IAA Retrospect and Prospects: ‘Bigger, connected middle class will demand more responsiveness from brands’

The India Chapter of the International Advertising Association (IAA) launched its new property ‘IAA Retrospect and Prospects’, with D Shivakumar, chairman and CEO, PepsiCo India, in the NCR on 22 January.

In his presentation on the theme, Shivakumar threw light on the highs and the lows for marketing, media and advertising practioners in 2013. He also indulged in some focused crystal ball gazing, on trends to expect in 2014 and beyond.

Circa 2013

Before beginning to retrospect on the year gone by, Shivakumar noted a few trends regarding the industry. He said, “We have always said that the ‘Consumer is the king’. Intellectually, people understood it but down to the point of actioning it, very few people have done it.”

What changed in the king’s world in 2013 was that consumer began to have a voice, he noted, adding that translated to consumers having a collective voice thanks to social and digital media. The fundamental change in the fabric has meant that one wrong move by a brand can lead to a collective voice against it, he explained.

“The biggest trend of 2013 that reshaped branding, advertising, communication, governance, transparency, humility, arrogance, was that a billion smartphones were sold across the world. And for the first time, mobile internet became bigger than fixed internet, globally,” noted the former head of Nokia India. He added, “The moment you have a smartphone, the way you connect and behave changes.”

Echoing a warning that is getting louder by the day, Shivakumar said that every industry that has over 20 per cent trade margin will get disrupted by mobile internet technology. He quoted, “For the first time in 2013, the time spent on mobile for digital was 316 minutes a day, globally. The time spent on television was 270 minutes. This will have a dramatic impact over the years to follow.” This will give rise to tablets and wearables, he noted.

Another trend that surfaced in 2013, according to the speaker, was emerging markets slowing down. “This set a serious impact for big multinationals, for whom 30 to 40 per cent of business came from emerging markets. This trend is not good, and should correct itself over the next 18 months,” stated PepsiCo’s chairman and CEO. He further highlighted FDI in retail as the next trend that influenced businesses in the year gone by. Even as he asserted that mom-and-pop stores would not die, he said that modern retail and private labels are a threat for the brands.

Addressing the growing power of social media, he pointed to another trend that re-defined 2013: crowd funding to produce a Kannada movieLucia. “We will see lot more of this in coming era,” he said.

Emerging trends in 2014

Shivakumar drew attention to the distinct defining periods that have marked history. He articulated, “1947 was the year of euphoria of independence, which lasted 10 years. 1977 saw collective anger that lasted for two years, in the wake Emergency. 1984 saw collective optimism and it lasted three years.” He added that the Lok Sabha elections in 2014 would see the collective voice becoming bigger as middle class becomes more connected and bigger.

“With middle class becoming stronger, the concept of responsiveness will be bigger with the ‘connected’ middle class. Brands would have to respond to them within the limited time frame,” cautioned the speaker.

Commenting on the changing media landscape, Shivakumar said, “We have seen more changes in last one year, when it comes to regulation, technology and launches, than we have in last 12 years. 95 per cent of programmes in India have less than one per cent TRP. This fragmentation will have to be addressed soon.”

‘It is imperative that we identify our ‘frenemies’

On the game plan to gear up for 2014, and beyond, the speaker said that the brands should focus on their strategy, without confusing it with tactics. “Strategy has been commoditised in every single category,” he observed, adding that the brands need to invest in their middle management continuously to reap results. He cited real estate, business schools, and jewellery as categories where commoditisation was prevalent, thanks to their focus purely on execution.

“Brands should also focus on creating industry leaderships,” he added.

On the role of celebrities, Shivakumar noted, “India is a celebrity market. We believe in: ‘When you don’t have a strategy, have a celebrity’. But going forward, brands need to question if the celebrities need your brand or if celebrity is him/herself a brand.”

He then explained how brands should address consumption behaviour of the consumer. “Brands should look at driving consumption through a more dependent (connected) ecosystem. For instance, mobile phones wouldn’t have been able to grow without Airtel and Vodafone. It is about addressing the wants and desires of the consumer, and not necessarily the needs. To work and grow together in an ecosystem, it is imperative that we identify our ‘frenemies’,” he said.

On the role of the CMO, the former marketer said, “The CMO should understand that consumer for market differentiation, which means they have to stay connected with the consumer. They should work with agencies for perfect copy. Besides which, they should be able to train the managers below them, and also the second-rung managers. They should look at stabilising the whole value chain, and not concentrate only on advertising.”