The Best Touch Points To Market To SME Businesses In India

Imagine stepping into a market that has only 10% market penetration of the category that you specialize in.

Sounds like too good to be true?  Welcome to a new chapter in the Indian growth story. The  SME – Small and Medium Enterprises sector in India.

A few facts first.

In India, the size of the investment that a manufacturing or services company makes in its plants/machinery/equipment determines if it is to be classified as a Small, Medium or Micro Enterprise:

SME Classification INDIA(SME Classification: Indian Manufacturing and Service Enterprises, Source)

 Besides, today the SMEs in India are known to:

  • Contribute to 45% of the industrial output
  • Make up 40% of India’s exports
  • Employ 60 million people
  • Create 1.3 million jobs every year
  • Produce more than 8000 quality products for the Indian and international markets and
  • Have been growing at 8% per year (source)

In fact, by some accounts India has the largest number of SMEs in the world — at 48 million —second only to China!

But that’s not the most salivating part of the story. The magical statistic is the following:

As per a recent study conducted by Microsoft-Boston Consulting Group (BCG), nearly 90% of SMEs in India have no access to the Internet(!), compared with only 22% of SMEs in China and 5% in the US. A commensurate increase in technology adoption by SMEs can potentially add  $56 billion to the country’s economic output and create more than one million additional jobs, says the study.

This is a telling statistic on the growth potential for IT companies that market to SMEs, their wares related to Cloud computing (e.g., SAP, EMC), Productivity Solutions (e.g., Microsoft Office Suite, Xerox etc), Digital Marketing Solutions (eg, Google Adwords etc), Networking & Infrastructure Management Solutions (e.g., HP) etc.

No wonder then companies like Google have begun to make massive inroads to market to SMEs in India. Two recent examples:

  • As part of a massive campaign called ‘India Get Your Busisness Online‘ aimed at bringing down the barriers that prevents SMEs to get on the Internet, Google India & HostGator recently targeted popular traditional markets in Ahmedabad, Surat, Vadodara and Rajkot and built websites for over 5000 small businesses making them accessible to the world besides also creating Google maps listings and Google+ business pages for them. As part of this, Google India has recently announced its plan to get 50,000 SMEs in Gujarat online by end of 2014. (source)
  • Google India has partnered with Getit Infomedia to market Adwords to SMEs in South India. As part of this 50,000 SMEs in Coimbatore mainly in engineering, automotive components, textile machinery and pumps and motors would be targeted and educated on how to achieve global reach at lower cost with measurable results and personalisation. (source)

So while there doesn’t seem to be any dearth in the ambition and appetite of IT companies that target SMEs, the natural question that this begets is  – What is the best touch point to market to SMEs in India? What is the Zero Moment of Truth for these customers? 

My take on this  –  For IT vendors, banks are the best touch points to market to SMEs in India. The Zero Moment Of Truth in marketing (potentially any IT product/service) to SMEs is the time when they engage with their bank for their financing needs.

Why? My reasons as below:

  • Relationship: Given the role that banks play as lenders/financers/ advisers/ networking conduits for their SME customers, the latter tend to nurture their relationship with their banks for their long term interest. So the ‘lender – borrower’ equation in this context lends itself to exciting possibilities as a touch point for cross category marketing and info dissemination.
  • Reach: Banks have a very wide reach across the length and breadth of India.  For e.g., SBI – a government owned banking corporation has 14,816 branches in India, as on 31 March 2013, of which 9,851 (66%) were in Rural and Semi-urban areas (source). So they are naturally positioned as an incredibly powerful ‘distribution channel’ to market to SMEs.
  • A Customer Mindset that tends to be Future Oriented: The moment a SME operator steps into his bank to say, apply for a loan, his Zero Moment of Truth begins. After all, the sheer process of zeroing onto and applying for a loan are the most forward looking instances in terms of the customer mindset in setting up/sustaining his business. So can there be a better time to engage with him on possibilities and the cost benefit equations that are relevant to him from your product proposition stand point?
  • The Equation of Trust: From a psychological perspective, banks are traditionally about ‘trust’. So any message that gets seeded to a SME customer within the context of a banking relationship is bound to be enveloped with a liberal coating of feel good emotions like openness, good will and trust.   
  • Multiple Touch Points to Seed Content: A typical customer journey in a banking process is laden with multiple touch points from the multitude of application forms, the multiple approvals that need to be sought, the bulletin boards on the walls, the pamphlets that help the customers kill time as they wait for their turn, the tellers, the bank manager etc which can all seed compelling content on potentially any given new product/service that could be relevant for the SME.
  • A Win Win Relationship: Most banks tend to be big customers of IT services/products already. So they can be a willing accomplice to partner with an IT company to help market their wares to SMEs in return for say, a competitive pricing package for the coming year on their IT requirements. So a win win relationship can thus be effectively leveraged.
indusBank
(Image Source)
So there you have it, some food for thought. All along the purchase funnel right from building awareness, influencing consideration, driving sales to growing loyalty and retention, aren’t banks the strongest touch points to tap into when it comes to marketing to SMEs in India?

And for a category like ‘IT’ that is only 10% penetrated among the SMEs, what are we waiting for?

Marketing Lessons From Emerging Markets

Successful marketing examples from emerging markets teach us many a lesson in getting the basics right.

Let’s take Indonesia for example. While Coke is the beverages leader globally, it is NOT so in Indonesia!

Teh Botol Sosro – The Indonesian Beverages Leader

After 80 years in Indonesia, Coke sells around 80 million cases per annum. Interestingly a local player by name Teh Botol Sosro (TBS) sells 2x that volume. Fascinatingly, TBS is not even a cola, it is a Ready To Drink Tea format and has become Indonesia’s favorite beverage in less than a decade! (source).

sosro

The reason? As per this insightful post on Occasion Based Marketing, it is two fold:

(1) TBS’s positioning is grounded in 3 local truths

  • Indonesians eat several times each day (3 square meals and 3 to 4 more snacking occasions)
  • Indonesia has a strong tea culture
  • When Indonesians eat or munch, they feel the need to drink something as well

Given these, TBS positioned itself with the simple and straight forward tagline

“Whatever the meal, Teh botol Sosro is the drink”  –  (“Apapun makanannya minumnya Teh botol Sosro”).

(2) Discipline in executing marketing strategy

Not only did TBS get the basics right w.r.t the beverages segment, it also ensured robust execution through:

  • Consistency of the brand messaging across all touch points
  • Ensuring Physical Availability i.e. solid distribution across retail and popular fast food chains like McDonalds and KFC
  • Building Mental Availability i.e, driving top of mind awareness and salience by leveraging on all media channels: ATL & BTL

TBS-Iklan-Ramadhan-01

(A Ramadan promo material for TBS,  shows the extent of its ‘Physical Availability’ – Image source)

McKinsey & Co Report On Building Brands In Emerging Markets

In many ways, each of the above principles strongly resonate with the findings of a recent McKinsey report titled “Building Brands In Emerging Markets”. Read the full article here for an elaborate report based on research conducted in nine product categories (including food and beverages, consumer electronics, and home and personal-care products) across various developed and emerging markets.

Essentially the report highlights 3 key differences between emerging and developed markets and its implications as:

  • Harnessing the power of word of mouth is invaluable, as it seems to play a disproportionate role in the decision journeys of emerging-market consumers.
  • Getting brands into a consumer’s initial consideration set is even more important in emerging markets, because that phase of the journey appears to have an out sized impact on purchase decisions.  
  • Finally, companies need to place special emphasis on what happens when products reach the shelves of retailers, because the in-store phase of the consumer decision journey tends to be longer and more important in emerging markets than in developed ones.

McKinsey Report On Emerging Markets(Exhibit Source, McKinsey Report On Emerging Markets)

While the above example and theory are inspiring and instructive in many ways, these miss out a commentary on an important characteristic of an emerging market.

How about speaking about building CATEGORY RELEVANCE first?

Emerging markets are essentially those where the categories / segments in question are under developed.  i.e., the target consumers in these markets don’t find the category/segment relevant to them – at least as yet. So if a segment itself is not seen as relevant in the market place, how crucial are word of mouth / perfect in-store experiences / or consistency in communications for a brand?

As a corollary, brands that start off by ‘setting up the dialogue on a category relevance’ can be said to be leveraging the opportunity to drive awareness of the category/segment and thereby establishing a strong salience of its branded offering in the market. If this key – setting up the context – activity is handled right by a brand, it can naturally have a solid advantage in the market place in the emerging category.  Let’s take 2 examples, one from a marketing strategy stand point and the other from a creative execution stand point.

1. Wines in India – Marketing Strategy In An Emerging Market

Wines in India is still an emerging market.  In 2012, wine (including imported varieties and sherry) only made up 0.45% of sales of 9 liter cases of alcohol in the country! (source). In other words (for various reasons) wines as an offering in India are still not seen as ‘relevant’ in the consideration set of alcoholic beverages category by most target consumers. So how do you build relevance for wines?

Sula Wines – a pioneer at the forefront of the Indian wine revolution shows by example. It embarked on a set of relevance building initiatives for the segment by going all out to promote wines domestically.For example, it holds about 1,600 wine tasting sessions a year to educate people on the finer points of enjoying a glass of wine, off late it has also been actively developing ‘wine tourism in India’ with vineyard tours and a music festivals held at its winery.

As a result the company produced 550,000 cases of wine last year and expects the number to rise by 25% in 2013. (source)

Sula Kebab Fest

(Image Source, Kebab Fest @ Sula Wines)

2. 4×4 Drives in Venezuela – Creative Executions In Emerging Markets

Venezuela has 147 motor vehicles per 1000 inhabitants. Compare this with 797 motor vehicles per 1000 that USA has (source). Motor vehicle here is defined as  automobiles, SUVs, vans, buses, commercial vehicles and freight motor road vehicles.

So how does Jeep communicate in each of these two markets?

You guessed it right! In a market like Venezuela,  Jeep focuses on setting the category context first – i.e. it’s communications are tuned towards building relevance of GETTING OUT as an activity ; and not so much on its technical specifications or competitive claims. See the following print ads by Leo Burnett developed for Venezuela. I love how Jeep manages to drive relevance of its segment without losing its tongue in cheek tone.

Jeep_Climber_ibelieveinadv   (Source, See the other ads in this series here, agency Leo Burnett)

On a related note, see how Jeep communicates in Bolivia here.  Similar theme here too –  More focus on setting up the category relevance than on proclaiming its uniqueness / superiority vs competition.

Now, as a contrast, how does Jeep communicate in the US?

It still speaks in its tongue in cheek tone, it still speaks about getting out or making the world your playground. But here, it also focuses on what makes Jeep the best in its segment by rattling off the pertinent technical specs or superiority credentials. See the following print ad from the US.

wrangler_garage(Source, Click on the ad for the enlarged version, agency BBDO)

The copy says: “Dana 44 solid axles, heavu duty Rock-Trac 4WD system, Tru-Lok fornt and rear differentails, front and rear mounted tow hooks, CD player, and seven speakers.”

On a related note, see Jeep’s print ad for Germany (another developed market) here and here.  Similar theme here too as that in the US – The focus here is on reinforcing its uniqueness and/or technical superiority vs competition and not so much on setting up the context / category relevance.

In Summary..

Whether it’s about a marketing strategy or even a creative execution,  whenever we see a success/failure of a brand in the context of an emerging market, probably the first questions to be asked could as well be:

  • Who was the first to drive the category/segment relevance in the market place? (who initiated the dialogue)
  • And How?  (is the dialogue grounded in local consumer truths?)

Once you have these answers, often times, you might not need to see the market shares for validation.

Don’t you think so?

(Featured Image –  BRIC Countries, Source)

Of trucks, specs and monopolies

Buri nazar wale, tera mooh kala

Sounds familiar? It losely means:you with the evil eye, may your face turn black. Does this remind you of anything? I guess for Indians the question should be how many such phrases do you remember?

HORN OK PLEASE/AWAZDO/HUM DO HAMARE DO/and most common ‘JAI HIND’

I am sure that the list could be endless with a gazillion kinds of messages having tones that are quirky, humourous, funny, cunning, spiteful, romantic, ambitious, fanatic, patriotic and sometimes absolutely ‘WTF kinds’! And I am talking about the messages that are painted on the back of trucks in India

See here, for a good detailing of some history behind some of the most popular write ups on the back of trucks. A infotainment indeed.

Besides my realisation of the obvious ‘service’ that they do to the roads by lighting up moods, igniting conversations and sometimes even helping drivers stay awake, what was interesting for me is the phenomenal reach and the audience that each truck (or even an autorickshaw in a city) has in India.

It is in this context that I felt a creative to be hitting on the ‘desi cool’ theme.

Brand Titan Eye+ (clock here for a larger view of the picture below)

Though the creative is interesting and has a real ‘desi cool’ ethic, I am not sure how impactful or even relevant that would be for the kind of consumers that Titan Eye + wants to speak to (why? that’s a different post altogether). Unless this is part of a larger 360 campaign that spans across all relevant touch points, I am sceptical about its success (of this single medium) in delivering results as claimed above.

While reading about trucks in India, another interesting thing that I came across is this new ‘genre’ of monoploy game that the popularity of trucks has spawned.

Truckopoly, as the game is called as per the designer Shantanu Suman, is adapted and designed on the basis of the truck industry of India. The objective of the game is to become the wealthiest truck owner through buying, renting and selling property and goods across the country. The game involves various rules that have to be followed by the truck drivers while transporting goods from one city to another. The challenge is to stay on the top while incurring losses in the form of fines and penalties.

A cool idea that can be translated to the digital realm and marketed as the desi farmville’s of the world. Has there been any popular online Indian game that has captured the imagination of kids and adults alike in the new milieu? Good ideas, seeded through the right channels with decent funding and some innovative marketing is all that it could take to make it big. Hmm.. some food for thought there?