Crisis is an opportunity for brands to differentiate
Prof. Anand Kumar Jaiswal, IIM Ahmedabad, argues that companies should prioritise responsible behaviour and genuinely work towards societal concerns. While survival may be priority for many companies, a short term focus towards profit maximisation may backfire.
TPCI: At a time when the market is down and restricted to a few essential categories, how do you view the importance of marketing communications? What should be the new communication approach and strategy?
Anand Kumar Jaiswal: We say that in every crisis there is an opportunity. We have never had a crisis of this kind, at least in healthcare. In this situation of crisis, companies that can demonstrate that concerns about society, consumers, environment, are more important for them than revenue or profitability will see a lot more favourable response from consumers.
You have seen that many companies have come forward and are trying to help people. This is expected in a crisis period – forget your revenue or profit concerns for the time being and do whatever is possible to mitigate the suffering of people or help them. If you can contribute significantly or with serious intent towards a positive social impact (as opposed to overt marketing with pure commercial goals), this can help your brand in the long run.
Corporates have given major contributions, and in the era of social media, everything is very easily disseminated. For instance, Taj Hotels announcing that it will provide free accommodation to healthcare officials or Tata Sons Chairman Mr N Chandrasekaran announcing that Tata group companies would pay full salaries to their temporary staff and daily wage worker employed by these companies was widely noticed. The role of marketing then is to effectively communicate these initiatives to position you as a purpose-driven organisation.
Some companies, like those in healthcare, can undertake socially relevant actions and initiatives directly. Others can do their bit in terms of creating awareness, telling people to be careful or vigilant like promoting social distancing, saluting or highlighting the contributions of all those who are providing us essential services, etc.
This reminds me of a rumour that spread a few years ago that there is a scarcity of salt. Tata Salt came up with big advertisements that they have enough stock and can make it available at any place. Invariably that attracted the attention of everybody and that helped in making Tata Salt India’s most trusted brand next year. Sometimes, retailers could take advantage of this perceived unavailability of stock. There are supply related/availability related constraints. If you do something meaningful to help people at the time of crises, then invariably that attracts attention.
TPCI: Given the emphasis on social distancing, what key adaptations do you deem necessary for companies in their supply chain management?
Anand Kumar Jaiswal: Safety and health-related concerns will invariably affect the buying behaviour due to the probability (no matter how small) of you catching infection. Companies need to communicate that they are following best possible approaches and the products are untouched to the extent possible. Food delivery companies are committing that their food has tamper-proof packing. You need to do whatever best you can do in terms of people who are handling all these issues. It matters how they are maintaining their personal hygiene, possible precautions taken, using bigger packs, which can avoid human touch. Maintaining hygiene in the store, regular screening of staff or maintaining temperature charts, all these steps can help companies in reducing safety related concerns of consumers.
TPCI: The role of e-commerce is expected to increase drastically in the coming months, as retail stores and malls become more or less forbidden territory. What should Indian consumer brands do to prepare for this shift?
Anand Kumar Jaiswal: In all probability, the exit from lockdown is going to be a gradual and long process. There is a great degree of uncertainty and one does not know when we will come back to the normal or near-normal situation. All these malls and markets may not be operational at least in the near future. Even if they open, consumers may prefer standalone stores or stores in the neighbourhood. The government may not easily allow malls to operate and even if they are gradually opening up, consumers may have some concerns.
In that context, e-commerce has a big advantage in filling this gap. They can ensure that products are available at the doorstep. In the US, Amazon and other e-commerce companies are helping provide many products at home. They have hired a large workforce to meet the increased demand. People will also invariably start adopting e-commerce in a bigger fashion. Before the crisis, e-commerce was seeing significant growth. The crisis may further intensify the momentum because at least temporarily people will have no option. E-commerce companies have opportunity to attract new users. There is major increase in online purchase of grocery through Big Basket or Grofers. Even food deliveries companies like Zomato and Swiggy have entered the grocery delivery business.
TPCI: What major changes do you anticipate in customer behaviour, approach to consumer brands and buying patterns when the lockdown opens? What kind of opportunities does this open up for marketers?
Anand Kumar Jaiswal: It would not be fair to generalise, because the crisis may affect different kinds of consumers in different ways. Some marketers may be at an advantage. Others may be at the receiving end. For example, there is a general consensus that the economy will slow down significantly, there could be organisational cost-cutting, people may lose jobs, etc. All of that may eventually impact consumer spending. Especially consumers in the low income categories will cut down on their discretionary spending. In categories like electronic gadgets or apparels, eating out, movies, etc may be considered as discretionary. There may not be significant impact on essentials, though some kind of downtrading may happen in case of financial distress. For instance, you cannot stop buying soap, but you may start shifting to more affordable brands or move from branded to unbranded products.
But there are new opportunities. For instance, the concern for health is now higher and you would be seeing a growing interest in categories like immunity boosting products like chyawanprash and other natural Ayurvedic products. Health and hygiene products such as soaps, sanitisers, disinfectants, floor cleaners have been experiencing major growth. Touch-free products may come in vogue to protect against contamination. Some categories like meat are suffering because of pre-conceived notions or information that people are being fed.
TPCI: Companies tend to cut down on marketing budgets in such scenarios? What would you recommend in terms of both marketing budget allocation and optimisation?
Anand Kumar Jaiswal: During downturns, consumer spending goes down, which invariably affects companies. In general, the marketing budget is always the first among few to be relooked at. Often, branding is seen as a long term investment. Sales related spending like consumer promotion, trade promotion (push strategies) take precedence. So invariably when there is inventory build up due to less demand, you reduce prices and offer promotions so that the product gets offtake in the market. So many companies would reduce the marketing budget or similar other long-term investments.
However, companies with deep pockets typically avoid this. If you cut down on branding investment, it is going to surely affect you in the long term. For optimising the budget, digital marketing has grown significantly. This mode will get a real boost due to the lockdown, as it is a low cost medium relatively. People are spending a lot more time on internet at home. Print advertising may see some decline trend for some time .
If you are looking at the long term and are not financially stressed, the crisis has given you an opportunity to differentiate yourself. Companies should not exploit the crisis for purely enhancing sales as it may backfire. People can see through your actions, when you are acting responsibly and when you are trying to maximise profitability.
For instance, the makers of Lifebuoy and other soap companies are saying that you can use any soap for hygiene and not necessarily their product. Tata Hotels has announced that it would provide free accommodation to healthcare workers. In response to scarcity of ventilators in the country, Mahindra group successfully designed and developed a low cost ventilator in about little over month time and product is now ready for production. It also offered to use its resorts as temporary care facilities for Covid positive patients. Companies that go beyond profitability and act responsibly will gain in the long run.
Professor Anand Kumar Jaiswal is Associate Professor of Marketing at Indian Institute of Management, Ahmedabad (IIMA). His research interests include bottom of the pyramid (BOP) markets, services management, customer satisfaction, business-to-consumer e-commerce, and brand extension management. He was given Distinguished Young Professor Award for excellence in research in 2011 at Indian Institute of Management Ahmedabad. He won the International Management Division’s Skolkovo Best Paper Finalist award in 2012 Annual Meeting of the Academy of Management, Boston. He won the best case award in 2011 international EFMD Case Competition in the Indian Management Issues and Opportunities category. In 2013 international EFMD Case Competition he was runner-up in the Indian Management Issues and Opportunities category and received a special Highly Commended mention. He has been involved in executive training /development programmes with several Indian and multinational corporations.