The current economic slowdown and the ensuing uncertainty has many companies looking to map out their growth in this highly volatile environment. The political environment and regulatory challenges have also added to the woes of companies looking to navigate a VUCA (Volatile, Uncertain, Complex and Ambiguous) world. Giving his insight on this, Marten Pieters, Managing Director and CEO, Vodafone India said that the best way to do this is to embrace it positively as this will help companies turn it around and not be disillusioned and disheartened. Pieters laid down his six rules for finding new pockets of growth in these tough times.
Our future customer is already with us
This is key to building business and the focus should be on products that fulfil the needs of customers – be it social, personal, emotional, etc. Pieters stated that it is necessary to look at trends and study details of consumer behaviour as behaviour is embedded in the past and present, and the future consumer is embedded in the present. “The big picture and details are needed to decide on the future customer,” Pieters said, adding that a balance needs to be maintained between the big picture, which is where the world is moving, and the details, which is what the consumer wants. He further said, “Consumers spend if there is something worth to be picked up.” An example of this would be caller tunes, which though popular, in reality nobody needs them.
Behaviour change happens more slowly than expected
While bringing out new products, companies should keep in mind that expectance of any new product is always slow, as changing habits is a gradual process. The other key element to be kept in mind is that even when a company brings in an upgraded version of a product with new features, many consumers are unable to differentiate between the older and new versions. This insight is important, as Pieters pointed out, marketers are more impatient than consumers today and bring out new advertisements even when they are not required. Referring to Vodafone, Pieters said that 3G data volumes were slow off the block to start with before gaining momentum when smart phone penetration increased.
Business grows by leveraging opportunity, not by only solving problems
In a downturn, it is critical to realise that the need of the hour is to have business developers and not problem solvers. Pieters felt that problem solvers could deter investments and their advice was obsolete. In his opinion, a VUCA environment is a time to be innovative, and a company needs to be lightfooted to make use of this opportunity. He shared that Vodafone’s money transfer business in Kenya, M-Pesa, helped consumers transfer money using their handsets and today, 70 per cent of transactions in Kenya are done via M-Pesa.
Acquisition is not optional for brands
While dwelling on acquisition versus retention, Pieters said, “Keep an eye on customer retention, while not losing focus on acquisition.” According to him, acquisitions of customers are of two kinds – customers who are new to the brand, and customers who are new to the category. A lot of focus in Vodafone is on the second category, and price plays a big part in the marketing mix. Looking at Vodafone’s customer base, Pieters said that while a low price point helped Vodafone garner new customers for 16 quarters, this has levelled in the last four quarters, primarily on account of the category flattening out.
Light buyers matter
With companies’ attention focussed on heavy and medium users, it is easy to ignore the light and infrequent buyer, who, Pieters said, though a marketing challenge, offer good potential for future growth. Thus, it is essential to create product awareness and get these consumers to try the product as this segment can’t be ignored since a shift in consumer consumption would mean that a light buyer today could become a heavy or medium user over time.
Intensify investments during lean periods
Pieters believed that investments in lean period could deliver higher returns, and this is the time to invest more in brand building. Reiterating Vodafone’s commitment to India, he said, “Vodafone has kept investing on infrastructure despite consumer growth levelling in FY13.”
Marten Pieters was speaking on the topic ‘Not every Consumer has Sealed her Wallet: Finding New Pockets of Growth’ at the ISA’s Global CEO Conference on Navigating VUCA, organised by The Indian Society of Advertisers in partnership with exchange4media. The session was moderated by Annurag Batra, Chairman and Editor-in-Chief, exchange4media Group. The Conference was held in Mumbai on October 31, 2013.