Shop or Stop?

IT?S that time of the year when customers turn into enthusiastic shoppers, not deterred by price tags, economic slowdowns or terrorism in the neighbourhood. Globally festivals are an excuse to shop more and India is no different. Beginning in October with the Navratras followed by the major festivals of Dussehra and Diwali and ending with Christmas in December, this is the time when sales peak. If that’s not all, the October-December quarter also marks the wedding season. Apparently, this time presents a great opportunity for brands across categories to woo the Indian shopper. At the same time, it’s hard to ignore how we are living in uncertain times. The US and Europe have been grappling with budget deficits and debt crises for long. While it may not be a revisit of 2008 when the collapse of investment bank Lehman Brothers initiated an economic and financial crisis that had the entire world in its grip, the going can soon get difficult for India too with 9-10% inflation rates amidst economic growth slowing down to around 8%.

Considering all this, will the brands and Indian shoppers prune their marketing and shopping budgets respectively this season? Will the impending gloom impact the festive sentiments? A dipstick survey by BrandWagon indicates that despite all the apprehensions, marketers are pulling out all stops to woo the consumer and get her to loosen her pure strings further during this festive season. ?The market to some degree has been impacted by the overall macro economic situation. However, we are confident that the festival season will create great momentum in the market and boost sales,? says Elkana Ezekiel, chief marketing officer of consumer electronics maker Samsung India.

Traditionally, it is the consumer durables sector that leads in high-decibel festival marketing, lining up launches of new products and special offers, festival discounts and freebies, and this year is no different. All big and small durables companies have set aside substantial marketing spends for this festive season. With the objective of achieving 30% growth in sales this season, Samsung has announced a promotional initiative titled Samsung Smart Utsav. As part of the consumer promotion, the company is giving away gifts worth R150 crore to consumers. Apart from the advertising for Samsung Smart Utsav, the Korean company is also advertising for its flagship products like smart TVs, refrigerators and washing machines. ?We are performing well across categories and are optimistic that with the Smart Utsav consumer promotion and finance schemes, our sales will get a boost,? says Ezekiel.

Rival LG Electronics is giving special attention to its flagship products such as the newly launched Cinema 3D TVs throughout the festive season. The company will give away gifts worth R100 crore this festive season.

Says Rohit Pandit, business head, home entertainment, LG Electronics India, ?Our top priority is to maximize customer satisfaction and heighten the competitive edge of our flagship products. Festive season will be a continuation of this thinking, with a clear focus on premium imagery building and leading with flagship products, prompt customer service and enhancing our relationship with trade partners.?

Meanwhile, Japanese brand Panasonic has come up with a variety of schemes for its customers. A nationwide campaign covering 17 cities across India – Colors for Life ? has been announced under which Panasonic has unveiled a new range of direct cool refrigerators, air-conditioners and digital cameras in multi-colour options. Says Manish Sharma, director ? sales and marketing, Panasonic India, ?We have earmarked a marketing budget of R100 crore for this festive season, 40% of which will be pumped into BTL (below-the-line) activities. For Panasonic, this year?s festive season is very important as it will account for 30-40% of the total revenue of the company.?

Videocon?s festive marketing budget has gone up by 60% this year. It is also coming up with new products such as flicker-free 3D LED TV, smart TV, etc., this month. Videocon claims to have done business of R1300 crore in the previous festive season. Again, to break the advertising clutter and to achieve better consumer engagement this festive season, Haier India is strategically focusing on BTL promotions nationwide with mall activations, store promotions, exhibitions, road shows, etc. Haier India is eyeing a sales growth of 50% over last year.

This time, Whirlpool India is offering a cash voucher worth R2300 from travel portal Yatra.com as an assured gift to all customers on every purchase of a Whirlpool appliance. The voucher will entitle the customers to avail a discount of up to R1,000 on flight bookings and R1,300 on hotel bookings through Yatra.com. The company has also launched new models in top loading and front loading washing machines. As part of consumer promotions, the company would be giving away gifts worth R150 crore during the festive season. The Diwali promotion and all the newly launched products will be supported in print, radio, OOH (out of home), digital and outdoor. The total advertising and marketing spend earmarked for Diwali promotion this year is in the range of R12-15 crore.

However, Shantanu Dasgupta, vice-president, corporate affairs and strategy, Whirlpool India, says the company is expecting a slower growth in sales this festival season compared to last year. ?This is because of a combination of external factors such as sharp increase in essential commodities and rising inflation which, in turn, is impacting buyer sentiments. With all our festive marketing initiatives, we are targeting to grow at 15-20% over last year and aiming for sales of around Rs 700 crore,? he adds.

Quite a few brands are hoping that the festivities will trigger a change in the spending patterns of consumers which has seen a downtrend in the last few months. According to Federation of Indian Chambers of Commerce and Industry (Ficci) data, the consumer durables industry grew at just 4.2% between April and July this year against 18.5% in the same quarter last year. The interest rate on loans for consumer products has shot up by about four percentage points in the last two years. For the durables industry, the festival season traditionally contributes around 20-25% of the full year sales.

?It was not as hot as it should have been this summer. We have sold fewer ACs and refrigerators than last year,? says the owner of a multi-brand consumer durables shop in South Delhi on the condition of anonymity. Kamal Nandi, VP, sales and marketing, Godrej Appliances agrees and explains how the category has not shown healthy growth in the past three months, thanks to a cooler summer, early monsoons and higher rate of interest. ?Festive season looks promising as we are expecting a demand spillover and hoping for 10-15% growth. We have also launched some new products to meet the demand,? he says.

This festive season, the maker of BlackBerry smartphones is focusing on retail activations and outlet promotions in Mumbai, rest of Maharashtra, New Delhi and Gurgaon. Also, the company is giving free gifts on purchase of PlayBook till November end. Says, Krishnadeep Baruah, director marketing, India, RIM, ?Festive season is marked by huge surge in buying of gadgets and other consumer electronic goods. We expect to see a significant growth in our sales in this season as we have seen in the previous year as well.?

Sony Ericsson is pushing the sale of its new Xperia Ray and Walkman W8 for this festive and wedding season. With the objective of expanding its Xperia range in the Indian market, the company recently announced its ?FingerTALK? campaign.

The continued demand for gold jewellery despite bullion prices shooting up also proves that the current economic scenario has failed to dampen the festive spirits. ?Though demand fell in August, the Navratras bought good news for jewellers as more customers flocked to buy the yellow metal. In fact, gold is doing well globally including the US, Japan and China, among others,? says Mehul Choksi, chairman and MD, Gitanjali Group.

If numbers from The World Gold Council Research are to be believed, by 2020 cumulative annual demand for gold in India will exceed 1200 tonnes or approximately R2.5 trillion, at current price levels. India?s continued rapid growth which will have significant impact on income and savings, will increase gold purchasing by almost 3% per annum over the next decade. While the yellow metal has always been a hot favourite because of its traditional relevance, diamond jewellery is also picking up this season. According to RK Menon, CEO, D?damas India, diamond jewellery appeals to a choosy consumer and its sales during the festive season have improved over the years. ?We are expecting 25% surge in sales this festive season,? he adds.

For the auto sector, a lot is riding on the festive season this year. Reeling under successive petrol price hikes and soaring interest rates on loans, auto sales have been tempered this year. Ford India claims to have grown by 10% in September. The company launched a multi-media campaign titled ?Swap your drive? in the same month during Onam. Says Anurag Mehrotra, VP-marketing, Ford India, ?October has started on a posititive note and we expect to achieve our sales targets. There will be no cuts in our marketing spends but we will strive towards using our budgets effectively for the festive season.?

At the same time, several auto brands such as Honda and Hyundai are out with new cars to woo car lovers. With the launch of its hatchback Brio, Honda plans to capture a sizeable market share. According to research done by the company, car purchase for this segment is as emotional as it is rational. The theme for Brio?s ads campaign is hence ?It loves you back!?. Jnaneswar Sen, senior vice-president (sales and marketing), Honda Siel Cars India accepts how this year has seen many ups and downs with respect to sales. ?This festive season too, the outlook is conservative. However, for us at Honda, we are hopeful that the newly launched Honda Brio will mark Honda?s entry into the volumes segment and will surely create some excitement in the market during the festive season,? he says.

As part of its festive marketing strategy, Volkswagen is pushing the sale of the Polo and the Vento Breeze models. Neeraj Garg, member of board and director, Volkswagen passenger cars, Volkswagen Group Sales India, says, ?With increasing fuel prices and interest rates the mood in the market is definitely not very upbeat. We do expect sales to go up but not drastically due to the current market conditions.?

The festival season marks an important time in the calendar for fast moving consumer goods (FMCG) brands given that people look for gift packs during this time. For Horlicks, this Diwali is the right time to do something they have never done before. Recently, the brand announced its association with Shah Rukh Khan starrer Ra.One. As part of this, Horlicks has come up with a special edition Ra.One pack. The association is apt given that the superhero G One (played by Khan in the movie) embodies Horlicks? brand promise of a ?Taller, Stronger and Sharper generation. ?We are looking forward to tap the general excitement around Diwali. This association will surely help us engage with kids in a more exciting way,? says Puneet Das, general manager, marketing, GlaxoSmithKline Consumer Healthcare.

Coca-Cola India has launched its new integrated communication initiative ? Khushiyan Baatne Se Hi Badhti Hain, this Diwali. The TV commercial, ideated and executed by McCann Erickson will also be supported by a strong digital media campaign that aims to amplify the concept of sharing happiness through the act of lighting lamps. ?Diwali is an important festival for us and marks an important milestone in our annual calendar,? says Anupama Ahluwalia, VP ? marketing, India and South West Asia, Coca-Cola.

Cadbury is also bullish on this years sale of its gift packs, Celebrations. ?Our chocolates saw an unprecedented off take last years and this festive season started on a positive note with a good response from consumers during Rakhi,? says Chandramouli Venkatesan, director – snacking and strategy, Cadbury India. ?This year we have focused on bringing ?action? to the question Iss Diwali Aap Kise Khush Karange by urging consumers to go meet there loved ones instead of using technology at their convenience like sms, social networks, etc. And hence we have launched an intitiative called Jaa Kar Milange.? Winners of a contest run on radio and Facebook chosen on the basis their stories on who they would like to meet and what do these people mean to them will be flown by Cadbury from Mumbai to Delhi to meet their relatives.

Offering a cost-effective gifting option, biscuit manufacturer Britannia promotes its ?Shubh Kaamnayein? range of cookies and cakes between August and December every year. Says Shalini Degan, category director ? delight and lifestyle, Britannia says, ?During festivals, you neither want to gift something cheap, nor you want to set higher expectations by giving away something expensive. While the average gifting budget in our category stands between R100 and 250, packs costing R150 are hot-selling.? Britannia is looking at 25-30% growth in Shubh Kaamnayein sales this season. ?We are not expecting any dip in festive sales this year,? she adds.

Interestingly, a new trend in festival gifting can be discerned with purchases shifting from the tangible to the experiential. Last year, life insurance company Max New York Life started using festivals as an opportunity to connect with their target group of customers and now 8-10% of the annual policy sales come during festivals. The brand is now planning to highlight Diwali as an auspicious time to invest. Without sharing any numbers, Anisha Motwani, chief marketing officer, MNYL says, ?We will be able to achieve our festive sales target this year. I do not think the economy is as weak as it was in 2008. Yes, the consumer will be more conscious in terms of spending.?