IT through the FMCG lens

A few days back, we got to do a workshop for one of the leading FMCG brands in India. It was a workshop to do a Vision 2015 for one of their popular brands. The workshop was attended by senior people from across the world representing different important geographies, like South Africa, South East Asia, Brazil and India ofcourse.

It was an extremely engaging and intellectually stimulating two days that I have had the fortune to be a part of. Coming from a completely different IT hardware industry, I could not help but think of so many learnings that could be cross-pollinated between the two industries.

Made we wonder - what would happen, if a set of senior FMCG managers are taken out and brought into the IT hardware industry. Let me speculate :

1) For both industries i.e the IT hardware and FMCG - there is a huge dividend to be exploited from geographical expansion. FMCG by its very nature has an appeal to a broader base - whereas IT hardware, from a current penetration point of view at 4% of the market is still virgin territory in India. Add to this, the huge broadband expansion agenda that the government has articulated - and the FMCG manager would perhaps be licking his fingers at this familiar opportunity staring him in the face. Ofcourse, easier said than done - but fighting over the paltry 4% was never easy anyways, was it ?

2) While IT hardware sales in India is very "selling" focussed, FMCG by its very nature is more "marketing" focussed. It is about occupying a certain mindspace in the customers head. I suspect a FMCG marketer would see this as a gap and perhaps relook at the market with this new set of eyes. For example - what does brand "Lenovo" or "Acer" or "HCL" stand for in a customers head? Yes, HCL would have a low cost positioning. Acer would have a "Low cost - MNC brand" positioning. But I believe there is a huge space available for other non-cost positions up for the taking in the market. The only brand currently crystal clear on a long term positioning plank is Apple with its "Kool" positioning. Pick up the paper and go through any PC advertisement. 9 out of 10 are around tactical messagings.... around a "Core2 Duo" processor, a "Windows 7" or at best a "Entertainment PC". Seriously, in a world overloaded with brands shouting for attention, isn't it too much to expect a consumer to remember the messaging of a certain product defined by cryptic numbers, of a larger brand? Yes, I know what a Merc stands for - but do I know what a C class, E class or a S class individually stand for? Who cares?... except perhaps the brand / category manager of that product line!

But a positioning or messaging takes years to percolate down to the masses. Nike I believe took close to 6 years, before their iconic communication around "Just do it" really began to stick with people. If there is one big input a FMCG marketeer can get in - it is this tendency in the hardware industry to think with a horizon of 3 months. Michael Dells glorified statement around a "nano-second to stop and breathe before running again" - has perhaps got overhyped and has cemented a wrong kind of thinking that urgently needs a relook. The success of Apple in overtaking mighty Microsoft in market capitalisation is perhaps a lesson that hardware managers should pause to think about instead.

3) In both industries, there is again a huge potential to get people to move up the ladder from using "unbranded" or "assembled" products. The unbranded hardware market at 55% of the current market has for long been a "promised land" that hardware marketeers have eyed with much anticipation. The thinking really was: If a branded product is today made available at a slight premium over the unbranded product, the flood gates will open. Numerous really interesting projects and brilliant people have had their go at this logic. But the fortress still stands strong. Why?

I propose - maybe its a mindset issue with the industry. Many of the people who are today at the helm of the IT hardware industry are mostly folks who got into the industry during the boom days of the 90's. This was the time when a 386 PC would sell for more than a lakh and margins were generous. In boom times, the whole focus is on getting in as many orders as possible and executing them at speed. The fifth P in the marketing mix became "PACE". Therein lay the seeds of "order taking" as against "selling" value. "Price" in such a scenario got a glorified importance. What followed next was a familiar human tendency... If all you have is a hammer - everything you see is a nail! So, when the challenge of cracking the "assembled" market came forth, when the boom times subsided - it was but natural to think in terms of price proposition.

A FMCG marketeer, may perhaps have a different take. Today people buy a FMCG product not particularly due to product features, but largely due to emotions associated with the brand communication. Surf for example which says "Dirt is good" - achieves a certain association in the consumers mind, which makes him overlook the fact that it is 20% costlier than Wheel. It also makes the fact that it contains certain kind of "chemicals or molecules" a secondary fact to his buying decision. This is not to say that features or price dont matter in an IT sale - on the contrary, it does. But the balance in weightage given to "Features and price" can definitely be reduced in comparison to the weightage given to "building a consistent brand positioning and messaging".

4) FMCG marketeers have tasted huge success in India in serving out their offerings in small plastic sachets. That one innovation brought in a huge number of consumers into their fold, who used the products on 'occassions". So a shampoo sachet is often used in many households only when there is a function for which the family goes out. "Pay as you go" has been a concept that has often been dabbled with in the hardware industry in the past. But with cloud computing, SaaS (software as a service), Web 2.0, unparalleled connectivity and converged products - all coming together now, the time is perhaps right for a fresh assault on this front, that has the potential to unleash the same kind of demographic dividends in IT as it has already done in FMCG.

5) By the very nature of their DNA, FMCG marketeers are always looking to tap into societal trends. They scout popular culture, literature and the "buzz" to tap into deep insights that then reflect in their product marketing campaigns. So, when Pepsi said there was "Nothing official about it" - more than the fact that it was tongue in cheek, what really catapulted the campaign was that it tapped into a generation of people who had grown tired of Indian "officialdom". The tools of the trade of an FMCG marketeer are perhaps getting relevant today in the IT hardware industry, where consumer demographics is changing rapidly. The IT decision makers in urban homes is more often the younger generation of people. The salience of getting the "communication" just right is getting amplified more than ever. Tactical ads of the past which showcased specifications and pricing are passe. The key question increasingly will be : "What is the one "tension" in society that your messaging is giving a release to?" Apple is the only one who has it right at the moment, by its positioning of being cool, that releases the tension of the Apple user by saying "This is who I am. I am a Apple user. I am cool".

The IT hardware industry in India, I believe is in the cross roads. On on one hand, it stands at a moment in time where the earlier wave has subsided. New generic competiton from mobile players like Nokia and Telecom players like Airtel (who provides online computing) are changing the playing field. And legacy mindsets of "order-taking" as against "selling" has steadily weakened the profitability in the industry. On the other hand, it also stands at the cusp of a great new wave that will be propelled by converged products, huge investments in broadband reach, new wireless technologies and the startling figure of an abysmal 4% IT penetration to-date. My bet is that when this next lot of consumers come of age, the fight in IT hardware will be between the marketeers and not between the sales folks. The company that will win, will be the company with the sharpest marketing focus and the deepest consumer insights.