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Thursday, December 27, 2001

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The scourge of recession


Harish Bijoor

Prostitute! Taliban! B*****d! Taliban again! Recession! All bad words. They are politically incorrect in this highly sensitised world today! But all truisms that exist dominantly in our social and economic lives! They are realities that thrive and rub shoulders with each one of us in their own unique and necessary ways.

The US has been busy in the last eight months trying hard to refuse the reality of recession around, taking refuge in the definition issues of a recession in the mother of all consumer markets! Thankfully there are loads of different definitive indicators that point the way to the dirty R word. The world recognises a recession in one of many ways. A worrisome period of two consecutive quarters of negative GDP! A sluggish level of industrial production output, a slack in retail sales, a distinct lull in the employment and business performance index of corporates!

And the qualitative definition of a recession can go on and on! The US of A has finally acknowledged that it has a recession in its markets! And when the mother of all consumer markets sneezes, the rest of the world catches a bad case of pneumonia. In this case, it is a case of recession rheumatism as well! Lets remember, the word R is a contagious disease, which affects every related market-economy. How then does a market react? What typically does happen? And what is the one big trend around in these tough times?

While reactions in different consumer markets vary in relation to the intensity of the contagion, recession marketing is largely a game that has been practised worldwide in predictable cycles. The best way to really look at it is to look around in the great Indian market place, peek in to see trends of how we are handling it in our contemporary lives. Lets look around.

The good news first! India is certainly less hit than its other neighbours in South East Asia. All due to the dubious distinction of it being that much less connected to the epicentre of this new wave of recession, the United States! Lets remember, India exports just about 10 per cent of its GDP compared to more robust numbers (upwards of 40 per cent) of countries such as Taiwan for one! All the same, lets take a peek-a-boo!

Is consumer spending up or down? The mass of research on consumption throws up a whole set of contradictory trends. The market-space all of us live as consumers, throws up equally puzzling data that seems to pull in the right opposite direction. Therefore, without reposing too much trust in the sets of bold corporate PR stances at one end of the spectrum and even bolder Cassandras at the end amongst the fraternity of market researchers and their dipstick forecasts, lets weigh the balance of the markets. Lets look at this issue from the perspective of solutions marketers seem to be putting together to battle the R word, acknowledged or unacknowledged!

Two big macros first! One: There have been job cuts galore. The bulk of these cuts has been in the IT arena. The entertainment sector is not far behind in this rejig of its numbers. Having built empires during the upswing in media fortunes, the biggies are cutting the flab. At the receiving end is the middle-level! The top remains pretty insulated. The thinking head is always necessary. The foot soldiers performing key revenue-generation tasks are found important as well! What goes into the out-tray of organisations is the middle layer then. The corporate bureaucrat, the mailbox, the aggregator and anyone without clear revenue generation intent are on the stove! Two: Interest returns have been at their lowest ebb in recent years. There is very little choice of where to save. The 8.5 per cent RBI Bond is suddenly the panacea for the middle-class guy in the marketplace (a large spending chunk of our population). Should he spend instead? No, we are not there as yet. The savings culture of the average Indian makes him that much more prone to the sweeping arm of recessionary attitude spurred on by societal culture!

Marketers seem more and more desperate in their yen to monetise stocks at the earliest. The marketer is keen to reduce his inventory. Keen to get that headspace in his production capacity topped up. There is just too much of capacity around. It needs to be filled desperately. Desperate times and desperate measures then. The hotels want to flog their rooms at prices that were once considered infra-dig to reputation. Freebies are being thrown in generously to entice the customer in. Free air tickets to jet your way into your holiday destination, bottles and bottles of exotic Australian wine, massage packages to de-stress you in these tough times and offers of this kind and many others. The marketer of the brand, of both the product and service kind, is taking the oft-treaded route of price then. When the propensity to spend is low, the best ways to excite interest are prices that seem ridiculously low and affordable. Every toothpaste and every television set is vying to do just that. Buy one and take two. Buy a big television and take a small one free! Take home two for the price of one! Marketers big and small seem to be treading the route of exciting prices and sheer value for money. VFM is back with a bang, it seems!

Take a look at the latest print-ad from the guys at MR Coffee in Mumbai. Yes, the very same guys who created a furore with their rather explicit ad, Real pleasure does not come in an instant message some years ago. The guys now show you a natty young model in a bra that is made out of their colourful triple laminate packaging material for one of their brands. She is throwing open her arms, bosom thrust out and screaming: Buy one, take home two! How much more open can one get then?

The crass revolution of price is here. The marketer is morphing into the mindset of price. While the biggies play the same game, offering product on product, the small ones are venturing into price cuts and rate wars.

The brand, in bargain is at risk. What brand? In a recession, brands cease to hold relevance. Prices do! At least in the case of a bulk of brands that are absolutely confused. Absolutely dazed to see what has hit them and their growth curves. De-branding is the big trend then. Just as brand managers vie to build brands investing valuable amounts of time, patience, money and new ideas, the market in return seeks to behave in a manner that is best described as commodity gravity. Very simply put, every category is at the risk of commoditisation, some albeit in small and subliminal ways and others pretty overt and discernible in their trends.

View de-branding as a pull of gravity in marketing space. View branding and all the efforts put in building brands as completely anti-gravity exercises. During a recession in the market, when price reigns supreme, every player who joins this game adds a dimension of support to this exercise of de-branding. De-branding therefore happens more often than not, subliminally. It is more like a weevil eating into the very foundation of a brand built painstakingly and assiduously. The trend is never to be scented in immediate fall in volumes. Instead, the trend is seen in a long term hit on brand equity. Something that myopic managers seldom see! As brand managers and the finance lynchpins in organisations stand atop corporate mountains and supervise price-strategies that bring in the immediate moolah, somewhere, far away in the underbrush, there is a weevil eating away merrily. Do you hear the merry munch?

((The author is COO, Zip Telecom Ltd. Feedback can be e-mailed to

bleditor@thehindu.co.in)

 
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