Every business is about getting and retaining customers, be they for trucks or soaps. Marketing is all about winning, about being No 1 or 2. To a mindset that yearns for order, stability and cost minimisation, marketing has many appurtenances of waste. However, the endgame is efficiency from the customer’s viewpoint, with waste being an inevitable by-product. Marketing is about satisfying customers, and it is at the very heart of any business. 

• There is a heritage of genius in Indian business, which has been a premier marketer for several centuries. But the last century has been an aberration, a time when Indian business forgot that ‘marketing is the business of business’ and became inwardly focused.
• The next 15 years are going to be a period of life-threatening change for Indian businesses, and I will share four mega-trends (as I see them).
  
• Four lessons from the challenge of re-calibrating business to the marketing mentality.

The Global Marketer
Merchants from Harappa and Mohenjodaro were trading with Sumeria as early as 2300 BC. For centuries, spinning and weaving of cotton has been a prime economic activity, for the home market and for exports. Roman coins have been found in South Indian ports in such volume that it is suspected that the balance of trade in the first century of the Christian era favoured India.

In 1498, when Vasco da Gama sailed into Calicut, it was already a thriving port familiar to Arab and Chinese merchants. In 1608 an English captain, William Hawkins, dropped anchor at Surat armed with 25,000 pieces of gold and a letter from King James I to the Mughal emperor Jehangir. He found that Surat was a bustling city, its warehouses bulging with merchandise from most of Asia (everything from peacock feathers to elephants). Hawkins’s tour report to King James I said, "Nothing that England makes at this time is really desired by Indian merchants or officials."

After the battle of Plassey, as colonialism established roots, the East India Company attempted to establish a monopolistic trade. The passing of the Charter Act in 1813 further opened up trade. Due to the huge demand for commodities in post-Napoleon Europe, India gradually got converted from an exporter of manufactured products to a supplier of primary commodities.

For 80 years, from 1835 to 1915, India had a consistent and handsome trade surplus, with exports always ahead of imports (see 'Indian trade experience-I’). Thanks to the opening of the first Indian railway line (in 1853) and the Suez Canal (in 1869), a new impetus was imparted to our foreign trade. This was a fabulous era of multilateral trade, of simple international payments and exchange rates. The major advantages were the global free-trade policy, the rapid industrialisation of Europe and the United States, and the transformation of Japan under the Meiji Restoration, all of which created a new level of demand for raw materials and foodstuff.

The turmoil of the two wars was reflected in the pattern of India’s foreign trade, which was quite erratic. There was no growth, imports in some periods exceeded exports, and the great depression (of the 1930s) undoubtedly took its toll. Compared with the previous 80 years, the inter-war period witnessed trade-distorting policies like tariff protection, the control of foreign exchange and the growth of bilateral trade.

A characteristic throughout these 110 years was the existence of a large Indian export surplus, which was not offset by a rise in foreign-exchange reserves or an increase in overseas lending. The key to this puzzle lies in invisible items in the balance of payments and the unilateral transfer of funds to Britain. This was the genesis of the idea of ‘wealth drain’ from India.

But what happened after 1945? India has consistently run a trade deficit during the last 55 years (see ‘Indian trade experience-II’). A trade-surplus situation of a long time, probably 2000 years, suddenly got reversed.

Future Scenarios
If we were to crystal gaze into the India of 2011, we will see a land of one-and-a-quarter billion consumers, many of them rural and poor, with real choices that they exercise with earthy common sense. These consumers will spend money in ways that will attract many from all over the world. I wish to touch upon four mega-aspects: the non-consumer, distribution, services, and migration.

The non-consumer
When we were young sales managers, one of the activities that companies undertook for the government was to distribute Nirodh (the condom brand). Out in the military areas around Tezpur in Assam in the late 1960s, there were many troops. An inexperienced contemporary of mine, trained to correlate large populations with the demand for consumer products, pushed a marwari dealer to stock more Nirodh. The dealer asked him laconically, "Saheb, aapne moja to de diya, par is ilakey mein joote kahaan hain?" (Sir, you have delivered the socks, but where are the shoes in this area.) So the rhetorical question for our marketer of 2011 is: where is your consumer? In the villages, that’s where.

India has always lived in the villages. But although seven out of 10 Indians live there, marketers behave as though it is a world separate from themselves. In the villages there are rich people who may follow the adoption models of urban brands. What about people who are today’s non-consumers, who are rural and poor? The marketer’s understanding of these consumers, and his comprehension of their economics and aspirations are vague.

Distribution
In the 1950s there were about 250,000 outlets catering to 400 million Indians; that’s about 600 outlets per million of the population. The estimates for today are 5 million outlets for 1 billion people, which means about 5,000 outlets per million of the population. This is the opposite of trends in other parts of the world, including developing countries, where outlets per million are decreasing and trade is getting more concentrated.

Indian retailing is different because our infrastructure is woefully underdeveloped (roads, traffic, cars). It is not that there will be no supermarkets or self-service stores, but the consumer will, by and large, continue to shop in neighbourhood stores, even in 2011, when it comes to items of everyday consumption. This means that distribution and selling will continue to play as major a role within the marketing mix as it has in the past. With urban-centric marketers and their agencies, there is growing resistance among youngsters, for whom a stint — let alone a career — in selling is unattractive. Companies that do not manage this aspect judiciously will not be around in 2011.

Services
Another development will be the rapid rise of services in employment. In 1951 there were 125 million workers in the unorganised sector and 15 million in the organised sector, making for a total workforce of 140 million. By 2011 there will be 430 million workers in the unorganised sector and only 30 million in the organised sector. Here is the point to remember: while organised-sector employment will double in 60 years, in the unorganised sector it will increase by over three times.

This, again, is a course that runs contrary to global trends. It is also instructive to note that even within the organised sector, employment in services is growing faster than in industry (trade, banking, insurance, public administration, etc constitute services).

Services were 25 per cent of the gross domestic product in 1951; now they stand at 45 per cent. By 2011 they could well be around 55 per cent of the economy. And this is not about more IT-enabled services or software professionals. Have we not noticed local caterers for parties, the neighbour who makes pickle or health food, the small company that does housecleaning on contract? All of these are service-sector people. In 1971 there were one million vehicles on the road; today there are 48 million. In 2011 this figure could exceed 100 million. These require highways, drivers, cleaners, petrol pumps. One can see these coming to pass.

Migration
The difference in the income per agricultural worker and the income per non-agricultural worker indicates how attractive it is to migrate from agriculture. In Punjab and Haryana, if a worker earns Rs 100 in agriculture, he can earn about Rs 150 in non-agricultural work. In Maharashtra and Tamil Nadu, Rs 100 from agriculture compares with Rs 550 from non-agriculture, thus explaining rapid urbanisation. In the ‘cow belt’ it is Rs 100 to Rs 300.

What will people do when the cities of their own states cannot absorb them? Employment statistics show that the ‘cow belt’ states have the maximum backlog of unemployment, but it is in these states that the growth of the labour force is expected to be high. These states will, according to plan documents, witness a 50 per cent increase in the already high rate of unemployment. Job opportunities in Andhra Pradesh, Karnataka, Maharashtra and Gujarat, on the other hand, will be higher than the growth of the labour force. Thus, while the nation is doing aggregate growth planning, labour is migrating to where the jobs are. This is not new per se; what is new is migration from home to faraway places in the country.

Four Lessons
I am not one who despairs that Indian organisations have adapted inadequately. I revel in the thought that several are moving in the right direction to become more customer savvy in novel ways uniquely suited to them. Some lessons I have learnt are perhaps worth sharing. They are not rocket science, but they are practical and they work.

CEOs to spend 20 days a year on the ‘three Ss’
Going out to meet customers means different things to different CEOs. A trucking centre for a truck maker, neighbourhood grocery stores for an FMCG player, farmer hangouts for an agro-inputs marketer. For all, though, it means the ‘three Ss’ — sweaty, sticky stuff.

The chairman of Hindustan Lever has done this ever since I can remember. I know that my colleagues, who are directors and business-unit heads at Tata Engineering, are doing this more and more. It should not be the occasional ceremonial visit with a camera unit near at hand. It must be based on a budgeted time allocation, it must be intensive, and it must involve a great deal of serious listening to be meaningful.

Tata Engineering recently realised some home truths about its rear axle. Although the company’s engineers had rightly designed the axle for a rated load, the reality was that truck operators would carry a higher load to manage their economics. Through a study of overloading patterns and the direct involvement of an operator, Telco mounted a ‘Kulbir Singh Project’ to produce an axle of greater value to its customers. I can confirm that this came out of careful listening during intensive customer visits.

Promote multi-functional customer contact on a systematic basis
It is so common to see salespeople as being functionally responsible for customer contacts and markets. Based on their feedback, design and development teams deal with customer problems. Wrong, all the way.

Sales people have their own limitations and biases, and, anyway, customer contact is not their exclusive preserve. Let me share the Tata Engineering experience, when the company went through a life-threatening loss situation during the last two years. Tata Engineering was what many engineering monoliths tend to be: engineer-dominant, not always savvy about the customer, operating in silos seeking functional excellence, and proud. Today Tata Engineering is a vastly different organisation: it listens to its customers, operates multiple cross-functional teams, and focuses its sales force to market segments.

During the last 18 months, the ‘Panthers’, a team of over 250 plant engineers, have worked in the marketplace doing three-to-six month projects with direct customer contact and selling. A few have even made career shifts. As part of a customer-driven ‘new products process’, the company’s new ‘quality functional deployment’ (QFD) teams included 30 engineers from plant and engineering research. Tata Engineering even deployed 500 plant engineers to assist in the augmentation of its dealer network. That is, in my view, a great example of making marketing everybody’s business.

Differentiate and brand as far as you can
Even a commodity product like steel can be branded. Tata pipes and Tata bearings have existed for some time, but they are now being aggressively promoted as brands. Between 1992 and 2000, Tata Steel had sold, each year on an average, Rs 500 crore of branded steel products like bearings and tubes. In the last financial year, it increased this figure to Rs 1,200 crore. In the current year the company expects to achieve 25 per cent of its turnover (Rs 2,000 crore) from branded steel. These are not mere numbers for presentations; the company has actually earned a premium of Rs 35 crore out of such branding.

It is great to note that in a traditional steel company over 20 brand workshops, covering 350 officers, have been conducted in the last two years, Brand health checks are undertaken periodically, and business decisions taken on the basis of such research. All this in a company that was rationing out its production only a few years back.

Get involved with your customer’s customer
Traditionally, urea is sold to dealers who sell it to farmers at government-controlled prices. But farmers have needs beyond urea. 

This is an interesting example of how technology can actually be used to reach your customer’s consumers. The Tata Kisan Kendras (TKKs) are an innovative project pioneered by Tata Chemicals to help small farmers harness sophisticated modern technology, such as satellite mapping and geographical information systems, to enhance the yield from their land. These TKKs, or farm centres, provide end-to-end solutions, from what crops to grow to how to sell them for the maximum returns. What does this do for Tata Chemicals? It not only enables the company to reach new consumers, but also gives direct access to its consumer.

TKKs not only solve agriculture-related problems and run crop clinics, but also have library services, newsletters giving farm-related news, training workshops, research facilities, and finance and insurance facilities. They stock seeds, pesticides and fertilisers that farmers can buy at affordable prices, and they lease out farm equipment and implements to those who cannot afford to buy expensive modern machinery.

The kendras also have exhibition halls where special events — educational, social or just pure entertainment — are held for members of the Tata Kisan Parivar, an organisation promoted by the TKK network to build relationships with farmers and their families. Currently these TKKs cover the states of Uttar Pradesh, Haryana and Punjab. There are 11 mother TKKs and about 300 franchisee TKKs in operation, covering a total area of 39 million hectares.

This is an edited version of Mr Gopalakrishnan’s address at the Confederation of Indian Industry’s third ‘marketing summit’, held in New Delhi on August 21, 2002.