We are seeing a shift of power away from the
companies to the customers: Naresh K Malhotra
Interview with Regents' Professor, DuPree College of
Management
Rajarshi Bhattacharjee / Jan 30, 2012, 00:53 IST
Consumers in India and
around the world have become more value conscious post a
protracted slowdown, says Dr Naresh Kr
Malhotra, Regents' professor, DuPree College of
Management, Georgia Institute of Technology. Malhotra is
also a visiting consultant for business, non-government
and government organisations in the US and around the
world. During a recent visit to India, he spoke to
Rajarshi Bhattacharjee about the relevance of
marketing research during economic uncertainties.
How can marketers leverage marketing research to
reduce the risk of product/ business failure during a
slowdown?
Marketing research is all about the things that help in
making better decision that does reduce — if not
completely eliminate — the risks associated with decision
making. So even during an economic slump, marketing
research is important. There are systematic procedures
for determining what kind of research should be
undertaken during specific market conditions.
If you look at more innovative and more creative firms,
what they try to do is, use the ‘down period’ or ‘slump
times’ to actually increase their market share. They come
out stronger with what they are doing because other firms
or weaker competitors cut down. And the easier things to
cut down are the activities that have long-term impact and
are not immediately felt. So they tend to cut down on
marketing research because the impact of it is long term.
But the more innovative firms actually increase their
marketing and marketing research expenditures during slow
periods so that they cater to the customers better and
capitalise on the weaknesses of the competitors and grab a
bigger share of the market.
In a globalised era, how important is it for
companies to adopt a cross-cultural marketing research
projects that go beyond states/provinces or ethnic
groups?
Because of globalisation, cross-cultural marketing
research, sometimes called international marketing
research, has become extremely important. The growth in
the marketing research industry is coming more in
cross-cultural research compared to domestic marketing
research. The successful entry of Procter & Gamble
(P&G) in China can be an appropriate example for
this. When P&G was trying to enter the Chinese
market, it was said that P&G will face a big
challenge as its products are more expensive than the
Chinese ones or its other counterparts and that it caters
only to the affluent consumer segments.
But P&G, being a good marketing firm, and realising
the value of marketing research, chose to ignore the
advice and did detailed marketing research. They spoke to
the Chinese consumers, tried to understand their values,
how they go about making decisions, their challenges in
life etc. One of the important challenges for Chinese
consumers that was largely unaddressed was dandruff.
Chinese people have jet-black hair and so the dandruff
stands out. Different shampoo brands were available in
the market at that time in China, but with a substantial
focus on the middle-class segment of the market. P&G
found that the Chinese are quite willing to spend up to
six times the price of local brands for a shampoo that is
effective in fighting dandruff.
Based on all this information, P&G chose shampoo as
the entry category and used Head & Shoulders as the
entry brand in China. The launch was very successful and
today P&G has managed to capture around 70 per cent
share in the shampoo market in China.
Another example can be the entry of Unilever in Japan.
Unilever aimed to enter the market through the detergent
category and had information that the Japanese are
convenience oriented and freshness and fragrance were
important to them. Based on the information they had,
without undertaking systematic marketing research at all,
Unilever launched a detergent in tea bag-like sachets
that can be put into the washing machine and cloths will
come out fragrant. But the product failed because they
didn’t take into account the fact that the Japanese use
low agitation washing machines and the detergent doesn’t
dissolve adequately in such machines. The fresh-fragrance
positioning also failed because the Japanese people
prefer hanging cloths out on a clothesline than using
driers.
On the other hand, before entering the Japanese market
Johnson & Johnson did extensive market research with
Japanese housewives, about their problems, issues and
challenges. Johnson & Johnson found that women are
sensitive to their environmental issues and the disposal
of tempura oil (used for cooking) was an issue. The
feedback that they got from the housewives was, if it
could be solidified somewhere it could be disposed as a
solid waste like other garbage. Johnson & Johnson
developed a product which, if added to tempura cooking
oil, solidifies the oil and can be disposed like any
other solid waste. And the product was very successful.
So the same market in the same country delivered
different results for the two companies — the right kind
of market research being the deciding factor.
How has the integration of social media in recent
times redefined the basics of market research
globally?
Let me put it this way: it is rapidly changing. To make a
statement that social media had no impact on marketing
research is not true, and to say that social media has
radically changed marketing research
technologies/procedures will also be incorrect. Marketing
research is about obtaining information from the
respondents. Typically what researchers do is prepare
questionnaires, give it to respondents and analyse the
responses. But social media is a domain in which
conversations are taking place naturally. There is a
wealth of information out there in social media and it
can complement standard market research procedures, which
I also expressed in the recent edition of a marketing
research book.
Social media can be a good additional source of
information for marketing research professionals. What
one can do is monitor the conversations that are taking
place in the social media — all the blogs, micro blogs,
Facebook etc. Researchers can also develop and refine the
expertise to analyse qualitative information available in
the social media. In the near future we will see that
social media as a domain in which to conduct marketing
research is becoming more and more important.
What are the latest technologies global companies
are adopting to win a marketing edge over
competitors?
We are in a technological age. Social media is only one
among the many gifts of technology. Together with the
consumers, companies also update themselves with the
latest in the technological domain to be on par with the
market demands. We have seen Philips, for example, that
had in the past made many technological innovations that
excelled and successfully introduced those to the
marketplace. The key is one needs to know how to cash on
technology in a marketplace that can meet the needs of
the consumers. In order to do that one has to rely on
marketing. I would say that marketing research can give
the guidance on how to translate technological
developments and available technologies in production and
business processes that will cater to the needs of
consumers in a competitive marketplace.
Have you identified any structural shifts in the
urban consumption patterns in India as a result of the
economic slowdown?
What has happened is, consumers have become more value
conscious. What we have seen in recent years is that
consumers have become more knowledgeable and have also
become more demanding. Now you can go on the internet
anytime and get information about products, stores,
compare prices and so on. What we are seeing is a shift
of power away from the companies to the customers. But
the most distinct change that we have seen is that
consumers have become more value conscious. This is true
in many parts of the world including India. If you look
around now, how many ‘sale’ offers do you see around in
the retail stores across markets? Almost throughout the
year the ‘sale’ phenomenon continues. This is because
marketers have realised that if they want to cater to the
value-conscious consumers, they will have to increase the
value of their products and services.
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We are seeing a shift of power away from the companies to the customers: Naresh K Malhotra