Thriving under a banyan tree!

Survival strategies for small brands

Well we all feared a catastrophe when global giants started entering the country post liberalisation. Speculation was that Indian industry, especially the small players, would not be able to compete with global quality and levels of service. Again, a few years ago, the same fear returned when Chinese products started flooding in. This time the fear was that local brands might not be able to complete with the low price of these products.

Well we all know what happened. Indian companies, including a large number of small players, have not only survived those two onslaughts but are thriving. Yes there was impact. Some brands vanished, some reduced to a shadow of what they were earlier. But most adapted and grew.

While bigger players had the financial backing, global understanding and marketing muscle to adapt quickly, how did some of the smaller players adapt? Therein lies the biggest mystery of modern marketer –– India. There is enough and more written about India as a market, its potential, its uniqueness and its paradoxes. But still more books, research papers and study material come out every other day. Not because the earlier ones were not good or not relevant.

But because India is such a complex market that it offers new insights into its dynamics every time someone tries to understand it. The diversity of this market is the biggest bottleneck and also the biggest opportunity… its how one looks at it. The diversity of this country provides immense opportunity for a marketer to create a niche and thus compete successfully with competition several times larger.

The bigger a company gets, the easier it is for it to create economies of scale and reduce cost. It can then translate the lower product cost into a price advantage difficult for smaller players to match. We see such examples everywhere.

But then how have the pop-n-mom stores survived the onslaught of large super and hypermarkets? Personalised service, customised product range, home delivery, a free toffee to the kid accompanying her mom.

Find out what big guys cannot provide, and mind you there is a huge list of this they cannot because of their size, and create an expertise in it. Create a small niche which is either difficult for the bigger players to duplicate or the size of the niche market too small for them to bother and you have a success recipe at hand. Also small niche is relative.

The large size of the Indian market and the extreme diversity in terms of culture, language, customs and climatic conditions, even a very small niche is lucrative enough for a small and also not-so-small player. But how does one go about after finding a niche that is not being catered to? While there are several ways of doing it, here are four routes that uses well the diversity of India:

*Geographical niche: Tea in India has a 90 per cent penetration and is the highest consumed beverage after water. But what is good tea for someone in Kolkata is not true for someone in Chennai. While the big two players - HLL and Tata Tea are fighting at a national level, there are several small players who have understood the tea requirement of the local consumers and have created a small niche. Case in point is Wagh Bakri in Gujarat, which has a tiger’s share in the state. And this is true for several regional players across India. They have customised their product to a specific geography and provide what the local taste wants. Their in-depth knowledge of local likes and dislikes makes them formidable competitors in that geography.

*Socio-economic niche: Find a need with a socio-economic group that is not being addressed and you have an untapped market. There are several examples where companies have successfully used this strategy to enter into an industry with high entry barrier.

An excellent example is Nirma, when it targeted the bottom of the pyramid to create a niche in the highly competitive detergent market. The trick is to find large enough segment that is profitable yet small enough to attract the bigger players.

*Distribution niche: Another route of creating niche is distribution. Distribution is very expensive. If a company does not choose the route properly, it might spread itself too thin or at the wrong place and bleed. On the other hand, creating a strong fit between the product attributes and the distribution route will ensure optimum utilisation of the channel.

*Communication niche: Communication creates perception. What and how one communicates decides what the consumer thinks of the product. Since the target audience is a section of the market, the best way to get the communication mix is critical to high-effectiveness and optimising communication budget.

One element of communication that is critical both for creating positive perception and for its cost effectiveness is Public Relation. PR is a very effective tool in forming positive feel about a product. Consumers perceive very differently messages through PR and those through other forms of communication like advertising.

The focus of any small or medium company should be to use the size of its competition to its advantage. Identify the “Achilles foot” of its competition and strike. And avoid the temptation to imitate the leader. If you are as good as the leader, or even marginally better, there is little incentive for the buyer to opt for you.

Its only when you are ‘different’ from the market leader and offer a significant ‘value proposition’ that you can survive and thrive under the banyan tree.

(The writer is Business Head, Consumers Products Division, Himalaya Herbal Healthcare)