MUMBAI: To de-tangle production from the grasp of a recession, fast-moving consumer goods (FMCG) companies are redefining their brand and marketing strategies, based on their evolutionary stage.
Hindustan Unilever (HUL), already well-established in urban as well as rural India, has retained its pyramid straddling approach. On the other hand, the urban-centric company L'Oreal is looking for a more premium play and has put the back-burner sachet strategy. Some like Nestle India is more focused on the urban market (75 per cent of their sales) than rural ones, and are looking to reinforce their portfolio mix with a clear focus on the core.
Nestle India CMD Suresh Narayanan said three variables would determine the potential texture of consumption in an exclusive interview with TOI. One is the portfolio mix of super-premium, premium and mainstream products that companies enjoy. "We will expand, but we will intelligently combine premiumization with more mass-oriented products," Narayanan said.
The second factor is the demand for a variety of products that consumers are looking for on various occasions.
"That's what we've been dealing with over the last three years with the vigorous innovation/renovation plan we've had on 61 goods. That's about three times what we had previously been innovating. The pace of innovation will play a major role, "Narayanan said.
Third, a brand's consumer-centeredness. These companies, Narayanan said, which are more consumer-centered and anticipate products that may be needed by consumers, will ultimately win the game with their agility and responsiveness.
"The customer of today, whether rural or urban, is not only looking for good value for money, but also trustworthy and sustainable performance. Consumers search for brands important to them. It's a journey that businesses need to go through. So it's not enough just because the product has been around for 50 years, speaking a particular language in a particular format or price point. In the corporate path, it's not customers, it's companies in the consumers, "Narayanan said.
Nestle India bucked the slowdown in September quarter and declared a 10.5 percent domestic revenue growth, which was better than its peers. Around 60 per cent of the annual quarter-on-quarter spending by Nestle India has been in support of new products. New products make up about 4 per cent of Nestle's domestic sales at this point.
While it is an investment stage and yields are low now, Narayanan said the company will invest in innovations as long as it believes it will yield a sustainable return. Nevertheless, he said the organization was unable to take its eyes off the ball as regards its center.
However, Narayanan said it won't be a quick slope up. "Maybe it's a little steeper, but I still believe there's light," he said. Though adding a clarification that there are budgetary limitations that can not be overlooked or forgotten, Narayanan said, "Likewise, if you have to kick-start demand, we must either directly put more money into people's hands or indirectly through a tax impact."
Tags : Hindustan Unilever, urban-centric company , sustainable performance, investment stage,