The economy is stalling. Economic reforms are at a standstill. Consumer spends are dipping. Car sales have crashed. TV and print ads have registered negative growth. Rains are playing truant. This is 2012 and we are doomed.
Stop. There’s no point in wringing our hands and sounding hopeless. Step back and relook at the data. It has a message – one of growth.
For starters, the economy has not stalled. It continues to grow albeit not in the eight – nine per cent range, but yet at a comfortable six – 6.5 per cent, depending on your source. This means that while some sectors aren’t growing, there are others which continue to clip. Therefore, look for sectors that are growing and grow with them.
The reforms standstill cannot continue endlessly. There is far too much pressure on the decision-makers and much like in ’91 these forces will ensure reforms get back on track. It is only a matter of time, but one need not sit idle waiting for reforms to happen. Remember, reforms will only ensure a faster growth rate.
The Indian consuming classes today have already crossed a threshold of living standards which they are unlikely to retract from. The psychological impact of a gloomy environment tends to affect consumers. They will hold back expenditure. But this is only temporary and will not affect all categories.
E.g., a consumer who has graduated from a Rs 10 soap to a Rs 20 soap will not revert to the Rs 10 soap just because of the fear of slowdown. He can well afford the difference. What he will instead do is see if he can get more value by buying a pack of three of the same brand of soap for Rs 50 instead.
Similarly, he will not stop the purchase of clothes for the forthcoming festival season, but may make the most of the current sale period to buy them at a discount, rather than pay full prices later. And this trend is being borne out in the record retail sales, this July sale period.
Extending this concept to home decor and cars, one can safely assume that while consumers may postpone purchases, it will not be indefinite. A good offer will egg a socially conscious consumer to emerge from his shell. While he may yet tone down his purchase, i.e. go for a lower model, car or scale down his renovation, it is unlikely that he will ignore it completely.
The initial reaction of ‘freeze all activity’ affected consumers, companies – large and small and entrepreneurs for the first half of the year. As the months progressed, however, all three groups have realised that sitting tight will not improve the situation. Therefore, now one can see signs of activity from all of them.
The consumers are looking for value deals and smart buys to maintain their social status.
The companies will try new marketing tricks to push out the inventory that is piling up in their factories.
The entrepreneurs will seek new ways to expand his business.
For agencies and media houses, this means a recalibration of expectations.
• Strike long-term media deals and be open to bargain. Hunt for opportunity. Plenty are going cheap.
• Don’t think long-term only. Short-term solutions will win plaudits from the besieged marketing manager in your client’s office.
• Look at traditional B2B sectors. There could be brands here that have grown and now wish to target consumer segments. This may be their moment in the sun.
• Stretch your ambit to provide marketing service for resource and skill strapped entrepreneurs. It may not just earn you more money, but create a potential client.
• Since 2004 drought has affected some parts of India or the other every year, however, this has not impacted the growth rates of the last decade. This is because since 2004 the Indian Government is well prepared to handle such situation and minimise the effect of drought. Look for states in the country growing at faster rates than rest of India. Focus your client’s marketing in such areas. Not just will your business grow, you will earn a loyal client.
The author is President and Chief Executive, Quadrant Communications