Senior Vice President | 10 Jun 2009
Advertising was hit by recession badly. We have cut down our advertising budget from Rs 100 crore last year to Rs 50 crore. We are not compromising on our below-the-line (BTL) activities, it remains the same as last year but our above-the-line (ATL) activities have been impacted. We have spent almost Rs 1 crore in the online medium; print and outdoor there is some activity but we have completely cut down television.
Alok Bharadwaj, Senior Vice President, Canon India is the key decision maker for the brand’s journey in the country. Under his charge, Canon has grown from strength to strength in India. As Senior Vice President, he is responsible for leading the overall performance of five business divisions of the company. The mandate is to be on the No 1 position across various product.
In his six year tenure at Canon India, Bharadwaj has been the driving force behind the sales, marketing, PR and brand building activities of Canon, which have led to the company’s exponential growth in India besides the company’s impressive financial and market share growth across categories.
exchange4media’s Qashish Chopra caught up with Bharadwaj, where he spoke about the challenges that the brand faces in the Indian market, coping with recession and future plans.
Q. How has the year been so far? Give us an overview of Canon’s operations in India.
The year 2008 was going extremely well till the recession hit in November so the sum up for the year in Nov and Dec went down a bit. But that was just for two months. Those two months we tried to understand the impact of recession. We had 31 per cent growth -- from that perspective 2008 was good for us.
Q. Would you like to explain more on how Canon dealt with the recession?
Recession has two good things. One, it puts the house a little bit in order. At a very fundamental level, it created a sense of urgency. We looked at how to enhance peoples’ productivity. Cost cutting was an important element for cleaning up. It made the organisation slim, trim and apt for competition, and that was the best way to sharpen competitive edge. The second part was that business models got restructured. During recession the capacity shrinks but the demand does not, so there is a mismatch. Companies acquire companies, acquisitions take place, mergers happen --- there is a complete shift in operations depending on the impact of recession.
In terms of Canon, we tried to understand the market segments where recession had hit us badly and therefore, business models have been restructured. We tried to understand in what way we could trigger the market demand. We found that the business-to-business (B2B) and business-to-consumer (B2C) segments were badly impacted. Recession has taught us a few things. We understood and implemented new business models, learnt to cut fat to keep our competitive edge sharp and finally learnt to measure every bit of our marketing spends.
Q. And how was marketing hit in recession?
Advertising was hit by recession badly. We have cut down our advertising budget from Rs 100 crore last year to Rs 50 crore. We are not compromising on our below-the-line (BTL) activities, it remains the same as last year but our above-the-line (ATL) activities have been impacted. We have spent almost Rs 1 crore in the online medium; print and outdoor there is some activity but we have completely cut down television. But we are a little unsure about marketing online primarily because we have not experienced the benefits of it. We are planning to hire young people; we are definitely not shrinking. We are adding more people in areas that are more critical. Service for instance, is a critical area. In vertical segments we are hiring people as domain experts.
Q. What is the USP of Canon, and how is it different from other brands in the same segment?
We have positioned ourselves to be technology leaders. We are famous for making breakthrough technology. We are pioneers in launching any new functionality. In other words, when you are looking at Canon, you are protecting yourself against future digital obsolescence. The USP is the quality, the making and manufacturing.
Q. What are your best selling products in the Indian market?
We are in 10 product categories. However, in a few products we are market leaders and in the rest we are no. 2. The ones that are most popular are three products; cameras, copiers and printers. Copiers for B2B, printers for soho and cameras for home. Also, in the digital cameras segment there are people who buy it by keeping the prices in mind, secondly the drive quotient is also an important factor.
Q. How important is the Indian market for Canon?
Strategically it’s a very important future market but India is not in the top ten markets. Since there are no shortcuts we have to build a strong market here. In some categories, India is quite mature, we are at least in the top two or three markets in Asia. China is of course no.1. In some mature categories we are after China, and in some cases after Hong Kong, as these are developed markets. But in very infant markets, which is a new category that got created in India, penetration is low right now. So we are not even considering benchmarking India as a world market.
Q. What are the challenges that the brand faces in this market?
A market is driven by the economy. Indian economy is in its early stages of evolution in high growth, and it has not reached a point where the consumption is phenomenal. If you look at India’s total economy, it’s a trillion dollar economy - that is only three percent of the world economy. We cannot expect any of the major categories to have consumption more than that. The only exception to this macrolevel concept is that more than the economy, it is the population that matters. In a country like India, the market size of soap which is a basic product, is very high due to the population. That is why, today mobile subscriptions are close to 350 million subscribers in India. However, considering the economy India deserves to occupy only three percent of the total world space.
Q. What were your revenues and profits for 2008? What are your targets for this year?
Last year our revenue was Rs 665 crore, and our growth rate was 51 per cent. This year we are looking at a revenue of Rs 840 crore at a growth of 25 per cent from the previous year. Even during recessionary times, we are planning to grow the company by 25 per cent. I would like to add that the profits have been badly impacted due to rupee evaluation.
Q. What are your future plans?
We are looking at a Rs 1000 crore turnover next year. The major wish is to create a brand, which is popular across the country and not just metros. Our focus has to be on tier II and tier III towns. When people think of photography, by default they should think of Canon. India is a population of a million people, however, the total number of camera users is only five billion. So the penetration of digital camera in India is only 0.5 per cent. One of our main aspirations is to make photography the second habit of people. In terms of technology we have proved ourselves, marketing we have a long way to go still.