himself. Media reports often analyze how Mallya promotes the `Kingfisher' brand by associating it with lifestyle events like horse-racing, Formula 1 racing and prestigious launches. Reflecting on how he contributes enormously to it through his own flamboyant lifestyle, it is pertinent to probe into the prospects of Kingfisher's brand extension.
The Kingfisher brand has come to epitomize a lifestyle that encompasses some of the finest things in life and is today synonymous with delivering a premium experience.
- Vijay Mallya Brand Kingfisher
I am the brand ambassador; I am the `King of Good Times',said Mallya, the brainchild of Kingfisher brand launched in the year 1980. Reports say that Mallya, while working in Kolkata (Indian city in the eastern state of West Bengal), felt that none of the existing beer brands Black Label, Kalyani, etc., were stimulating. Mallya, wanting to create a vibrant brand, went back to Bangalore (Mallya's hometown), rummaged through archives and stumbled upon an old label with a picture of Kingfisher on it. That manifested the birth of the iconic brand Kingfisher (Exhibit I). At an impressionable young age of 28, Mallya had become the chairman of UB, following the demise of his father, Vittal Mallya in 1983. Young Mallya, who loved good living and was crazy after fast cars, discos and planes, was criticized by many as a `playboy'. In Mallya's own words, "My industry peers were in their 50's. I stuck out like a sore thumb." Many were sceptical about Mallya's stewardship. Mallya, however, in course of time, proved his cynics wrong. He endured the succession dilemma and guided his empire to unimagined heights. By 2008, UB was a multi-national conglomerate of over 60 companies with an annual turnover of over $1.2 bn.
Flamboyant CEOs have been known to endorse their brands from the front. Sir Richard Branson and Steve Jobs are two famous names that may be recalled in this context. Mallya, at the helm of UB, deems it right to lead his brand upfront by leveraging his multifaceted persona. Mallya astutely judged that his involvement with the rich and the trendy will eventually rub off on his brands (Exhibit I). His wealth is stretched across the globe. He has over 25 dwellings around the world including houses at Sausalito, Napa and Trump Plaza in New York, a castle in Scotland, and at Monte Carlo, apart from homes in every major city in India. His antique racing cars number more than 260 and are stored in 10 countries. He has two yachts in California and a few in India. Among them is the famed `Kalizma' - a 165-foot Edwardian yacht once owned by Richard Burton and Elizabeth Taylor and now based in the Mediterranean; and a 187-foot yacht in Australia. He also owns a Boeing 727 and a Gulf Stream jet. Mallya never loses an opportunity to lend his wealthy locations to garner publicity for his brands.
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Kingfisher is considered by many as a classic case of branding sensation which is expressed as iconic and is equated to the Virgin brand. If one were to ask a young Indian as to what `Kingfisher' is; the most likely answer would be Beer or Airline. Kingfisher from the UB group stable is the largest selling beer brand in India. Though UB is the market leader in India with a 40% market share, its flagship Kingfisher brand alone commands 25% market share. The brand's advertisements epitomize energy, youthfulness, enthusiasm and freedom, but with a touch of professionalism. Outside India, Kingfisher is well-known and is widely available in many European countries, especially those with a large Indian ethnic population like the UK. The Kingfisher beer brand has its presence in over 50 countries.
Vijay Mallya - The Spirit behind the Kingfisher Brand
Though touted as the most flamboyant face of India Inc., there is much more beyond the `liquor baron' tag that Vijay Mallya is anxious to shake off. It is unquestionable that Mallya was the Indian industrialist almost singly responsible for positioning Indian liquor on the global map. As an NRI investor, Mallya created waves in the Indian business community in the 1980s. In 1988, he bought Berger Paints with 100% funding by HSBC, divested it for significant value in 1996 and founded a software company in the US in 1993, which was subsequently listed on the NASDAQ in 1996. He also initiated the promotion and globalization of brands from the UB stable; in particular, Kingfisher and McDowell. The Indian beer brand, Kingfisher, was the first to foray into the international arena and made inroads into the British market, so much so, that industry analysts say that "beers from the Indian subcontinent are now firm favourites with British drinkers."
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Mallya cleverly manipulates his sporting interests and hobbies to further his brands' popularity. An avid sports enthusiast, Mallya has won several titles, and endorses and sponsors myriad sporting and cultural events. Renowned for his zest for good life, Mallya lives up to his `King of Good Times' moniker and is legendary for splurging his money in the public. He is seen as the epitome of a lavish lifestyle, with parties on luxury yachts and good living in general. According to Mallya, "No point in being in denial, I like to enjoy myself. It took time for the media to come to terms with that. They started off calling me a playboy, and since then have used every adjective except frivolous. The latest trend is to compare me with Richard Branson, but I am not apologetic about how I live. I don't live off other people's money."
Mallya made his presence felt in various other arenas too. He revived the Indian Derby scene. His horses have performed feats in nearly 200 Classics and he is the only Indian Derby winner for more than four times. Mallya has however stayed absolutely clear from backing any horse. The event is significantly titled Kingfisher Derby. In 2001, in an unusual venture, UB Group acquired 51% stake in an ailing film magazine Cine Blitz, from RIFA Publications. Following this, Mallya made major forays into the entertainment arena. Mallya also hosted popular events like concerts by Sir Elton John and the Rolling Stones. Around the same period, he toyed with film production - his first film being directed by popular director Pamela Roux. All these forays gave Mallya a platform to popularize his various brands.
While theorists opine that `marketing' is a serious business, Mallya counters that marketing is a CEO's business. According to him, when a CEO takes interest in the brand and virtually promotes the brand on every occasion, there is so much equity generated for the brand. He always felt that the primary task for any CEO is to be passionate about the brand. He takes the brand with him everywhere and his passion for the brand is fittingly referred to as the major factor behind the rise of the Kingfisher brand. The brand is so positioned that it directly talks to people who are easy going and chilled out; who are always willing to take a break and party with friends and at the same time are very professional and successful. Kingfisher's is a unique marketing story because it prospered in a setting where liquor/beer advertising was prohibited by the Indian government. Mallya personally built the brand, circumventing the interdict on promotion. Marketing gurus consider Kingfisher as a brand that enjoyed a distinctive marketing triumph, as it survived the onslaught of surrogate advertising critics.
The Issue of Surrogate Advertising
"Considering the ill effects of cigarette, alcohol and other intoxicants, the government has banned advertisements of these products in the media. As a reaction, the liquor and tobacco majors have sought other ways of advertising their products. They have introduced various other products with the same brand name and carry out heavy advertising, so that consumers do not forget their liquor brands," says the Indian Union Health minister, Anbumani Ramadoss. The Union Health Ministry of India took a stern view of unbridled surrogate advertising by the alcohol and cigarette industry in India and undertook surveillance of the same with the help of the Information & Broadcasting (I&B) Ministry. In an interview in January 2001 to DD National (the Government owned TV channel), the I&B Minister Sushma Swaraj clarified what kind of surrogate advertising will be allowed on television channels. She said, "Where a product is being manufactured and a brand has been built around it by the liquor company, advertising for that product will not be considered as surrogate advertising and will be permitted. Where the product is not being manufactured in substantial quantities, it will be seen as surrogate advertising and will be disallowed." The Minister quoted the example of the UB group's Kingfisher beer which also retails Kingfisher mineral water and said, "Advertising for Kingfisher will be allowed. However, advertising for McDowell's cricket bats and balls will be perceived as surrogate advertising."
According to critics of surrogate advertising, Vijay Mallya ventured into other businesses under the name of Kingfisher to covertly promote his beer brand. Some even believe that the very concept of having an airline was to promote Kingfisher beer. There have been consistent protestations against surrogate advertising and the government has imposed curbs on such ads on TV. The move has worried broadcasters and is likely to spell a loss of INR 250 cr or more in TV ad spends. Many peeved broadcasters however demand the definition of surrogate advertising. They questioned, "How do you implement such bans or disprove legitimate brand extension? Does this mean Kingfisher Airlines doesn't exist and can't advertise? Or that there is no Wills Lifestyle stores? And will Sony not be allowed to air Indian Premier League (IPL) matches featuring Royal Challengers (named after Royal Challenge, a liquor brand)?" Amidst such developments, in 2003-04, Mallya had the brand logo undergo a makeover with the Kingfisher bird flying (Annexure I). According to Mallya, the new logo reflects the brand's vision to scale new heights and foray into fresh expanse.
Kingfisher's Brand Extension
Mallya's significant extension of the Kingfisher brand was his incursion into the aviation industry. The year 2005 saw the UB Group entering the airline business with its Kingfisher Airlines. Although Mallya's original foray into airlines with the launch of UB Air in 1990 did not take off, Mallya decided to capitalize on the striking growth opportunities in the Indian airline industry through a second attempt. Noting the phenomenal rise in per capita income among the burgeoning Indian middle class, Mallya did some quick thinking. He engaged IMRB to assess a potential slot in the aviation sector. The result recommended that there was a need for a trendy, entertaining and a premium product. He decided to make the most of the notable status of Kingfisher and focus on young business travelers. By leveraging the brand equity of Kingfisher and the marketing skills of The UB Group, Kingfisher Airlines Limited (KAL) was launched.
"We are building a sustainable business model in which we cut costs where they can sensibly be cut, but we also offer a premium-class product to the growing wealthy Indian," says Mallya. Mallya gave the KAL launch wide publicity by scheduling it on his son's birthday on May 9, 2005 and throwing a lavish party. Mallya opted for the premium route with four flights a day with one brand new Airbus A-320 aircraft. "The aircraft and service will reflect the Kingfisher lifestyle imagery and credibility that has been built over the years," Mallya said. His competitively priced fares and quality service instantly helped attract customers. According to Mallya, Kingfisher offers full service at true value and delivers an unparalleled experience to the Indian air traveler. For the first time in India, Kingfisher Airlines offered world-class in-flight entertainment with audio-visual screens for every traveler. In addition, gourmet meals and cabin crew of international standards made up a unique `Kingfisher Class guest experience'. The `guest experience' included valet service at check-in, live in-flight satellite television, takeaway goody bags and "the prettiest air hostesses in the sky".
Though Mallya is at the helm of a multibillion dollar business empire, he sees his additional role as chairman and chief executive of Kingfisher Airlines as a vital responsibility. He micro-manages Kingfisher Airlines so persuasively that he not only monitors aircraft turnaround and load factor data, but also flies Kingfisher regularly to scrutinize service standards and is involved in practically everything from the choice of staff uniforms to interviewing would-be employees. Meticulous attention is paid to flight attendant interviews, with Mallya insisting the need to personally study every future employee who will have contact with a `guest' to warrant stringent quality continuance. According to Mallya, "But the airline, this is such a huge investment by UB and it's so damn visible. If there is one wrong move in Kingfisher Airlines it could spell disaster. I am aware of that. Once I am established and I have the reputation of having an absolutely fine airline, then I can put this on autopilot too. Until then, this is not something I take lightly." In fact, every time a Kingfisher flight takes off, the flight manager reports directly to Mallya via SMS about the time of flight, number of passengers, etc.
In 1996, Kingfisher took up worldwide sponsorship of the West Indies cricket team and Mallya was conscious to retain the stardom of Kingfisher throughout the series. The West Indies team was projected as a fun loving but thriving team, much akin to Kingfisher's image. The brand also cashed in on the popularity of Indian cricketers Ajay Jadeja and Sourav Ganguly for brand promotion during the 1996 World Cup. In contrast to brands like Pepsi, which focus only on cricket, Kingfisher promotes many sports including football, formula racing and rugby.
Kingfisher has been observed to possess a 360 degree approach to brand promotions utilizing all possible means to communicate with its target audience (Annexure II). Mallya sponsors many glittering lifestyle events under the brand name. Kingfisher beer is a widely known brand across the globe, and industry watchers credit Mallya with having single handedly changed the image of his beer brand from a commodity to a lifestyle brand. Kingfisher beer commands a lion's share of the beer market in India and is sold in over 52 countries. Capitalising on the popularity of the brand, UB launched Kingfisher Packaged Mineral Water in 1999. Kingfisher hosts some of the most colorful events of the fashion industry like the fashion awards, model hunt and the swimsuit calendar. The Kingfisher calendar which is very popular for its exclusivity has attained a cult status within a few years of its launch. In March 2007, the UB Group also conducted its first King-size Polo event in Mumbai under the Kingfisher banner. The show flaunted the popular brand by the debut of `Kingfisher First' Polo Team and a fashion show by popular designer Anna Singh and many others.
In 2007, NDTV, a popular Indian channel, joined hands with the Kingfisher brand in a first-of-its-kind media alliance for the promotion of a lifestyle channel called `NDTV Good Times'. The channel targets an audience comprising multi-ethnic, socially buoyant consumers who live in style and enjoy life to the hilt. The assorted shows offered by this channel, touch upon a wide range of inspirational lifestyle topics on health, fashion, food, travel, luxury and such others. Speaking on the occasion of the channel's launch, Dr. Prannoy Roy, Chairman, NDTV Ltd., said, "NDTV is proud to pioneer yet another step in Indian television history. Our new offering, NDTV Good Times, will leverage the NDTV Group's proven programming and broadcasting skills in partnership with the admirable lifestyle appeal of the Kingfisher brand. The strength of the Kingfisher brand combined with NDTV's depth will give our new lifestyle channel a distinct edge." To quote Vijay Mallya, "The NDTV Good Times channel would leverage from the editorial credibility and quality of the NDTV group and the strong lifestyle appeal of the Kingfisher brand and icon, to offer Indian viewers a world-class television entertainment experience."
In April 2008, with the launch of the DLF-IPL cricket, Kingfisher Airlines became the official umpire partner of the IPL for five years at INR 106 cr.Kingfisher sponsored all third umpire decisions during the 59 matches in the IPL during 2008. "Kingfisher Airlines has had a long association with a variety of sports at both the domestic and international levels including tennis, Formula 1, polo and now cricket. Their decision bears testimony to the fact that the DLF Indian Premier League is here to stay, and is set to carve out a distinct niche for itself in the international cricket calendar," said Lalit Modi, Chairman and Commissioner, DLF Indian Premier League. The agreement authorized Kingfisher branding on the umpires' uniforms and hats during the league matches and other opportunities around the property. Mallya declared that his five-year association with the DLF-IPL was further demonstration of his commitment to building the Kingfisher Airlines brand through sports.
Mallya had the foresight and vision to partner with a global sports event such as Toyota Formula 1 racing. Commenting on this, Mallya said "Of all the available sponsorship opportunities and platforms, Formula 1 is the most premium and the most visible one. This association will naturally enhance the image of Kingfisher Airlines and catapult it to a league of select and renowned international brands that typically support Formula 1 initiatives. The shared values of Kingfisher Airlines and Formula 1 racing - a dedication to innovation, delighting viewers and guests, and commitment to absolute excellence - are highly complementary." At the Grand Prix, the distinct `Fly Kingfisher' insignia - which is now a recognizable brand in India and outside, will feature prominently on the TF107 Formula 1 racing cars at events across the globe. It will also be emblazoned on the drivers' helmets and overalls, and the available corporate branding platform. John Howett, President, Toyota Motorsport said, "This partnership is exciting news, not just for Panasonic Toyota Racing, but for Formula 1 in general. We hope this partnership will strengthen Formula 1's position in India and bring Panasonic Toyota Racing to the people of India. We are grateful for the support of an ambitious and successful brand like Kingfisher Airlines and we will help them as they expand into an international operation."
Mallya is a classic example of how Asian CEOs can lead their brands by being the most vocal ambassadors of their brands to build and sustain brand equity. Mallya has ingeniously cashed in on the brand equity of his Kingfisher beer by using the same name and logo for his airlines and other lifestyle products and events (Annexure III). Kingfisher beer in India was the fourth biggest when he took over the company in 1983. At present, it is the runaway leader, with not less than 45% market share. He appears in Kingfisher's ads as the brand ambassador. Noted Indian journalist MJ Akbar, said, "The UB group must have done a thousand ad campaigns, but there has not been a campaign better than the life of Vijay Mallya.."
At the rear of all the glamour of swimsuits and fancy parties, one cannot make light of the sound strategies that have built Kingfisher into a super brand. Will the brand while maintaining international quality ensure that it is within the reach of the Indian consumer? Can the lifestyle image so painstakingly built survive in the long run?
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Celebrity Endorsements on Indian Television An Overview
-- Meenal Dhotre
Assistant Professor at VIM, Pune, Maharashtra.
The author can be reached at meenald_vim@yahoo.co.in
-- Sarang Bhola
Assistant Professor at KBPIMSR, Satara, Maharashtra.
The author can be reached at sarangbhola@gmail.com
Today many marketers are crazy about signing on popular celebrities to endorse their brands and are spending billions on them. This appears to be the easiest way of drawing consumers' attention, especially in the context of fierce competition in the consumer goods category, where there is a clutter of alternative brands and their advertisements, vying for consumer attention. This article takes a look at the conceptual background to the subject and delineates contemporary examples of celebrity endorsements on Indian television.
Testimonials by celebrities are below average in their ability to change brand preference. Viewers guess that the celebrity has been bought, and they are right. Viewers have a way of remembering the celebrity but forgetting the product.
– David Ogilvy on Advertising, 1983
Conceptual Background
In the context of marketing, celebrities come under the broad category of `reference groups.' A reference group is defined as an actual or imaginary individual or group which has significant relevance to a consumer's evaluations, aspirations or behavior. The presumed perspectives or values of the reference group are used by the consumer as the basis for his/her behavior.
Celebrities constitute a non-membership reference group. This is to mean that consumers do not belong to this group themselves, but it provides a standard of reference for their behavior. A single celebrity is considered to be an individual referent. Celebrities constitute a positive or associative reference group, as consumers normally find their values and behavior attractive, and look to them as role models. Celebrities can also be considered to be identification groups as consumers identify strongly with their behavior and try to incorporate the same in their own behavior.
Celebrities have a credibility influence on consumers, i.e., consumers tend to believe the source of influence as accurate and unbiased. They also have comparative influence which means that celebrities do not set or enforce any rules of behavior on the consumers, but serve as a standard to choose for comparison.
Depending on the context, celebrities can have informational, value-expressive or utilitarian influence; or even a combination of these. Informational influence refers to knowledge and expertise; value-expressive influence is about feelings and image; while utilitarian influence is based on one's own preference and experience. A celebrity can also be considered to be an opinion leader, especially when he/she commands informational influence.
The `expert', `executive and employee spokesperson', `spokes-character', `the common man' and `professional organization' are all forms of reference groups. However, on occasions, they can also play the role of celebrities.
Definition of Celebrity Endorsement
According to Friedman & Friedman (1979), a celebrity is an "individual who is known to the public for his/her achievements in areas other than that of the product class endorsed." Friedman & Freidman found empirical evidence that celebrity endorsers lead to greater believability, more favorable evaluation and more positive purchase intention in the case of products with significant psychological and/or social risk.
McCracken (1989) defined a celebrity endorser as "any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement."
Types of Celebrity Endorsements
The `endorsement' by a celebrity can take one of various forms.
A celebrity can provide a testimonial, where it is suggested that the celebrity should be a user of the product and endorses it based on his/her experience. An example of a current television commercial is the testimonial for Veet hair remover by Katrina Kaif, where she is mentioned by name and shows how she is confident of herself because of Veet. In the Reid & Taylor advertisement, Amitabh Bachchan talks about the merits of the suiting. Sachin Tendulkar had been endorsing Boost, nutritional supplement drink, stating – "Boost is the secret of my energy." Other examples of this genre are the television commercials for Garnier hair color (Simone Singh) and Himani Navratna Tel (Amitabh Bachchan). Testimonial may be considered to be an implicit mode of endorsement, where the message is "I use this product."
Alternatively, the celebrity could state or imply "I endorse this product" (explicit mode) or "You should use this product" (imperative mode). The most common situation, however, is that the celebrity merely plays the role of a character in the advertisement, just as any other model would. But there is much more to this. The celebrity is well-recognized by the audience and is associated with certain attributes and characteristics, which are meant to strengthen the communication by way of brand-celebrity fit. Further, the celebrity is often engaged in the larger role of a brand ambassador and participates in product launching and other events associated with the brand being endorsed.
There can also be many variations and combinations of the endorsement types described above. For example, in the television commercial for Aegon Religare pension plan, Irfan Khan plays the role of a character who advises others to invest in the pension plan. He is, thus, making an imperative statement, which is addressed to other characters in the advertisement, but indirectly to the audience. Another example is that of the Boro Plus ad, where Amitabh Bachchan is a priest conducting a marriage and he recommends Boro Plus to the groom having an itchy skin!
Special Types of Endorsers
One variant of the celebrity endorser is the expert endorser. This concept is, however, contradictory to Friedman & Friedman's definition, which states that a celebrity is one who is known for achievements in fields other than that of the product class being endorsed. The alternative view, therefore, is to designate an "expert endorser" as an individual referant and not as a celebrity. Semantics apart, when Sachin Tendulkar endorses Nike's sports shoes, his influence on the audience can be much stronger, as in this context, he is not just a popular celebrity but also an expert in the field related to the endorsed product. The television commercial for Sugar Free Natura shows the renowned chef Sanjeev Kapoor in the role of a celebrity-cum-expert (Exhibit 1).
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An organization too can play the role of a celebrity endorser (or that of a reference group, depending on one's view). For example, Dettol soap advertisement uses approval from IMA (Indian Medical Association), while Pepsodent toothpaste claims approval from IDA (Indian Dental Association). Currently we have a television commercial for Orbit Sugar Free chewing gum (The "khane ke baad" advertisement) which states that the product is accepted by the Indian Dental Association.
Actual consumers are often seen providing testimonials for products in commercials. For example, Aswini Hair Oil uses this form of advertising. Though this is a testimonial advertisement, it cannot be considered to be a celebrity or reference group endorsement.
While popular actors, sports persons and musicians/dancers are the most common celebrities used in commercials, we also have people from other walks of life, being engaged for endorsing products. Sanjeev Kapoor referred to above is one such example. We sometimes have the promoter or an executive of the firm coming in as a celebrity. For instance, Shahnaz Hussain herself makes an appearance on the television commercial for Shahnaz Hussain herbal beauty products.
Celebrity Power versus Brand Power
Though the use of celebrity endorsement is on a growth path, marketers are worried about their drawbacks and side effects. The first of these is that celebrities often overshadow the brand being advertised. People tend to remember the celebrity and not the advertised brand. Another problem is that the image of the celebrity may get diminished or tarnished, which could have a negative rub-off effect on the brand. Top celebrities such as Amitabh Bachchan, Sachin Tendulkar, Shahrukh Khan, etc., endorse several products leading to scope for confusion and possible dilution of effect.
The success of celebrity endorsements depends on two aspects – reach and brand linkage. Reach leads to visibility. The combination of visibility and brand linkage results in the response which has two dimensions. The first is behavioral change, which results in short-term sales. The second is change in attitude, which leads to brand equity building.
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Celebrity Endorsements on Indian Television
Commercials with celebrity endorsements have been appearing on Indian television since a long time. The trend has picked up quite substantially since the 1980s, when television broadcasting became more widespread in the country. The total number of celebrity endorsement commercials on Indian television till date would run into thousands. There are hundreds of them which may be considered significant and memorable. Among the ones that stand upper most in the minds of many is Ustad Zakir Hussain's "Wah Taj!" advertisement. There is an explosion in the number of products and brands available in the Indian market, accompanied by increasing number of television channels of various categories and in numerous languages. Correspondingly, there is also a dramatic increase in the number of television commercials and, in turn, in celebrity endorsed commercials. In some instances, the advertisements of a given brand keep changing from time to time, but the celebrity endorsing it remains the same. There are other examples wherein the celebrity or brand ambassador has been changing with time.
Without much ado, at Exhibit 2, we present a selected list of around 50 television commercials with celebrity endorsements, that were running on national (i.e., Hindi and English channels originating from India) television channels as of February 2009. This list is far from comprehensive in any manner. Nonetheless, it provides a representative snapshot of the diversity of products advertised on Indian television with celebrity endorsement, and also the wide range of celebrities who are engaged by the marketers.
Conclusion
Celebrity endorsements are used extensively today by a variety of brands. However, the presence of a celebrity alone cannot attract today's smart consumers who can discriminate and judge the brand with or without the association with celebrities. Hence organizations must also strengthen their brands so that celebrity power may not overshadow brand power. In the long run, product performance and services offered always stand ahead of the selling power of celebrities. Companies should understand that celebrity endorsements come with risks attached. They should ensure that benefits of celebrity endorsements are not outweighed by the risks.
Market Segmentation & Targeting
Customer Next Marketing to the Aged
The world is aging rapidly. The percentage of people in the 60 + age group is projected to increase from 10% in 1999 to 22% by 2050. The total population in this age group will increase more than three times over these five decades. Unlike in the past, the aged population, particularly in the developed countries and even those in the upper socioeconomic classes in the developing countries, are no longer dependent on others financially, physically or emotionally. Many of the elderly are well-to-do, are in fairly good health (thanks to improved medical facilities) and also have a zest to enjoy life. This has provided immense opportunities to marketers, particularly those operating in the fields of healthcare and health foods; physical fitness and exercise; travel and leisure; and also media and entertainment, to cash in on this segment's needs.
No one ever aspires to be old ... it's ... the cult of the young. People today have aspirations that are younger than their actual age.
-Martin Smith
Managing Director of Advertising Agency,
Bartle Bogle Hegarty
Let us look at some data on the aging population published by the United Nations' Population Division (Department of Economic and Social Affairs):
The percentage of total population in the world that will be aged 60 years or more is projected to increase from 10% in 1999 to 22% by 2050. Correspondingly, the number of persons in the 60 years+ age group will increase 3.3 times from 0.59 billion to 1.97 billion during this period.
Aged persons will therefore form a significant segment of the total population, thereby becoming more attractive to marketers. The biggest spenders are no doubt going to be from the more developed regions of the world, i.e., the whole of Europe and North America, Australia, New Zealand and Japan. The proportion of elderly population (aged 60+) is projected to increase in these regions from an already high 19% in 1999 to as much as 33% by 2050! The total population of the 60+ age group in the developed regions will increase from 0.23 billion in 1999 to 0.38 billion by 2050.
However, most of the older population will be living in the less developed and least developed parts of the world, where they are expected to constitute around 20% of the total population by 2050, and will number around 1.78 billion as against just 0.39 billion in 1999! This will mean an astounding increase by 4.5 times in five decades. Healthcare and other aspects of social security may become a serious concern for substantial portions of this population, who are likely to be from the poorer sections of society. At the same time, the affluent sections among the elderly may be leading much more active and comfortable lives as compared to the previous generation.
Increase in the percentage of population over 60 years of age between 1999 and 2050 for some of the major countries in the world is projected in the given exhibit.
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The Centre for Aging in London estimates that by 2020 there will be nearly 700 million elderly individuals (aged 65 and above) in the world. Increased longevity will also see significant growth in the number of centenarians.
It is evident that across the world —in both developed and developing countries, the percentage and number of the elderly population will see significant increase over the coming years. The main reasons for this transformation are: • Sharp rise in life expectancy • Fall in birth rate • Improved medical facilities • Expansion in world population after the Second World War (baby boomers).
The Aging Population
This transformation will bring with it both problems and opportunities. This article addresses the marketing implications of the growing `grey' population, particularly in the context of the consumption pattern likely to be witnessed among the relatively better-off sections of the population. Given their numbers and the collective buying power, marketers can no longer afford to ignore senior citizens or treat them as a peripheral segment. The aged persons have distinct tastes, preferences and spending pattern as compared to the younger generation, and marketers will need to gear themselves up to meet the challenge, if they wish to have a piece of this cake.
Gone are the days when the elderly were in poor health, liked to live in isolation and depended financially on others. The world is already rising to the challenges posed by the grey contingent. Today, the socioeconomic profile of the elderly all over the world paints a much different picture. A lot of work is being done in this field. Schiffman and Sherman (1991)3 documented the characteristics of such a segment and identified them as the new age elderly. Although this segment has great diversity within, it is now being realized that a substantial portion of the elderly do not fit the negative stereotyped image of the traditional elderly (e.g., weak, poor, isolated, lacking aspirations, etc.).
In the US, the 50 plus consumers are the most affluent and also account for almost 50% of total consumer spending. They have multiple sources of income and account for almost half of the country's total personal insurance, pensions, transportation, health, housing and food. The scene in other developed countries is also similar. The developing and emerging countries may show some time lag, but they too will soon catch up with this trend.
Understanding the Changing Mature Customers
We cannot deny the fact that the aging process brings about a lot of changes. The elderly are not agile and mercurial like their younger counterparts and do not take fickle-minded and risky decisions driven by lack of understanding and experience. The older people constitute a segment which has seen the winds of change, and are therefore more mature and stable-minded. The major changes brought about as part of the aging process are:
1. Biological Change
There is a slowdown in the metabolism and in the working of various organs. Loss of elasticity in muscles also restricts various movements and changes the body shape. These changes cannot be stopped or reversed, and they affect the general life of the person. Marketers must take into account this aspect of aging, and design their products so as to be more friendly towards this segment. The grey customers are not technology-averse, but they cannot keep struggling with numerous tight knobs or complicated user manuals to get things done.
2. Psychological Change
Aging can set off a variety of psychological changes that include cognitive capability or function, change in mind-set and even feelings, moods and emotions. The two most important aspects of cognitive capability that can change are:
1. memory, and
2. ability to assimilate information.
These changes can affect the customer's cognitive processes underlying brand awareness, attitude-building, information searches, comparison of alternatives, point of purchase behavior, and post-purchase satisfaction. The mature customer is more cautious about evaluating alternatives and taking decisions. Keeping this in mind, marketers need to assess and understand how they plan their advertising and promotional campaigns. They also need to work on how to design and modify products and services for this new customer brigade.
3. Social Change
We should also not forget that the family and social roles played by the elderly is undergoing a change. Now, they are not care-giving grandparents, but parents faced with the empty-nest syndrome. Their entire social network, therefore, undergoes a change, depending on the situation they are in. Their lifestyle changes accordingly, and so do their social needs and activities. The need to socialize becomes more now, as they are not time-starved like their younger counterparts. These changes can affect the decision making while doing a purchase of gifts, homes, durables, vacations, entertainment, etc. They are also well-connected with a large network of people living under similar situations and circumstances. They can, therefore, influence the purchase and consumption decisions of many others.
4. Economical change
Changes in the family pattern have also brought about changes in consumption, savings and investments. A person earns less and spends more in his graying years. This segment might be emerging as affluent, but the requirement for financial planning and financial literacy are the most here. They need to manage their assets in a very judicious manner. They need a choice of financial alternatives and a lot of advice at this stage.
Customizing Products for the Elderly
The growth in numbers of the mature customer segment is not the only factor which provides marketing opportunity. Many mature consumers are financially comfortable and have a greater readiness for self- indulgence. Marketers need to take a call here. Many companies have already started aligning their products to suit the needs of this new segment. On discovering that driver fatality rates are highest among those in the higher age group segment, Ford Motors began finding ways to enhance occupant safety, which also included crash avoidance measures and post-crash support. Likewise, other companies which have a vision will understand that they need innovative products that are suited to the physical limitations of these customers.
The apparel industry, which is busy in designing and launching clothes line for the youth, needs to revisit its business plan. Today, there is hardly any choice for the elderly, and shopping experience for a 50 plus customer can, therefore, be very frustrating. Most advertising efforts are directed towards building a very young image, which can be very exasperating for this segment. Some companies in the skin care segment have launched products that cater to aging population, but the choice offered is not much.
Even if we take the example of media, i.e., radio and television, their programs target mainly the younger lot. But if we consider viewership data, we find that the younger people do not have enough time. The major viewership is by the older people, who ironically have to be satisfied listening to and watching programs that are not targeted at them. For how long can this be sustained? Media needs to revise its policies and focus on the tastes and preferences of this segment. The need is not to leave the youth behind, but to include the older sections of the population in a more conscious and proactive manner, while designing the programs. Marketers and advertisers will be the losers if they continue to overlook reaching out to this segment, which is substantial in itself.
Profile of Customers in This New Segment
The profile of customers in this segment will be different from that of their younger counterparts. There is also considerable diversity within this segment. The profile of the typical senior aged customer is very much at variance from that of the naive and curious young customer who does not mind indulgence. Some salient characteristics are listed below: • Wisdom comes with age. These customers have years of wisdom, which helps them to take more considered and well-thought-out decisions. • They are economically strong, and often enjoy multiple sources of income, including substantial pensions or other forms of financial security. • They understand the importance of saving and investment, and are hence more inclined to take objective decisions regarding saving and investment instruments. • They are also tech-savvy, and use technology to make their lives easier. • They are more likely to be stable and loyal customers, unlike their young fickle-minded counterparts. • Seniors hate to be patronized. • They do not like labels that make them feel age conscious.
Major Industries That Will be Influenced
The aging world is going to influence the markets and will definitely have long-lasting ripples. The major industries that will be influenced are:
1. Healthcare and health foods
The health care industry is driven by age. This industry stands to benefit as the population ages at a rapid rate. It is reported that in the US individuals over the age of 65 spend 1.5 times more a year on healthcare as compared to the general population. There is definitely a positive correlation between healthcare industry and aging population. Related industries that will be influenced by the growing demand from the aged will be those engaged in health foods, food supplements, etc.
2. Physical fitness and exercise industry
Sports and sports equipment industry is identified with the young blood all over. This industry has vast potential to grow, if it can also customize and cater to the needs of the older citizens. The increased interest in keeping fit as against being the traditional weak oldie, translates into large demand for a variety of physical fitness and exercise equipment, training services and the like. In the US and Australia, the sports and exercise equipment industry, among others, are vigorously targeting the mature customers. The UK-based stores — B & Q offers a diamond card which extends 10% discount to the over-60 population on Wednesdays. Related categories that will benefit from the aging population are yoga, meditation and other forms of services that promote physical, mental and spiritual well-being.
3. Travel and Leisure
Post-retirement is the stage when a person has time for meeting unfulfilled desires that he has nested all the years. The mature customer is interested in travelling to new destinations. Studies indicate that vacation is the most popular leisure activity among the elderly. Both domestic and international travel are popular activities among the elderly.4 Many companies have now recognized this new market and are coming up with customized programs. Marketers need to understand and explore the requirement of this segment and capitalize on it.
4. Media and Entertainment
Media is one industry which has still not recognized the need to cater to this population. The media primarily targets the younger generation, which really has little time for them. The elderly, who spend a significant amount of time sitting in front of the television, do not get anything substantial to watch. There are, however, some positive developments. For example, there are periodicals catering exclusively to the aged population such as Oldie, Saga Magazine and Mature Tymes.
Conclusion
What is given above is, however, not an exhaustive list. Other industries such as finance and insurance, apparel, retail, etc., will have to pinch themselves and wake up to the gradual metamorphosis in consumer demographics that is taking place all around them. Though the developed world has already begun feeling the change, the rest of the world is still some way behind. For example, India is considered a very `young' country. But nonetheless, the change is going to unfold over the years. This will substantially alter the age profile across the globe, and consequently upturn the focus of marketers on a wide variety of products and services. This is why we would refer to the elderly customer segment as "Customer Next."
--Sarika Tondon
Faculty Member,
The Icfai Business School,
Mumbai.
The author can be reached at sarika12001@yahoo.com CONSUMER BEHAVIOR
Nomophobia : The Right Time to Recognize and Deal with It
With each passing day, new models of mobile phones are entering the Indian market, and cell phone service companies are aggressively pushing their services by offering ever newer schemes. As a result, India is witnessing a very rapid increase in the number of mobile phone users, and many of them are getting addicted to this modern day communication device. An agency in the UK has identified that addiction to mobile phones is causing a new kind of psychological disorder or phobia, which has been termed as `nomophobia'. This is a cause for concern and the Indian masses too should be made well aware of this. It needs to be recognized as a deviant form of consumer behavior and preventive measures need to be taken to mitigate it.
Can we even think of not hav ing a mobile phone in today's times? The most probable answer would be "No!" Let me share an incident. It was the time when Reliance had recently launched its Code Division Multiple Access (CDMA) mobile phone service with much fanfare and a lot of publicity. At a traffic signal on a busy road in Kolkata, several vehicles were waiting for the signal to turn to green. In the front row was a wiry rickshaw-puller with a burly passenger seated in his hand-pulled rickshaw. Next to him was a taxi with its driver; and beside the taxi was a Mercedes car with its liveried chauffeur and a passenger sitting in the back seat, whose attire showed that he must have been the owner of the vehicle. Now, all the socio-economic classes in the society were represented in that small group of people. But my objective of narrating this is not to elucidate on the subject of social classes. It is something else. This would become clearer as I move ahead with the incident.
Suddenly in that row, a mobile phone began ringing. The first one to check his pocket for his mobile phone was none other than the passenger in the Mercedes car, who represented the rich class. The other persons, who represented various dimensions of the middle class (lower-middle, middle and upper-middle) also became alert to check out whether it was their phone which was ringing. But none of their mobile phones was ringing. To my great astonishment, the rickshaw-puller pulled out his mobile phone from a pocket under his loin cloth and began talking animatedly. This was totally unexpected at that time. But thanks to Reliance, which made the mobile phone so affordable, even rickshaw-pullers, who represent the lower economic strata of society, can now own one.
I now come back to the question that I began with, i.e., can we even think of not having a mobile phone in today's times? And if someone indeed answers `yes', then which socio-economic class is such a person most likely to belong to? This is very difficult to answer; because ownership of mobile phones is now well-spread across all classes of society. There are over 250 million phones in India, the vast majority of them being mobile phones. Today, most of us have mobile phones, and some even have more than one (Exhibit 1). And those who do not have one (we should perhaps not be using this term at all) are most probably prospective buyers, who are either already in the process of buying one or will be buying it in the near future. In keeping with this inclination on the part of consumers, marketers of mobile phone services and instruments too are increasing their offerings by the day. Recently, international service-providers such as Vodafone and Virgin Mobile have entered the Indian market. The increase in supply and the influence of aggressive marketing are in turn fueling the demand.
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Mobile Phone and Its Growth
Now, let us take a look at the information available about the growth of mobile phones in India. The number of mobile phones has almost doubled in the past two years. India now has the second largest number of mobile phones in use after China, having overtaken the US recently (Exhibit 2).
To quote a news item from the British Broadcasting Corporation (BBC's) website, "According to Vodafone, India is the fastest growing mobile market in the world, with around 6.5 million new subscribers every month". On the other hand, the mobile phone market is facing a downturn in the global market. As mentioned in another website, "The worldwide mobile phone market experienced an expected sequential downturn." At the same time, the website also states that, "Demand for handsets in the low-cost segment will remain present in certain emerging markets throughout 2008, driving worldwide shipment growth." Although the website has not named the countries, it is understood that it is pointing towards India and China. The reasons may be many for the growth of mobile phones in emerging markets, while there is a decline in world mobile handset shipments. Scholars are constantly working on such aspects. But my intention is to reveal something different.
There is a well-known idiom in Hindi - `chirag tale andhera,' which means that there is darkness under the lamp. Something similar holds true in the case of growth of mobile phone usage in India. As mobile-users are increasing day by day, which shows the country's progress on the path of economic growth, there is also a darker side which is building up simultaneously. This darker side, which has not yet been overtly felt, is nomophobia. This is a unique kind of phobia which occurs with the rise in mobile phone usage. It can also be said that as the intensity of mobile phone usage in the country is increasing and getting closer to that in the developed countries, the problem of nomophobia too is showing the same trend, i.e., growing and moving towards the trend prevailing in the developed countries.
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What is Phobia?
Before describing nomophobia, let us first understand what phobia means. As per the definition given in Wikipedia, the widely popular online encyclopedia, "A phobia (from Greek: öüâïò, phobos, `fear'), is an irrational, intense, persistent fear of certain situations, activities, things or persons. The main symptom of this disorder is the excessive, unreasonable desire to avoid the feared subject. When the fear is beyond one's control, or if the fear is interfering with daily life, then a diagnosis under one of the anxiety disorders can be made". This simple definition of phobia indicates that it is a kind of mental disorder, and any mental disorder, if it goes beyond a limit, is harmful to the individuals and also to the society at large.
We all have one or the other phobias in a mild form. These are natural and do not cause much harm. These start from our childhood. If we just recall some of them, were we not having `exam phobia'? May be, some will disagree. Exceptions are always there. But if we just recall our activities during exam days: we become more cautious about our health, begun facing sleepless nights and tried to mug up our studies with grave concern. It was also common that we took more than one pen to the exam hall. These can of course be explained as precautionary measures to get through the exams smoothly. But all this had definitely put unnecessary pressure on our minds during those days. These activities were performed in response to the fear of exams, and the symptoms are sufficient to be collectively designated as a phobia.
During exam days, due to this phobia, many school children are found to be depressed, though the extent of depression varies from child to child. As mentioned in the newspaper The Tribune dated February 19, 2002 in the article "Parents to blame for exam phobia"—"Beware the ides of March", said Shakespeare and "April is the cruelest month", wrote TS Eliot. These truisms have never been as relevant as in the lives of students preparing for their annual examinations. The sword of Damocles never hangs so precariously on the heads of students as it does during these two months. Examination phobia and the fear of ultimately not being able to fare among the top rankers bring along with them many physical problems and psychological disorders, forcing some students to the very edge of precipice.
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Not only was there exam phobia, some of us might have also faced other phobias during childhood, such as the phobia of creepy insects, lurking ghosts in the dark, etc. Of course, with the passage of time, we grow out of and overcome such phobias. But at the same time, we acquire new phobias which replace the older ones. During adulthood, for many people, the phobia of being looked down upon by society strongly influences their actions and behavior. Researchers have identified various causes for phobias among adults. The website of the Encyclopedia of Mental Disorders states that, "The development of a specific phobia may be determined by a variety of factors. Behavioral, cognitive and social theories of learning and conditioning, psychodynamic models such as the psychoanalytic theory of Freud and physiological studies of the brain offer various alternative explanations. Family background and genetic predisposition, variations in sociocultural environments and trauma can influence the development of specific phobia disorders. Some theorists propose that biological researchers have ignored specific phobias because pharmacological treatment is not the treatment of choice for this disorder."
These phobias change with age and researchers are working on how to cure these mental disorders. But, being a marketing person, I am not in a position to authoritatively expound upon phobias and their remedies. This short exposition regarding phobias is only meant to set the necessary background and tone before stepping into the main theme of this article. The objective of this article is very specific and simple; that is to explain the phobia which is engulfing our society in a menacing manner due to the advent and rapid growth in the use of mobile phones. This phobia has already been recognized among the youth in the UK who are addicted to mobile phones, and has been termed as nomophobia (Exhibit 3).
Nomophobia Explained
A website on mental disorders has stated that, "Nomophobia is actually the fear of the law - from Greek Nomos". This is what nomophobia means in the literal sense. But the same website also explains that "It just sounds like "No Mo' Pho' - bia"— (no more phones), funny that something like that made it into a bunch of newspapers." This statement was in reaction to reports on "nomophobia" that appeared in several newspapers in the UK (Daily Mail, The Tech Herald, etc.), which were also uploaded on various websites. This issue was researched by a UK-based consulting firm "YouGov Consulting." Its finding, as given in Wikipedia, is presented in Exhibit 4.
Basically, when an individual is habituated to using something, or rather, to state it in a different way, if an individual is addicted to something, the feeling of its absence particularly at a time when it is needed, leads to stress. This stress, if continued unchecked, takes the form of a phobia. Incidentally, it is not always necessary that only the feeling of not having the addicted substance creates stress. Even the feeling of something new in life could cause stress, followed by a kind of phobia. In the case of the mobile phone, however, as its usage and dependency are increasing among many Indians, particularly the youth, they are also developing a kind of stress, even at the mere thought of being deprived of their mobile phones. And this is known as nomophobia.
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As stated by the Daily Mail, "Getting married, starting a job or going to the dentist have long been recognized as sources of great stress. But it seems they are now matched by a new, peculiarly 21st century affliction —the fear of being out of mobile phone contact. Millions apparently suffer from "no mobile phobia" which has been given the name nomophobia".7
Also, to quote from an article on nomophobia published in The Tech Herald, "Nomophobia is all too real for many people. We're all familiar with the stressful situations of everyday life such as moving house, break-ups and organizing a family Christmas. But it seems that being out of mobile contact may be the 21st century's latest contribution to our already hectic lives. Whether you have run out of credit or battery, lost your phone or are in an area with no reception, being phoneless can bring on a panicky symptom in our 24/7 culture."
All the statements detailed above discuss the case of nomophobia in the UK. But is the situation not similar among Indian youth as well? A college-going youth in any metro city of the country cannot even think of life without a mobile phone. It seems as if the entire world is lost if the mobile phone is lost. But most youth are unlikely to lose their mobile phones as they are always talking over it. Added to this, the calling cost is reducing drastically, enabling people to talk even more. To make talking (or rather, listening) lucrative as well, Virgin Mobile has recently introduced a scheme whereby every incoming call will fetch some money for the receiver. So talk India, talk! And talk as much as you can!
Nomophobia is explained by the article hosted on CBS News' website, which says, "Millions of people are suffering from a new disorder. It causes cold sweats, nervousness and severe anxiety. Do you freak out when you forget your cell phone at home? Go mad when your mobile's missing? Can't bear to be without your BlackBerry? Then you might be suffering from what British researchers are calling nomophobia as in the "fear of no mobile phone."
These scary manifestations of nomophobia have been revealed only in the recent past, and the subject has not yet been researched in detail. But still, The Tech Herald has prescribed a few solutions to overcome or manage this problem. Its website points out that, "Possible ways recommended for better avoiding the related stresses of suddenly finding yourself cut off from accessing your phone include keeping credit levels near constant and carrying a pre-paid phone card in order to make calls should your mobile be out of commission, or perhaps even stolen." It also suggests "that mobile phone-users should supply family and friends with an alternative contact number, have important numbers stored and available somewhere other than in their mobile, and even to voluntarily enforce a period when the handset is turned off in order to loosen its hold over everyday life".10 However, more studies need to be conducted and specific solutions found to mitigate and control this phobia, which now seems to be looming large as a potential threat that will affect large sections of modern society. As it has already been formally detected and recognized in the UK, other countries, including India, should take note of this and be alert to the possible consequences of this phobia spreading on a wide scale.
Conclusion
I am not against the growth or use of mobile phones in the country. But my concern is only about the associated phobia, which is very likely to grow in parallel with the growth in the usage of mobile phones. While nomophobia has now been recognized and studied only in the UK, there is little doubt that the same problem is raising its ugly head in India too, but has not been formally recognized as yet. This is a matter of concern because if this phobia spreads and takes root on a large scale, it will affect the psyche of the Indian youth to a significant extent. It is, therefore, important to recognize and study this malaise in India at the earliest and identify means of controlling it.
Unlike an exam phobia or other childhood phobias, or phobias related to specific life events such as marriage, etc., nomophobia is likely to remain with the affected individuals for substantial parts of their adult lives, and lead to periodic anxiety and depression, thus drawing the victims into a deep spiral of mental affliction. As the present generation is likely to use mobile phones through their entire life, the phobia of not having a mobile phone will also continue throughout one's life. Therefore, social awareness needs to be created regarding the need to guard oneself against being afflicted. Mobile phone service companies (and/or their industry association) too should play a positive role by giving wide publicity to this possible malady, as a social responsibility measure; and thus protect the long- term well-being of their customers and the society at large.
- Harsh Arora
Junior Faculty Member (Marketing),
INC-Staff Training College,
Kolkata.
The author can be reached at harshiimt@gmail.com CONSUMERISM
Consumerism : Its Evolution and Development
The genesis of consumerism lies in the disadvantageous position faced by consumers, in spite of the apparent natural protection from unscrupulous marketers provided by free market competition. The consumer movement has grown largely through the efforts of consumers themselves, with requisite backing by various voluntary organizations, national governments, international agencies, etc. It has now also extended to green consumerism and expectations of socially-responsible marketing from the marketers.
Traditionally, "consumerism is concerned with protecting consumers from all organizations with which there is an exchange relationship. It encompasses the set of activities of the government, businesses, independent organizations and concerned consumers, and is designed to protect the rights of the consumer."1
A remarkable development witnessed in recent times is emphasis on the consumer as the focal point of the economic system. Under the modern marketing concept, the consumer is the fulcrum around whom the entire marketing activity revolves. All of us are, in fact, consumers in one way or the other. We eat food, buy various necessities, pay rent and taxes, and hire services. The moment a person enters into a shop and buys something, he becomes a consumer. Thus, consumers are the end-users or beneficiaries of products and services.
Consumer Sovereignty - An Illusion
The primary objective of marketing is to allocate scarce resources efficiently so as to satisfy the needs of consumers to the best possible extent. Adam Smith, father of Modern Economics said, "Consumption is the sole end and purpose of all production and the interests of the product ought to be attended to, only as far as it may be necessary for promoting those of the consumer"2. This idea underlines the concept of consumer sovereignty. This is reflected in well-known statements like "Customer is king".
The consumer should, in fact, be the sovereign of the market because the final goal of all business efforts is to sell goods or services for ultimate consumption. It is the consumer who merits the greatest attention from the marketers as he is most important for the survival of all businesses. But consumer sovereignty exists mainly in theory and not in practice. While both manufacturers and marketers are becoming more organized and stronger, consumers are for the larger part unorganized and weak. With marketers now being aided by newer and more innovative marketing concepts, marketing tools and technological advancements which strengthen their hands, consumers are now even more vulnerable to possible unethical marketing practices.
The father of the nation, Mahatma Gandhi, recognized the importance of consumers when he described them as poor consumers; and according to him they should be the chief beneficiaries of business transactions. He remarked, "A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption on our work. He is the purpose of it. He is not an outsider on our business. He is a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so."3 In a developing country like India, where there is virtually a sellers' market in many situations, the consumer is a dethroned king, with only a title and no real powers.
Consumers' Expectations
A typical consumer has an array of expectations:
• Goods available are reasonably priced.
• Goods are unadulterated and of high quality.
• Goods are of sufficient variety so that selection can be made effectively.
• Marketers render after-sales service.
• Marketers do not indulge in unfair trade practices, and
• Goods and services are fairly and widely distributed in order that purchases can be made at convenient locations.
In reality, consumers are frequently exploited and their expectations are belied. Several studies reveal that consumers are often dissatisfied with their purchases. Consumer satisfaction presupposes marketers' fair transactions, which include supplying quality goods, using correct weights and measures, informative advertising and packaging, avoiding hoarding of goods, profiteering and other unfair trade practices. As such unethical marketing practices are not uncommon, consumer sovereignty and consumer satisfaction often remain in theory. For instance, according to Indian Merchants Chamber, the Indian consumers who spend around Rs. 75,000 cr annually are cheated of Rs. 1,600 cr through incorrect weights and measures alone!
In this context, it is worthwhile to note the views of world-renowned management consultant and executive coach, Dan Coughlin (his clients include Coca-Cola, McDonald's, Boeing, Toyota, AT&T and more than 100 other corporations). He exhorts the CEOs of corporations to perform 23 accelerator actions as practical guides to spur business momentum. One of the accelerator actions is "Learn from consumers". He defines consumers as potential end-users of a corporation's goods and services. He also says, "these consumers don't bother about whether you hit your sales target or not. They also don't care even if you go out of business. But they want one thing and that is value."4 This value may be related to price, quality, brand image, friendliness and so forth. Therefore, the consumers serve one important purpose of teaching the business concerns about whether they create value that is worth buying. This vividly pinpoints the importance of consumers for every marketer. A marketer must find out why the consumers buy his product/service. Also, if the consumers do not buy his product, he has to then identify why they do not buy it. This awareness will help in increasing the marketers' sales. Consumers teach sellers lessons everyday. Be open to learn them even if it is not what you want to hear.
Marketers' objective of consumer marketing should be to care for consumer satisfaction. Coca-Cola's objective of consumer marketing is as follows: "By closely following evolving preferences, our consumer marketing efforts create value by building consumer affinity for our trade-marks…. We also use consumer marketing to develop new products to fulfill changing consumer desires, always seeking to make what we can sell, instead of merely trying to sell what we make."5
Need for Subjugating Consumer Exploitation
Under the factory system, the society moved from doing business based on tradition to doing business based on contracts. During the 19th century, the industrial revolution led to the adoption of individualism as the social philosophy, which enthroned free competition in business activities; and sanctity of contract was the keyword for the law administrators. As the citizens of a country choose their own form of government in a political democracy, in an economic democracy under free market situation, it is expected that production will adjust to consumption by a process that will be automatic and responsive. Economists suppose that the interests of consumers will be well protected under free competition. But, in modern industrial society, practical limitations of competition are quite visible even in the retail market for consumer goods; and these limitations are briefly explained below:
• With the availability of mass marketing and advertising facility, there is an abundant production of goods that results in waste of resources, as well as production of superfluous items.
• As a result of increased marketing hype, consumers at the lower rung of the society tend to imitate those in the higher rungs and this results in production and marketing of various products and services that may be non-essential.
• Advertisements sometimes provide incomplete or misleading information to consumers, resulting in their taking incorrect and detrimental decisions.
• Prompted by the pressure to survive under intense competition, some marketers resort to unfair trade practices in a surreptitious manner, which cause harm to gullible consumers.
According to Ralph Nader6, the eminent economist, consumer exploitation slashes real income and resources by way of inferior articles, malpractices and deceptions and they also hurt the consumers by the supply of hazardous goods, belated or no services, as well as environmental pollutants. All these suggest that consumers must find an effective means for direct action against detrimental marketing forces, as mere free competition and price mechanism fail to protect them. During the 1960s, the consumer movement gained momentum when consumer groups in different parts of the world registered their dissonance and voiced their concern over exploitation by marketers.
Prelude to Consumerism
Initially, the groundwork for the protection of consumers (commonly termed consumerism) was laid in the US. The credit goes to the then US President John F Kennedy, who equated the rights of an ordinary American consumer with the national interest and introduced the world to the revolutionary notion of "Rights of Consumers" in 1962. It is worthwhile to quote an extract from Kennedy's Consumer Message to the US Congress in 1962: "The march of technology has increased the difficulties of the consumer along with his opportunities. Rational choice between and among products will require the skills of the amateur electrician, mechanic, chemist, technologist, dietician and mathematician. Marketing is increasingly impersonal. Consumer choice is influenced by mass advertising utilizing highly developed arts of persuasion. The consumer typically cannot know whether drug preparations meet minimum standards of safety, quality and efficacy. He usually does not know whether one prepared food has more nutritional value than another, whether the performance of a product will, in fact, meet his needs or whether the `large economy size' is really a bargain. Additional legislative and administrative action is required, however, if the federal Government is to meet its responsibility to consumers in the exercise of their rights.
These rights include:
1. The Right to safety
2. The Right to be informed
3. The Right to choose, and
4. The Right to be heard."
Thus, Kennedy provided impetus to the international consumer movement. The rights of the consumer were incorporated in the United Nations Charter of Human Rights. The Government of India also recognized these rights subsequently.
Concept of Consumerism
In 1962, Kennedy dedicated his administration to the promotion and protection of consumers' interests and, thus, consumerism became the discovery of the 20th century. Subsequently, Ralph Nader further strengthened this subject and focussed attention on various consumer issues. Since then, the consumer movement has acquired international character. At this juncture, one may be interested to know the formal meaning of consumerism, which is also referred to as consumer activism or consumer movement. Definitions of consumerism can be classified into two categories - those given by the traditional group and those under the modern group.
Traditional Group's Concept of Consumerism
The traditional group advocates welfare of the individual consumer. To quote Philip Kotler,7 "Consumerism is an organized movement of citizens and the government to strengthen the rights and powers of buyers in relation to sellers." According to Buskirk and Rothe8, "Consumerism is an organized effort of consumers seeking redress, restitution and remedy for dissatisfaction they have accumulated in the acquisition of their standard of living." In fact, consumerism means people's search for getting better value for their money. In the traditional sense, consumerism is concerned with protecting consumers from all organizations with which there is an exchange relationship. Consumerism may be a movement or policies meant for regulating products and services, methods or standards to be followed by marketers and advertisers in the interest of buyers and such other regulations which may be statutory or embodied in the voluntary code of a particular business, or even it may result indirectly from the activity of some consumer organizations.
Modern Group's Extended View of Consumerism
Consumerism has, today, become an all-pervasive term. Its definition goes well beyond the interest of consumers by including public interest, ecology and other aspects. It is evident that concepts like green consumerism and ethical consumerism have emerged. Earlier, consumerism was confined to the protection of consumers against unfair and restrictive trade practices of producers and traders. The new movement encompasses sociological aspects like health, safety and other issues. The ultimate aim of consumerism is to improve the quality of life of individuals as well as the public at large. Under the modern concept, the scope of consumerism has been extended from conventional marketing to green marketing and green economics. It is to be noted that Brazil is one of the biggest players in green economics, meeting about 44% of its energy needs from renewable sources - while the world average is 13%; and in Europe it is 6.1%.
Conclusion
Originally, consumerism was born out of lapses and negative aspects of marketing. It was aptly remarked by the eminent management pioneer - Peter Drucker, that `consumerism is the total shame of marketing.' Consumerism has now blossomed into socially-responsive marketing and enlightened marketing towards the later part of the 20th century. This enlightened marketing stands out as an addition to and not as a replacement of conventional marketing.
- R Neelamegam
Emeritus Professor - AICTE,
Department of Management Studies,
VHNSN College, Virudhunagar,
Tamil Nadu.
The author can be reached at mba@vhnsnc.in CONSUMER BEHAVIOR
Targeting Whom? Final Consumer or Decision Maker? : An Analysis of Fruit-Beverage Marketing to Children
This article, based on a field survey, points out the importance of distinguishing between the consumer (one who consumes or uses the product) and the customer (one who takes the purchase decision) when targeting one's marketing efforts, especially in situations where the two are likely to be different. The example given here is that of a company which marketed a new fruit beverage to children and failed, as it did not pay adequate attention to the fact that the actual buyers would be the parents.
The literature on consumer behavior in economics makes an implicit assumption that `consumer' and `decision-maker' are one and the same. Therefore, the consumer's preference for one product/service to another has a direct effect on the sales of the product/service. However, this view, if extended to the objective of sales maximization in marketing, leads to a constrained situation. If the assumption of `final consumer' and the `decision-maker' being the same is relaxed, it opens up opportunities for enhancing the scope of marketing, leading to the possibility of increased sales.
In simple terms, a `consumer' can be defined as "one who consumes". The word `customer' is, however, defined by the Oxford English Dictionary as "one who acquires ownership by long use of possession; a customary holder" and also as "one who frequents any place of sale for the sake of purchasing; one who customarily purchases from a particular tradesman; a buyer, purchaser." These definitions offer a sense of disparity between a consumer (one who consumes) and a customer (one who purchases). As it is, this disparity is evident in many products and services. For example, men's clothing would be consumed by men, but may be bought by women.
Education is another example, where the product/service is consumed by the student, but may be bought by the parent. Clearly, a customer is a person to whom one is selling a product or service, and a consumer is the one who uses them. Therefore, interchangeable and mindless use of these terms can be naive, as stated by the following quote:
Dropping `consumer' does take a little getting used to, but being mindful of it is the important part.
- Michalski, 20031
When companies set product definitions keeping only their consumers in mind, and ignore an appropriate product definition for the decision-maker, they run the risk of lukewarm response from the market resulting in lower sales.
Ultimately, this product definition process must enable the enterprise and the product development team to answer the following question: What's most important to the customer in making a buying decision? When this question is answered and understood by all members of the development team, the likelihood of a successful development effort significantly increases.
- Crow, 20022
Keeping these points in view, the research effort here is to highlight the difference between the final consumer and the decision maker and the perils a company faces by focusing only on the final consumer and not the decision maker. For simplicity, in this article we call the final consumer as `consumer' and the decision maker as the `customer'. The difference between consumer and customer is explored in this article by analyzing the new product of a fruit drink beverage company in India, after the product's introduction in South India. The identities of the company and the product have been kept confidential.
Overview of the Fruit Beverage Industry in India
The fruit beverage market in India has witnessed expansion with the entry of several new players. There are primarily three types of fruit beverages - fruit drink, fruit nectar and fruit juice, with progressively higher percentage of fruit pulp3.
During 2005 (when this study was carried out), the total annual non-aerated soft drinks market in India was estimated at Rs. 22 bn with the fruit-based beverage market constituting 25% of the total. Thus, the market for fruit beverages was around Rs. 5.5 bn to Rs. 6 bn.4 Until three years earlier, the market, which largely consisted of fruit drinks, was growing at 30% annually, due to its low base. But with the launch of new products in the niche segments like nectars and juices, the fruit drink market growth reduced to 10% as compared to 30% growth rate for juices and nectars. The pure fruit juices segment was estimated at Rs. 1 bn and was growing at 40% per annum, while the synthetic flavors segment was growing at only 10%. The per capita consumption of juices in India was estimated at 200 ml per annum, which was expected to rise, given that China had attained a consumption level of 1500 ml.
Consumer Habits and Practices
The oft-quoted reason for the boom in the fruit beverage industry is the rising health consciousness among the Indian population. Fast-changing eating habits and proliferation of malls have added to the interest.
Analysts estimate up to 50% carts in a mall carry juice packs, which has led many companies to believe that if packaged juices are on mall shelves, they stand a good chance of being picked up.
- Sharma, 20045
Most Indian households have a traditional preference for fresh fruits and vegetables or those processed at home. People go in for fresh fruit juices that are sold at kiosk fountains, which produce instant juices from fresh fruits in the presence of the consumer. One reason is the unavailability of hygienic and well-preserved products, with the use of preservatives.
The fact is that if it is packed it denies its freshness. This was also a reason why some of the real but branded fruit juices launched in the late 1980s and early 1990s did not succeed. Taste is often the secondary consideration in the Indian market for beverages. Fruit juices also lose out on fiber, which is an important part of fruit nutrition. Few people know the difference between a juice and nectar. In general, the Indian consumers have become health conscious now and are looking for healthy natural and appetizing juices. They are moving away from synthetic drinks to natural and wholesome fruit juices.
- Thakur, 20056
About the Company XYZ
In the Rs. 600-cr fruit beverage market in the country in 2005, the drinks segment made up for 35% worth Rs. 180 cr and the company XYZ, with its new product, was hopeful of capturing a sizeable market, which was growing at a rapid pace. The product was initially launched in the markets of North India, followed by South India. The product was essentially targeted at the end-consumer—the kids. The customer (buyer), quite often the mother, was largely ignored. What followed was disappointing sales, much below what XYZ was expecting.
Research Objectives and Methodology
The primary objective was to explore the reason for the new product's failure, and preliminary investigations had revealed a disconnect between the product and the market. The research was, therefore, carried out to understand the perception of the target segment, which comprised children (the major group of end-users) and their mothers (the likely purchase decision makers on behalf of the children). The study captured and compared the opinions of kids and their mothers on the product's advertising, its packaging and taste.
This study was conducted through a two-pronged approach using both quantitative and qualitative techniques. In the quantitative component, primary data was collected by interviewing 105 children in the age group of 5 to 15 years (in schools) and 50 mothers (in shopping malls) in Bangalore. To obtain qualitative feedback, two focus group discussions were conducted - one with mothers and the other with children. The survey was carried out during June-July 2005.
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Results
The segregation between consumer and customer is based on the following findings regarding the buying decision for fruit drinks. When the kids were asked about the buying decision for fruit drinks, the response pattern that emerged was as tabulated in Exhibit 1.
Overall, the buying decision is dominated by the mother (57% of the respondents). Only a third of the respondents seemed to be buying fruit drinks by themselves. This autonomy, however, is much less among girls and children in the age group of 5-10 years, as boys and the older kids seem to enjoy greater freedom in taking buying decisions. In the backdrop of this finding, further research, which showed that while the children expressed very positive feedback about the product, the mothers seemed skeptical, becomes very important. In the case of the kids, the advertisements, packaging and taste drew out positive connotations and scores, whereas the mothers showed a lukewarm response. The marketing mix targeted at the end-consumer had generated successful results, but as far as acceptance of the offering amongst the customers was concerned, the product was a failure.
Opinion on Television Advertisements
Television advertisements have proved to be a driving influence on product recall and acceptance, especially among kids. Company XYZ, in an effort to capitalize on this, aired its advertisements on channels watched by kids (Cartoon Network, Pogo, etc.). These advertisements were widely acclaimed and liked by the kids, but that did not translate into sales, as is evident from the mothers' perceptions about the TV advertisements. More than 65% of the kids recalled the ads for the fruit drink seen on television accurately. This showed that the TV ads had received a high level of acceptance among the consumers.
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The mean scores on the overall opinion about the ad across sex and age groups was as high as 4.34 on a 5-point Likert scale (Exhibit 2). The advertisements were able to motivate the kids, but the power of buying is often not vested with them. The mothers, during the focus group discussion, stated that some of them had seen the advertisements when their kids were watching TV; but the majority had missed it. The general response was: "We don't watch cartoons. When ads are shown on TV, it is time for us to rush to the kitchen. We only see TV during prime time when soap operas are shown."
The promotional strategy of XYZ, as far as television advertisements is concerned, failed despite the fact that the kids saw the ads, recalled and liked what they saw. However, the decision maker was not exposed to the advertisements, and the lack of recall and/or information about the product might have led to skepticism while purchasing.
Overall Opinion on the Product
To understand the product's visual appeal among the mothers and kids, they were asked about their perceptions on the visual appeal, the pack design and the package's uniqueness.
The mean scores on the overall opinion of the pack among kids was 4.48 (Exhibit 3) on a 5-point Likert scale, as compared to a score of 3.42 for the mothers (Exhibit 4). The latter is significantly less than the former at a 1% significance level.
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After seeing the pack, the kids exhibited a strong inclination to consume the product, as revealed by the high mean score of 4.22 on a 5-point scale. The kids liked the packaging, but the modest mean score for mothers suggests that they did not seem to have liked the pack as much. The following additional scores on other parameters (on a 5-point scale) amongst the mothers further accentuate the lukewarm response among the decision makers:
¬ Mean score on Uniqueness of Pack : 2.54
¬ Mean score on Design of Pack : 3.26
¬ Mean score on Intention to Buy : 3.30
The perception of visual appeal of the package and related parameters therefore differs vastly between the children and their mothers.
Overall Opinion on Taste
Taste is often a major factor for driving the sales of any food product. Therefore, the perception regarding taste of the fruit drink was elicited among the kids and the mothers. The mean scores on opinion about the fruit drink's taste among kids was a high 4.70 on a 5-point Likert scale, as compared to a score of 3.98 for the mothers (Exhibit 5). The latter is less than the former at a 1% significance level. The taste of the drink also stood out as a driving factor for the likelihood for the drink to do well. A related dimension - uniqueness of the product, also took a beating from the mothers, garnering a mean score of only 3.02 on a 5-point scale.
In the qualitative (focus group discussion) phase too, the wide difference between the taste perceptions of the product among the kids and the mothers was very evident. The kids perceived the fruit drink to be "new and unique" and associated it with freshness and energy. The children found the `rich taste' and the "real fruit feeling" appealing. However, the kids thought that the drink seemed to have come across as something that could not be consumed or bought on a daily basis. The kids liked the overall design of the pack. They said, "It's a colorful, good design". However, the following were some of the responses of the mothers:
¬ It should cater to both kids and us.
¬ Health is definitely an important issue and we try to avoid drinks with added sugar and preservatives. We don't want them to drink it everyday.
¬ Sour taste.
¬ Too concentrated.
As far as the buying decision was concerned, the mothers did not personally feel like buying the product after seeing and tasting it and they would buy the drink only if the kids wanted it:
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¬ It doesn't have a very nice name or an appealing color.
¬ I am not aware of the fruits shown on the pack.
¬ The pack looks quite small and the shape is too common.
The divergence in perceptions between the consumers and the customers in terms of the product's advertisements, visual appeal, taste, uniqueness and intention to purchase explains the reason why company XYZ's marketing strategy did not yield expected level of sales, as the offering was catering to the consumers (the children), while the decision-makers were the customers (i.e., the children's mothers).
Conclusion
Company XYZ should have targeted the mothers with its marketing and product strategy, and recognized the impact mothers have in the buying-decision for fruit drinks, more so for children in the age group of 5-10 years. The advertisement formula seemed to have worked well with the kids, but the mothers did not get exposed enough. The timing and the channels chosen for the advertisements on TV were faulty. They could have been aired consistently during family serials on prime-time in order to achieve higher recall and brand-salience among the decision makers. Going by the mothers' perceptions, there was evidently a need for change in pack design as well as taste. In general, the fruit drink failed to create space in the minds of the mothers.
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Going by the feedback and the perceptions of the consumers, the product would have done very well, if only the kids would've been the ones making the buying-decision. Company XYZ suffered in a case of erroneous targeting and lack of customer understanding. The company sidelined the mothers in its marketing effort. It did not recognize that the buying decision is dominated by mothers for children in the age group of 5-10 years, though kids in the age group of 10-15 years were more independent in making their purchase decision.
- Amalendu Jyotishi
Assistant Director (Special Projects),
Ohio University - Christ College Academy for Management Education,
Bangalore.
The author can be reached at amalendu@ohiochrist.edu - Kranti Kumar Dugar
Doctoral Fellow,
Marketing Doctoral Program, College of Business & Industry,
Mississippi State University,
USA.
The author can be reached at
krantidugar@yahoo.com