He is convinced that India will become a destination for reverse innovation. ?Reverse innovation will be the key strategic positioning of India and it will happen across all industries and segments. As the market will demand affordability and accessibility, it will encompass services, IT, medical instruments, packaged goods, automobiles and appliances. And that is where India will have a key advantage over other emerging economies.? Marketing guru, Jagdish N Sheth, who was in the capital for the launch of Legends in Marketing series by SAGE, spoke to Sarika Malhotra on relationship marketing and competitive strategy. Excerpts:
What post-recession marketing strategies should companies focus on?
Companies will have to learn how to become smarter buyers. That will require the position of a chief procurement officer at a more significant level. Right now, procurement is highly decentralised and no economies are up-scaling procurement. In manufacturing, procurement occupies 65-70% of the total cost. Traditional manufacturing is not sustainable; companies will have to invest in quality – they cannot opt for cheap price and cheap quality. So positioning is not a price market, but a value market. Every segment now demands value. Companies will have to go for a total quality management quickly and invest back in the company, especially the ones who have significant cash flows.
Do you think marketing has become an integral part of the Indian boardroom?
There is a big contradiction. The best marketer in the world may be the US, but the chief marketing officer (CMO) in the US generally has no seat at the table. There are only a few CEOs in the US who come from the CMO?s position. Most come from finance, operations and the legal departments. But in India, you generally start in sales and marketing, even after an IIT degree. In India we tend to blur the sales and marketing boundaries in many ways. In other words, you are accountable for revenues, you are getting into operational stuff and as a general manager you get profit and loss responsibility quickly. As much as 60% of the Indian market is of unbranded products and services. It is slowly shifting to branded products and services. Given that a brand becomes a platform for trust, marketing will become surprisingly more central at the boardroom level.
How do you view this Indian market scenario vis-?-vis the West?
India doesn?t tend to pigeonhole people in a narrow way. Some of the best marketers are engineers; we rotate them across functions–both line and staff. Only in India I have seen a chief financial officer becoming a chief human resource officer. The reverse also happens. We find chief human resource officers with no accountancy degrees making great CFOs. Cross-functionality grooms the talent. In the US one tends to specialise from the high school itself. Indians somehow have a knack of ramping up more professional responsibility at a much younger age. You become an engineer at the age of 21-22, you go straight to an IIM and by 24 you are well trained and educated. So, you are given responsibilities in your 20s. In the US this happens in the 30s!
What is your view of ?Brand India??
Despite incidents like Satyam and 26/11, there is a 180-degree change in the rest of the world?s perception of India. The world sees promise in India. They see India in the light of its future, rather than its past. They think of India as a country of great entrepreneurs with a ?can do it? attitude. The economic reforms had a tremendous impact on the Indian psyche and ethos. India has world-class enterprises, which are now challenging the western well-established corporations and the world is noticing them. Look at Nano. But the biggest change has been in the IT industry. In a matter of decades it transformed India?s landscape. The biggest draw is acquisitions. Indian companies are buying global companies for their brand, technology, process assets. Also, the world is taking stock that Indians are great managers. If integrated quickly, Indian leadership can mange anything. I have heard that the Chinese love to work with Indian leaders. The colonial mindset that looked at the emerging economies with a passive resistance and uneasiness is pass?.
For all you know, we may become the new colonials ourselves.
You have predicted that India will ally with China in the future, given that India has coexisted with China, but never allied with it, will we witness a paradigm shift?
There are two perspectives. One, China inevitably will rise like the Germans and the Japanese. China is debating the way it should choose. The other is the opposite theory of the peaceful rise of China that is closer to the American model. Unlike the past, possessing a colony is a nightmare today; a big economic liability to maintain. There is a huge interdependence; China needs the rest of the world as much as the latter needs it. China is slowly expanding its soft power by creating 100 Confucian institutes. The Chinese made a mistake by insulating themselves when colonial powers were expanding. Now they need to counterbalance other rising nations like India. But you cannot guarantee which way China will go. Jairam Ramesh had coined the phrase Chindia, and it will prevail. Today, China is the largest trading partner of India. In time, China will begin to outsource manufacturing to India and Chindia will become the sourcing destination of the world. There is a gameplan unfolding organically rather than in a planned way. Just like the EU, we will have an Asian economy.
You talk about the emergence of a new Asian currency. Is it viable?
If Asia becomes its own largest trading partner through bilateral and multilateral trade and investments, your economic future cannot rely on somebody else?s currency. This was the reason for creating the euro. There are questions regarding its political viability and the damage Asia will incur if it gets off the dollar economy. There is too much danger of Asian wealth being hurt in the process, so there will be a gradual transition. Each of the large trading nations?India, China, South Korea, Japan?will have currency reserves in others currencies. So, they will not only have dollars, backed by gold, but rupees, yuan, yen. Dollar will not be the monopoly reserve currency, but one of the reserve currencies. Ultimately, there will a central bank of central banks for regulation by law and intervention, something like the IMF, which will have currencies of all countries and it will take care that the self-interest of a nation is now coordinated with the interest of the world. I earlier hoped a neutral currency like the Singapore dollar will rise like the Swiss Franc did during the world wars. The Asian currency will be relegated for a while till this new system comes about, which will manage both the national and transnational interest. And it will only happen if the Western countries bless this model.
