The Economy: What Desi CMOs Should Know and Do

This week India celebrated 65 years of Independence. In addition to enjoying a mid week day off, I listened to the Prime Minister's speech. The economy was a major, if not the most important theme. Over the last few months, we have been hearing rumblings about an economic slowdown. ‘The Economist’ even carried an article – ‘Farewell to Incredible India’.  Phrases like ‘policy paralysis’; ‘the first of the BRICS to lose its investment-grade credit rating' are becoming more frequent. Here is an excerpt of the speech that really hit home for me:

"These days the global economy is passing through a difficult phase. The pace of economic growth has come down in all countries of the world. Seen together, the European countries are estimated to grow at 0 percent this year. Our country has also been affected by these adverse external conditions. Also, there have been domestic developments which are hindering our economic growth. Last year our GDP grew by 6.5 percent. This year we hope to do a little better. We cannot do much about the conditions that prevail outside our country. But we must make every effort to resolve the problems inside our country so that our economic growth and the creation of employment opportunities in the country are again speeded up."

While I am not an economist, I have experienced marketing in an economic downturn (from my US and Japan days). For many Desi CMOs, this may be their first encounter. We need to understand the economic climate as a DesiCMO community and adjust our marketing strategies and spends to account for these realities.

If you look at the facts, Advantage India still exists. India's GDP has crossed USD 1 trillion mark, it is 4^th largest economy in the world on Purchasing Power Parity, planned US$380 billion projected infrastructure investment in next 5 years, and perhaps mostly importantly, we have a large domestic market and human capital  is still consuming, requiring a lot of products & services.

From a marketeer's perspective, the big picture still remains strong and I think still a very exciting time to be a Desi CMO in India. Look at what we have to work with: the soon-to-be largest mobile market in the world, exploding e-commerce market and internet usage, pent up demand from the hinterland still coming out, the giant manpower & skilling requirement.

But our role will need to evolve much like our counterparts in other markets who have already faced full blown recessions:

• We have to be business leaders, not just marketing leaders and think beyond the 4 Ps.  
• Given pressures on marketing budgets, we will need to drive strong ROI from our marketing dollars and think differently about our marketing mix. This doesn't necessarily mean cut back. We could even maintain or increase spend to get greater share of voice (presuming competitors cut back)
• We will have to collect and use customer data more diligently so that we can execute more targeted campaigns and messages to drive greater share of wallet vs. "Spray and Pray" acquisition campaigns.
• We will need to have sharper negotiations with vendors, suppliers and agencies to move to outcome/performance driven relationships.
  
• We will need to relook at offerings so that customers can buy in smaller sized chunks and use pricing offers & risk free offers (money back guarantee) longer period trials

Most importantly, in tough times, customers return to brands they are comfortable with and trust. Trust will is a key theme in the coming months. So we need to ensure we work hard with our employees and partners to ensure we have a strong and authentic corporate character the market and our clients trust and want to do business with.

Next week, I will be chairing a panel on this very timely topic: "What’s next for marketers: Differentiation to survive global hyper-competition" at the Paul Writer CMO Marketing Summit in Bangalore. There are no magic spells to dodge the slowdown but our panel will attempt to share some ideas/tips on how marketeers can protect their turf but also strategies to convert these factors into strengths for their organization. I am looking forward to this discussion. If you have some questions or thoughts that will help make the panel productive, please leave a comment!

Note: Many thanks to very knowledgeable Kingshuk Hazra for contributing to this post!