Factors that affect Advertising and Marketing

There are some factors which deeply influence advertising thinking in ndia and which are entirely different from the last
century and perhaps other developing countries. These should be monitored constantly, even when one is not directly
dealing with these products or segments, because the whole economy is an integrated whole and that affects all of us.
There is a lot of movement within each of these domains, sometimes situations changing totally as quickly as in three
months, creating a profound impact on the entire economy. Often unobserved and not very well understood, but critical
nonetheless. But by and large, these factors control and influence ndian economy far more than they are credited with and
thus should be watched keenly.
1 IndustriaI growth
t is difficult to measure in absolute terms because when one sector is doing well, another may not. ndustrial lending is a
key indicator. Big industries are in especially tight spot in 2008-09 onwards due to global recession, forcing closures and
retrenchments. And the financial health of the urban industrial worker segment is a major influence of the urban market.
Medium and small scale industries have been in trouble for some time some 44,000 closed down in 2004-06. But that does
not always show up in research data since this segment is not given the correct weightage in aggregate growth. n May
2003 CRA report was based on four industry groups food products, beverages, tobacco and basic metals, which is a
distorted view. The health of Pepsi, TSCO, TC, and TELCO does not represent total ndian industry. Most small and
medium industries are located in small towns and semi-rural areas, and the purchasing power of their employees is as
important as that of the farmer or the urban industrial worker.
2.3.2 The China factor
As Chinas so-called over-heated economy that grew at over 10% of GDP for several years slows down, it has many
implications for ndian market. Unable to compete with Chinas subsidized production, many ndian industries are
manufacturing their products in China, taking advantage of the same subsidies and importing them back into ndia, still at a
price cheaper than domestically produced goods.
China is also always trying to flood the ndian market with industrial intermediary products and cheap consumer products for
the lower end of the market. t provides ndia with more product options at lower prices. But it curtails our industrial growth
and reduces jobs in ndia and thus buying power. China is also a very big trade partner of ndia and even a slight slowdown
there will impact ndias industry and market economy in a chain reaction and thus advertising.
2.3.3 EIections
Not very well documented for obvious reasons, but election expenditures are a major factor in ndian economy. The
Loksabha and state legislature elections, as well as the smaller local ones like by-elections, panchayat, and municipal ones
are going on all the time.
For the advertising industry, the amount of print ads, banners, hoardings, posters, plastic danglers, booklets, CDs, video and
music vans, films, SMS, commercials and absolutely rubbishy press and electronic communications that are produced is
truly mind numbing. The two major parties will do just one national campaign each and most advertising professionals will
not participate in that. But many agencies will work on local election campaigns for individual candidates in every
constituency. These release an enormous amount of unaccounted cash into the market, which in turn goes to buy goods
and services immediately for a very large number of people. And they are all advertised, one way or another.
2.3.4 Monsoon rains
t used to be said that the rain is the real finance minister of ndia, because it controls the entire economy. The dependence
on rain is not so great now, partly due to irrigation and partly because agriculture accounts for only 17% of GDP now. An
ETG analysis of 10 years of rainfall data and key economic indicators show that during 2004-06 rainfall had been below
normal, yet these years have shown the highest economic growth. But still rain matters a lot, because in the end even
ground water based irrigation depends on recharging by rain water. ndia probably will not see a famine again, due to its
ability to import food in difficult years now. But nor will the farmers buy anything when their harvest is poor.
f the farmer does not have the money to buy gold to cars, imported luxuries to aspirational products, they buy it all now and
all are advertised - urban production suffers. However, ndian market is now becoming more climate-proof and stable. So
forward planning and budgeting for rural advertising can now be done with more confidence.
Yet, monsoon rains still wields enormous power over the ndian market. As 2009 threatens to develop into an El Nino year of
scanty rainfall the last El Nino was 2002, a drought year in ndia the FMCG manufacturers are getting jittery. Rain affects
many other sectors too.
Rainfall has been about 25% less than average in 2009 and its consequences are very visible. Because there is less sugar
cane, pulses and oil seeds produced, prices have shot up in spite of huge import and government control. Clearly black-
marketing is at work. Due to less cotton production, textile and garment manufacturing industries are in doldrums, especially
when due to the world recession ndian garments, gems and jewellery were already considered over-priced in the world
market. ndian coffee export has come down severely due to the cost-push price increase in cash crops inevitable in a
drought year.
When farmers, semi-skilled and industrial workers earn less and spend more on such essentials like food and clothes, they
obviously have little money left for buying other goods and services, which is the domain of advertising.
The market had grown at a rapid clip only in rural areas, riding on the good monsoon of the past few years and that can take
a serious knock if the rainfall is poor.
2.3.5 DisposabIe income
The great debate goes on about the percentage of ndians living below the poverty line. But where is the poverty line? As
mentioned elsewhere, in 2004-05 it was 21.8% national average, based on consumer expenditure data collected from 30-
day recall period. Apparently village folks do not remember what they did a month ago, and data came out skewed. n the
last three years researchers have lived with families and collected data on 7-day recall basis. The new data place population
below poverty line at about 19%, still horrendous in absolute numbers. Though these people do not buy advertised products
right now, they do aspire to in future and thus of interest to the advertising industry.
According to the World Bank survey 2005, ndia emerged as the 12
th
wealthiest nation in the world on the basis of
Purchasing Power Parity (PPP). n April 2007 ndia became a trillion dollar economy, an exclusive club of only 7/8 nations at
that time. Great for nationalism, but it just does not seem to reflect at the micro level, where our buyers of advertised
products are. Poverty and unemployment still dog us, which slow down growth and thus purchasing power.
No matter how eagerly the commercial world looks at the great ndian middle class that spends and acquires with the most
uninhibited energy, its size is probably just about 50 million families, or even less, with the current economic downturn. Their
annual income is considered between ` 2-20 lakh. Though small in number, this is where our buyers are. To sell into this
market, advertisers will need deep understanding of ndias new consumer today, to deliver the products that meet their
aspirations. Advertising agencies will have to be sensitive to their attitudes and aspirations. They also do not like to spend
much, still being loyal to their age-old thrifty habits. Therefore low price points and high expectations, with a tight control over
the wallet, is the new reality of the ndian middle class segment.
At the high end, the number of households earning at `1 crore and above annually, is guessed at about 20,000 families,
since there is no data. Nobody owns up to their real income in ndia, with ncome Tax folks always on the prowl. Yet, sharply
higher consumer spending now shifts to conspicuous consumption, changing the face of ndias retail sector, attracting some
of the worlds market leaders in super luxury goods. However, selling to this segment is a different technique altogether.
All these statistics is needed to get a grip on where our buyers are, what is their profile, disposable income and purchasing
pattern, how do they think, feel and act, so that better structured marketing and advertising strategies can be worked out on
a more reliable and long term basis.

2.3.6 EmpIoyment
As per 2001 census, ndian population is still growing at 2.1% and jobs at 2.05% or perhaps less, since there is no reliable
data. Complicating the matter even more hugely is the massive job loss that has been going on all over the world for almost
a decade, largely due to automation, and now because of the recession. ndia has no employment data, but by one
estimate, there has been nearly 10 million job losses up to 2008-09, taking unemployment to over 10% of employable
population, not counting the partially or inappropriately employed people or people who just do not even seek work
considering the market conditions, but are consumers nevertheless. Unemployed people do not buy too many things,
advertised or otherwise. Therefore marketing and advertising industries have to plan their turnover target and strategy
accordingly.
Even as the number of jobs heaves up and down, the demographic profile of ndia has changed drastically. Some 45% of
ndians are now below 35 years of age, and they want to achieve and acquire, mostly in material terms, which is the area of
advertised goods. They also want power and control, over their own lives and the nations destiny. To do that, they want to
earn lots of money. That will certainly change the way goods and services are positioned in the market, advertised and
nurtured.
2.3.7 InfIation and consumer basket
Since ndia publishes only Wholesale Price ndex and people buy at consumer prices at retail level, urban or rural, it is
difficult to figure out what is happening to the shifting consumer basket, which has seen major changes in the last decade.
ndians spend a much lesser percentage on food now, at any level, and more on durables, like education, housing,
electronic goods, vehicles, and utilities like power, water, telephone, etc. So the target profile and techniques to sell to them
also have changed.
When inflation is low, it means pretty much the same amount of money will buy about the same amount of goods. So market
forecast and advertising planning get easier it is safe to assume that people will continue to buy what they were buying.
When inflation is high, same amount of money buys far fewer goods, so market turnover of unit sale shrinks and requires a
different approach to marketing and advertising.
n the first half of this decade, due to easy consumer loans and rising disposable income, the consumer durables as well as
expensive investments such as real estate, insurance, retirement plans, foreign holidays all advertised products sold in vast
quantities. Thus there was a stiff competition among durables and luxuries for the consumers wallet. Too many goods and
services chasing available rupees, so to speak. ronically, the recession has swung the market to the opposite direction
loans have become harder to get and jobs scarcer, so less disposable money. And even a larger number of unsold goods
and services are still chasing shrinking amount of rupees. Marketing and advertising professionals are now creating different
selling and positioning strategies altogether.
Yet, as far as the consumer is concerned, opportunities had never been so good. Swanky malls even in small towns loaded
with global brands of luxury items, wide range of brands available to fit every taste and budget, a more relaxed acceptance
of acquisitiveness which was criticized before, the ndian consumer is finally in the drivers seat. ndian market has moved
from the regulated sellers market and shortage economy tolavish buyers market. All these affect the marketing strategy. t is
a great pity that the recession is taking the fun out of it, however temporarily.
2.3.8 Economic cycIe and managing change
The economic cycle of boom and bust is a fact of life, whether at personal, national or global level. Since the world started
keeping record of it, economists have been trying to discover a pattern, or more important, time scale of this curious
phenomenon. No success. t just happens. Our job on the ground is to deal with it.
The current economic condition of course is the result of many factors pooling together and it affects the advertising and
marketing industries hugely. n lean times, advertising needs to be far more skillful to achieve satisfactory amount of sale.
More direct and aggressive creative work, hard-selling strategy, smaller but effective formats, fewer releases, less expensive
media, yet delivering a certain amount of results is not an easy task. But possible. t just requires more innovative, out of the
box thinking that engages the target at a more fundamental level. The cycle will turn and bring in new consumption triggered
by pent up demand, even though marketers will have to operate on skin thin margin due to extreme caution on behalf of
badly singed buyers and unethical competition. Again, a different kind of challenge for the advertising professionals.
n boom time, of course, no great technique or strategy is required. People are in an upbeat mood to spend non-stop and
advertising flirts with it to sell the maximum.
2.3.9 Consumer mind share
The core of advertising does not change ever, which is trying to touch the self-interest of the consumer in order to make him
buy the advertised brand. But due to mind blowing changes happening at the speed of light all the time, the techniques and
strategies, as well as the budget needs to change too to adapt to the changing attitudes, mindsets and market conditions.
The acronym that the advertising fraternity is throwing around is CPA or Continuous Partial Attention. Due to the demanding
and stressful life people are forced to live on the one hand and the countless number of brands demanding their attention on
the other, audience apathy and hostility is only normal. t means everybody is getting lesser and lesser mind share of his
target. Gone are the days, alas, when people had to queue up and wait for several years to get a Bajaj scooter or an
Ambassador car (about 30,000 units produced per year in its heyday) and considered it a divine privilege. Today the
struggle to capture the mind share of target group is a warfare, and rightly so. Advertising and marketing take note of that.
2.3.10 Rising prosperity and spending power
The growing money power in all classes of society changes the tone and approach of advertising too. The target demands
to be treated with respect and not lectured or talked down to or bullied about, and he is prepared to pay for it. A nation that
had a permanent begging bowl after independence is today a net food exporter, not to mention its Chandrayaan spacecraft.
ncidentally, the moon craft is not just a piece of national pride but a serious commercial product duly advertised globally in
appropriate media it carried experimental instruments for eight nations who paid for the service, apart from ndias own
instruments.
ndia has gone up in the value chain eats less grain and more fruits and vegetables and more processed and restaurant
food, which are advertised products. People wear better clothes, live better and even lower middle class folks want basic
durables such as refrigerator, kitchen appliances and washing machine, gas cooking, video, music appliances, etc. Partially
because the mother works and cannot do housework all day. All of these are advertised products, yet need to be sold
differently to this newly emerging consumer group. They are extremely price conscious and bargain prone, but they buy
nonetheless. Very basic functions, low price, easy financing, installment plans, hard sell copy, all packaged into irresistible
offers is the way to go.
2.3.11 Government controI on ads
n spite of truly huge liberalization and globalisation, ndia remains government controlled. There is still a ban on advertising
of alcoholic drinks and the state is trying for years to do the same for tobacco products and may succeed yet. And rightly so.
The USA just passed in June 2009 a law banning the advertisement of tobacco products, especially the ones directed
towards the vulnerable young. ndia may follow soon. What will happen then? These two industries are not going to be
extinct, unless production itself is banned. n order to be sold, brand differentiation still has to be achieved.
nnovative advertising and promotion will be required, as indeed it has been going on for a decade at least. Sponsoring of
sports, visual and performing arts, culture and music events, adopting schools and childrens programmes, public donation of
very high visibility, corporate social responsibility projects are some of the ways to keep the brand name of these two
product groups in front of the consumers. And then of course there is the ridiculous ndian phenomenon called surrogate
advertising. Some advertising agencies do not accept these two products, as well as other products they consider injurious
to people or environment.
ndia also has a ban on advertising of ethical products like prescription drugs, hospital facilities, professional services such
as medical doctors, lawyers, etc. and that includes advertising services also, because self-advertisement of a service
professional full of hyperboles can damage the consumers judgment. Yet, these are vital and lifesaving services and the
consumer have a right to know what is available to him. f allowed soon, these need highly technical and responsible
presentation in media through advertising.
2.3.12 The power of vernacuIar Ianguages
ndia speaks in some 17 official languages and over 4,000 dialects. n the last century, advertising was completely
dominated by English. Campaigns were written in English and then translated into the other required state languages, often
with indifferent accuracy, commitment and result. Not anymore. Partly fueled by the explosion of regional language media
print, radio and television alike ndia today is proud of her multi lingual culture and demands to be catered to in them. And for
very good reasons. This shift is not patriotism or culture driven but market driven. The natives now have the big time money
power, like in rural and semi-rural regions, and not the minuscule English speaking city folks.
The truth is that an English ad cannot be literally translated into Gujarati or Tamil. At best the core concept of the campaign
can be retained. The vernacular ads have to be written and visuals modeled differently, to fit with the cultural differences,
linguistic quirks and sensibilities of the target groups. That means copywriters and visualisers need to develop skills and
intuitions to appeal to the culture they are addressing. For the best results, though rarely practiced, separate campaigns for
each region should be devised.
2.3.13 Innovative media
n the infinite clutter of easily produced mass communication messages due to easy to use computer technology, everybody
is desperate to find new vehicles of communication that will stand out from the crowd. t is the job of the advertising
professionals to think up new but cost effective media, which will grab the eyeballs, however briefly, before they too get
copied.
Two most eye catching innovations in recent times had been the panels of stunningly alive visuals on the sides of the
dedicated delivery trucks of companies, mostly processed food products, Pepsi to biriyani. These company owned trucks
always had these panels with large surfaces to cover the sides, but alas of dull dirty metal surfaces only. Then some genius
made moving hoardings out of them with special photography alive with colour and movement. And history was made.
The other startling medium is the back of auto rickshaws. Usually just the brand name and pack shot, but often full ads with
text and visual, this is a terrific medium. ndian urban traffic being what it is, the traffic behind an auto rickshaw is a hapless
captive audience and simply has to look, and thus read. And the message stays alive, due to the sheer number of eyeball
contacts it makes in a single day. Mouthshut.com (launched jn 2001 during the dotcom bust to find a cheap medium),
stickiewicket.com, buysellbooks.com, farmsandvillas.com, are some of the pioneers who saw 40% surge in business
credited to this endearing medium.
2.3.14 Happiness quotient
Desperate to reach out to the target group, strategy planners are using humour more and more and getting results. Even 15
years ago, humour in ndian advertising was an absolute no. The very brave agencies who tried it regardless, paid dearly by
getting poor or even negative response. ndia is a young nation today and youth does not mind laughing at them, because
they are more confident and feel good about them. Humour makes an instant emotional connect with the reader or viewer
and it is totally classless.
However, other ways of making customers happy are also emerging. How to make the consumer happy, get him to love
your product and enable him to become your brand advocate is the marketing challenge now. Offhand, there are some
basic, true and tried ways to achieve customer happiness. They are loyalty programmes like frequent flyer schemes, hotel
gold cards, Shoppers Stops First Citizen, Jet Airways Jet Privilege, Taj Mahal Hotels nner Circle, Renaissances Prestige,
Standard Chartereds Priority, TC Welcome Groups Sheraton Plus, and even Crossword book store has Book rewards ,
each having gradation within, like silver, gold and platinum, to prevent brand switch. Basic loyalty to the brand is rewarded
with discounts, proactively building relationships to get their message across.
The pioneers in the field feel that at the end of the day, a birthday card or a bottle of wine in the hotel room gives the regular
customer not just food or return on investment, but a happiness quotient. These are the long term experiential investments
and more rewarding to the service industries than a fat bill.
2.3.15 Good advertising is more than hard seII messages
To achieve these new modes of subtle communications, understanding the customers deep emotional needs and
preferences, or may be insecurities and fears, it is essential to connect emotionally. Joy, hope, faith, desire, longing and
confidence are only some of ways to connect. And they are eternal in their appeal.
These are not new concepts. Marketing folks have used these concepts since time immemorial. Only the form and media
have changed recently and advertising is moving with the times. nnovative thinking, connecting emotionally and being
absolutely honest with the customer are the core concepts that remain evergreen in handling human relationships and
contribute to good advertising.