Archive for August, 2012
Himalayan. Sure, we’ve all noticed it thanks to its packaging. It stands out in pink from the entire lot of blue, green labeled bottled water bottles, colors you’d typically associate with water. It stands out also because it looks contemporary – thanks to its vertical logo design as compared to the others that are oriented horizontally.
These things stand out at first glance, but what really caught my attention in these Himalayan water bottles on a closer look, was the use of varied imagery across bottles as well as different narratives to create tales about water.
Here are a few:
I was born in the Sivalik range of the Himalayas. In a place most of you visit only in an Atlas. In a time that wasn’t measured by cuckoos that sprang out of clocks. In a silence that was sometimes punctuated by howling winds and gushing streams. In a world that had nothing to do with yours. Seems like reason enough to be here. Live Natural.
I am so pure I make a worldly worn-out cliché like “pure” seem new again. So pristine, I could have only survived twelve hundred meters above the rest of the world. So removed, the only things I’ve been in contact with before you are sun, wind, earth and snow. I am one of the purest things you’ve laid your hands on. I hope you are thirsty. Live Natural.
I look back on life – its funny how things turn out. You, the creator of beeping sirens and honking cars, yearn for the solitude of mountains. You, a connoisseur of fast food, now gaze at water that took years to gather natural minerals as it trickled down from the Himalayas to within your reach. And I, some of the purest water in the world, stand here, trapped in a bottle. Come, enjoy the irony. Live Natural.
These short narratives help personify the brand. Give it a voice. Connect the consumer with its source, its life and its natural goodness. Sets it apart from other water.
This is a clear example of laddering up the benefits to appeal to the consumers. They all talk about safety and hygiene, but Himalayan takes it to the next level of a natural, pure, life. And these narratives – some factual, some poetic, some poignant, some sarcastic – help make the connection of the brand to the consumer.
- Roshni Jhaveri
Market research (MR) is always interesting, sometimes eye-opening, and occasionally vastly entertaining; it is a few of the entertaining situations observed by my friends and I that I am describing below.
Often people complain that market research is useless because people do not do what they say they will do. Quite true, and that is why observing and making inferences from actual behaviour in various environments is so critical.
Once though, we didn’t even need to enquire about a respondent’s past behaviour, or observe her daily routine and purchase pattern in order to spot the anomaly, it was quite evident during the interview itself.
This interview was being conducted to understand health – consciousness and related habits; it was being recorded on camera and we were watching it on a TV in another room. Right at the outset, the respondent claimed to be very health conscious and careful about what she ate, but she was more than a bit overweight, that gave us observers the first reason to doubt her claims. There was about 30-40 minutes of discussion around the work she does, where she shops, the kind of products she buys, etc. At some point, the young lady started feeling hungry, proclaimed that she’d had a very busy day, rummaged about in her handbag, took out a bar of chocolate and proceeded to eat the entire bar! Not five minutes after she had earnestly told the interviewer how she prefers to buy juice rather than aerated drinks for health reasons, and eats a lot of fresh fruit regularly! Yes Ma’am, we believe you.
Picture a focus group composed of middle-aged women, being conducted for a company marketing a regular consumer product – say a soap, powder or detergent bar. At some point, the respondents are asked about the reasons for selection of a brand, how their preferred brand is better than other brands, do all members of the family use the same brand, what do the others like, etc. Then the discussion veers around to which brands the husbands like, product attributes that the husbands prefer, and how they influence their husbands. At this point, one woman throws a googly into the discussion that leaves the moderator and the observers totally stumped. She coyly explains, “main bachhon ko kisi aur ke ghar bhej deti hoon aur unhein ‘khush’ kar deti hoon” (“I send the kids out to someone else’s house and then make him ‘happy’”). Disclosing this to a group of strangers during a discussion on quite an unrelated topic, this woman was either more frank than the rest, or worked harder at influencing her husband!
And if you thought that only the respondents were entertaining, it’s not so, often one’s own colleagues prove themselves capable of providing dollops of entertainment too!
Market research with Mr. Maths; a young enthusiastic colleague, eager to use the Logic and Quant fundas obtained through years of rigorous study at a premier institution.
[A bit of background – The portion of the discussion described in the paragraph below pertained to understanding affordability and willingness to pay for a product. Now, research on price is complex and accurate answers cannot be obtained through a simple qualitative research alone. Most people find questions about the price they are willing to pay for a product difficult to answer, especially if it is a product they haven’t purchased before and hence lack a reference frame for thinking about.]
One of our respondents answered the questions put to him by Mr. Maths as best as he could, but his answers did not tally too well with his stated income. Our intelligent inquirer, on the other hand, would permit no falsehood and insisted on understanding how the respondent could afford to pay Rs. x as EMI when his annual income was actually ‘only’ Rs. y and expenses were as at least as high as Rs. z. Not a conversation anybody would enjoy, and understandably, our respondent’s temper began to rise and the tone of his answers grew sullen.
After a few minutes of this, the interpreter decided that he’d rather intervene now than be stuck in a police case later; he gently pulled young Mr. Maths aside and pointed out two salient facts – a) the respondent was known to be very hot-tempered and often got violent when annoyed and b) he was known to carry a weapon. Survival instinct trumped the urge for data-gathering and that interview came to an abrupt end.
Market research with Mr. Diligent:
Diligently covering every bullet point from the discussion guide, he asked a poor farm labourer whether he would like to improve his living conditions and quality of life; this, when they were standing in front of the labourer’s hut which had been battered by several monsoons and was visibly close to falling down, and the labourer’s several malnourished stick-thin children stood nearby. Unfortunately, Mr. Diligent also knew the local lingo so there wasn’t even a translator who could modify the question and make it less frustrating. The labourer, tired at the end of a hard day, decided that he had endured enough inanity for one evening. He pointed at his house behind him, said, “aankhen hain tho khud hi dekh lo” (“if you have eyes, then see for yourself”) and walked off muttering to himself, casting aspersions on both the young man’s education and his intellect.
And sometimes the research venue is entertaining enough.
For some product testing research in the South, the venue was the big hall of a Kalyana Mandapam (marriage hall). It was simply surreal – five sets of tables and chairs were set out in the hall, where various respondents sat trying out different products and giving their opinions about them. Beaming beatifically down on everyone as if blessing them were portraits of happily married couples, complete with big floral garlands; in between were scattered statues and sculptures of various gods and goddesses. Quite an auspicious venue for a research, wot!
And, of course, we had a stage, with an arch covered in plastic flowers – in case the product got a thumbs up from respondents, the company folk had the option of breaking into an impromptu victory jig, there was even a sound system available to provide musical accompaniment.
- Zenobia Driver
(Disclaimer : This is not an entirely original post, some of these anecdotes were related to me by folk working at various companies)
Product managers and brand managers from FMCG businesses will sigh wistfully when they read of the response rates to ads and promotions in the Foods and Hospitality business!
Unlike FMCG categories, where conversion rates for promotional events, ads in newspapers with discount coupons, etc. are typically in the single digits, and PR also has low conversions in the short term, for restaurants the conversion rate is much higher and the results show almost immediately.
Consider the example of Café Terra, a small eatery in Koramangala in Bangalore that specializes in continental breakfasts, especially waffles. Soon after they had opened, they were visited by a reviewer from TOI, both the food and the ambience made a positive impression on him. The review was due to run on a Sunday morning and expecting an increased number of customers, they decided to order extra provisions. Their optimistic best-case forecast was to expect 50% more customers than usual on Sunday morning, and they ordered provisions to cater for the same.
Come Sunday morning, there was a crowd at the door, business more than doubled and they ran out of food by lunch-time; their estimate is that they could have done more than triple the regular Sunday business had they had sufficient stock.
That’s how quickly and how strongly PR impacts sales in the Foods sector.
Don’t you wish there were separate detergent and skincare review sections in the newspaper that you could avail of! And that detergents and skincare products were as much of an impulse purchase as foods are.
- Zenobia Driver
(Disclaimer : The author is a friend of the owners of Café Terra and likes to eat there whenever she visits Bangalore)
In May, we ran a post on the market for organic goods and how this market has been seeing a lot of activity in the past few years. One of the key challenges faced by the industry is the lack of adequate and standardized certification methods and policies. A recent initiative in the organics textiles industry is all set to help this sub-segment grow. To keep up with the increased demand for organic textiles, the Agricultural and Processed Food Products Export Development Authority of India (APEDA) has launched certification standards by recently including the National Organic Textile Standards (NOTS) under the National Programme for Organic Productions (NPOP). This initiative would help boost demand for organic textiles products as well as benefit local producers and the environment. Owing to this, organic textiles exports are expected to increase by 50%, from Rs.1,027 crores in 2011-12 to Rs.1,500 crores in 2012-13. (Click here and here to read news reports)
In May, we also ran a post on the direct selling business model followed by companies like Tupperware, Avon, Amway, Oriflame, etc. and how this has now become a force to be reckoned with in India especially for traditional FMCG and OTC companies. A recent article in the Economic Times caught my attention regarding the same. Below is an excerpt, click here to read complete article:
While traditional FMCG companies are facing slower growth due to economic slowdown and weak monsoon, direct-selling companies seem to have bucked the trend riding on stable demand, direct engagement with consumers, flexibility in market penetration and lower costs.
Direct selling firms—which sell their products to consumers without routing them through retail stores—are estimated to have posted 21%-23% growth in India in 2011-12, according to IDSA and industry body PHD Chamber. In contrast, traditional FMCG companies, which sell through retail channels, grew 15% in 2011, and 17% so far this year.
Clearly it is the traditional FMCG and OTC companies that need to take notice and be prepared.
- Roshni Jhaveri
Six months ago while attending a small agriculture related workshop I was asked what would I change about agriculture in India if I could change anything. My response was that I would change everything from what is grown, who grows it, how it is sold — almost every aspect of agriculture. But one of the biggest changes I would like to see is “farming as a profession”.
The simple act of putting the word “profession” next to “farming” forces us to invert on its head our typical view of farming, as an activity undertaken by mostly uneducated, unskilled, poor people in rural areas.
Seeing farming as a profession helps us envision an alternate future where farming is undertaken in a more scientific manner, where farmers select which crops to grow based on the ecological conditions of their land (terrain, soil type, water, weather, etc.) as well as the potential net income from the crop. A world where farmers are aware of the optimum inputs (water, fertilizer, pesticides, etc.) required for their crops.
Professions demand a drive towards excellence through continuous learning and improvement and farming wouldn’t be an exception. Farmers would need knowledge, skills, tools and techniques to excel at farming.
People working in the Indian agriculture industry typically mention various issues that need attention; issues such as need for more R&D on seeds, seed banks, access to weather and market information, irrigation, better infrastructure, inefficient and non-transparent markets, etc. But hardly anyone talks about the issue of farming skills and knowledge, which is the biggest component of making farming into a profession.
According to a 2010 paper on information needs of Indian farmers by the International Food Policy Research Institute (IFPRI):
Considering the large number of marginal and small holder farmers, particularly in rain-fed regions, a major need is to build the capacity of farmers to demand and access information to increase their productivity, profitability, and incomes. The information must be reliable and timely. For example, technologies need to be suited to the farmers’ capacity to take risk, which tends to be low in rain-fed regions, and integrated with available and timely services that support the relevant technology.
The same study mentions that for small farmers, the biggest sources of info are other farmers, input dealers and radio. For large farmers, the biggest sources of information are TV, other farmers and input dealers. Roughly 40% of small farmers and 55% of large farmers claim they get some agri-related information from at least one source.
There are many organizations (government, private and civic sector) which are trying to address information needs of farmers. Most of these efforts are stand-alone and do not address the problem in an integrated manner. A private sector service may provide market price information, Digital Green videos may provide info on cultivation techniques while government agencies may offer information on seed varieties.
I wonder if there are any service providers who offer an integrated solution through multiple partnerships with government agencies, private and civic sector organizations.
- Richa Govil
(Richa shares her thoughts on rural businesses at ‘Stirring the Pyramid’)
In India, rice and wheat comprise 70% of the agricultural produce by area, but less than 25% by value. That is, wheat and rice are low value crops to grow compared to other options. Yet, the land area dedicated to wheat and rice has not been decreasing significantly.
Government data shows that the consumption of wheat and rice has been declining around 1-2% in both urban and rural India, while demand for fruits and vegetables has been rising by 2-3% annually. This again begs the question: Why aren’t farmers shifting to growing more fruits and vegetables?
In addition, detailed studies across the country have also shown that while farmers just about break even (gross return compared to gross costs) on cultivating wheat and rice, growing fruits and vegetables is a profitable undertaking (gross returns are on average 2x the gross costs). Besides fruits and vegetables, there are other crops also which generate higher income than wheat and rice which we won’t go into, to help keep this post focused. (Refer to earlier post for detailed data on gross returns on different cereals, fruits and vegetables)
Having gone through these reports and data, I have been wondering, why, despite all this, do farmers choose to grow mostly wheat and rice?
In other words, if Indian consumers are demanding more fruits & vegetables and these crops are more lucrative anyway, why do Indian farmers keep growing more and more wheat and rice?
Are farmers completely unaware of the difference in returns? Or, is it that despite knowing the disadvantages, they choose to grow wheat and rice?
The first possibility seems rather difficult to believe. While I am sure farmers have not done a detailed P&L for growing wheat versus okra, it is unlikely that farmers are completely ignorant. They probably do have a rough idea of probable market prices, input costs and profits.
So what is it about fruits and vegetables that keep farmers from growing them?
Out of intellectual as well as professional curiosity, I have being digging deeper into this question, with the help of field visits and people working in the agri sector.
Here are the results from my own observations and discussions with agri-sector professionals and experts.
- Minimum support price. Wheat and rice come with a government minimum support price (MSP), and fruits & vegetables don’t. Farmers find it assuring to know that MSP exists and may influence open market prices and/or demand for their produce. (Leave aside the fact whether MSP has a real impact on market prices/demand in reality)
- Risk of crop failure. Pulses, fruits and vegetables are more vulnerable to adverse weather, leading to higher risk of failure. Rather than pay for crop insurance (wherever it is available), farmers prefer to simply avoid these crops.
- Care and effort required in cultivation: Wheat and rice require less care and effort to grow than fruits and vegetables. Higher care for crops means reduced availability of farmers for alternate income-generating activities, whether crafts or wage labor.
- Need to sell quickly due to lack of storage facilities: India has about 5400 cold storage units. So farmers don’t really have much of an option to store fruits and vegetables for later. The need to sell immediately means that they are at the mercy of current market prices, unlike for grains which can be held on to for longer.
- Price volatility: Fruits and vegetables experience a much higher degree of price volatility than grains. Part of the reason for this is the high level of mismatch between demand and supply of fruits and vegetables. Part of the reason is the inefficiency of markets in matching supply and demand in different parts of the country. And of course, part of the reason is their inherent perishability and lack of a cold-chain.
- Price realization due to spoilage: Lack of proper storage and transport facilities has yet another impact – spoilage of produce resulting in lower price realization due to poorer quality of produce by the time it reaches markets.
- Stored crops as financials assets: As one agri-expert put it, farmers treat grains like fixed deposits, for lack of other ways of saving/keeping money. They store them and sell them off as needed. You simply can’t do that with fruits and vegetables! Even cold storage would extend the life of fresh produce by only so much (unless processed, of course – but that’s a completely different topic).
Almost all of the reasons above relate to risk – either production risk, logistics risk or market risk. Only two non-risk reasons can be seen in the list above – opportunity cost of choosing crops which require greater time and care, and usage of stored crops as financial assets (which in principal can be addressed with better financial access).
Typical solutions to risk management are insurance products, but typical crop insurance products cover only a limited subset of these risks. And in any case, insurance subscriptions in India have been much lower than hoped for by policy makers and non-profits alike.
So what mechanisms and institutions are needed to address the plethora of risks, to enable farmers to actually deliver what people want to eat and also what gives the farmers higher margins? Or, if we expand our thinking to non-food crops, we can ask: what mechanisms and institutions will help farmers shift to more lucrative crops?
- Richa Govil
(Richa shares her thoughts on rural businesses at ‘Stirring the Pyramid’)