Silver lining in the dark clouds

The businesses would possibly remember 2011 as a year which progressively became a very challenging year with increasing prices, higher interest rates, global economic turmoil, bearish financial markets and most recently an unexpected fall of Rupee against the greenback; further fuelled by our own systemic failures in policy formulation leading to a reduced and cautious consumer spending.

Unfortunately, this grim outlook is expected to continue in 2012 as well. Having said so, this scenario however sets a perfect platform for Indian marketers to don their thinking hats and strive at maximising the returns on the marketing efforts.

Companies are focusing on building a larger market base through mass market or alternative product variants, shedding premium tags for technically advanced products, providing cost efficient solutions and exploring synergies to match the ever decreasing customer threshold for consumption against the grim economic background.

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For instance in automobile sector which is being battered with high petrol prices, car companies are ramping up their production capacity for an increased diesel variant sale. The demand for diesel cars has increased manifold and variants across most manufacturers are having a long wait for about eight to 10 months while petrol variants seem to be readily available.

The increasing tilt towards diesel variants, surprisingly so is witnessed in luxury cars as well with brands such as Audi and BMW gaining on diesel car sales.

This focus on diesel variants is likely to be the way ahead in 2012 to keep the sales ticking for a sector which saw a four month contraction on a year on year basis from July 2011 and an expected third time downward revision in passenger car sales for financial year 2012, pegging the car sales at almost same levels as in the last fiscal year.

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Similar instance of changing realities is seen in consumer durable sector where smart appliances or applications are being planned towards mass markets at almost same pricing or at a marginal premium.

Durable companies are planning to launch intelligent commonplace gadgets such as washing machines or air conditioners which can be controlled by mobile and not just depend on changing design, colour or minor modifications to entice the consumers.

A distinct shift towards higher penetration in mass market is expected further with companies such as Daikin competitively pricing their entry range products. Lucrative consumer financing schemes are being re-introduced and retailers are much more open to promote the same.

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Many durables companies are increasing their distribution presence out to semi-urban and rural areas by tweaking and customising their respective products and marketing approaches to better their sales.

The FMCG sector, while continuing with cost-cutting endeavours such as reducing and thinning of packet sizes might further look to redesigning the packaging itself.

Packaging companies which have themselves been reeling under increased cost of petroleum by-products have taken the cue and are introducing light weight and newer designs for containers, bottles and caps that are likely to have a huge cost saving advantage for a high volume production.

Further exploring synergies and building partnership is likely to intensify as it helps leverage one's strategic advantage at a reduced cost.

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The partnership between HUL and Future group to co-brand bakery products, which would be sold at select Big Bazaar outlets is a classical point in case to reach out to larger audience benefiting from each partner's core strengths.

So, as we prepare to ride a rather tentative Indian market in 2012, Indian companies will do better to increase their appeal and come out with approaches to keep themselves ahead of the pack.

As we see it, while the consumer sentiment will continue to remain subdued, the leaders of the marketing pack would base their efforts around the positives playing in consumers' mind.

These could be based on associations with environmental consciousness such as green efficiency, a brighter future for children, social responsibility, taking health to wellness amongst others.

Karthik Ramamurthy is head of Synovate Business Consulting India & MENA (Middle East & North America); Vihar Bhagwat is senior manager, SBC.