Sanjiv Mehta, CEO and MD, Hindustan Unilever Limited, who spoke at the launch of the BWIBusinessWorld Marketing Whitebook in Mumbai last week says brands must develop more one-on-one relationships with consumers to keep up with the dynamics of the changing world
Talking of the ADCs (Artificial Intelligence, Data and Content) of Marketing, I would like to say that in 80 years of its existence in India, Hindustan Unilever has maintained leadership in the FMCG sector, and the reason for this is that the company reinvents itself every few years. I will share with you how we have been looking at technology and how it has been impacting our industry.
Change has always been a constant, but today, it is the speed of change which is making a huge difference. About 10-12 years back, no one owned a smartphone. Twitter was an English word for bird song. I remember logging on to Facebook for the first time in 2008, and the concept of a virtual store was not even in our dreams. Living abroad in the early part of this millennium, I picked up a book from Amazon, but the fact that you would have online grocery models was something that was quite unthinkable then. All these companies with billion dollar valuation virtually did not exist in the world.
Today, the average lifespan of a Fortune 500 company is less than 20 years, and you see the boom and bust cycle coming up at a very rapid pace. You have companies getting massive valuations and then disappearing, unable to prove the business model; and then you again see a new business with a new technology shaping the horizon. The pace of change and disruption is so dramatic.
At Hindustan Unilever, over the years, our massive distribution strength was a barrier to the entry of others. Today that’s no longer the case. Today, you can reach consumers without having a massive distribution set-up. Even if you don’t own great brands, you can create a brand because you can reach the consumers without having the prowess or deep pockets like we needed earlier. Today, you just need an idea to be able to grow your business. There are many people to fund you. The scenario today is extremely different from what it was a few years back. And of course, India is changing.
SOME TRENDS THAT ARE SHAPING THE WORLD
Because India is evolving, you have to keep pace with the changing context. India is imbibing and in many ways it’s also having an impact on the trends shaping the world. These big trends reflect what’s happening in the world, but they are clearly more pronounced in our country:
‘Self Identity’: Today, everything is being curated. There was a time when we were taught the Indian culture of ‘Let your work talk about you’. From there we are now talking about the era of selfies and Facebook where everyone wants to talk about themselves. Everyone is posing for a picture. And this is where a big shift is happening in the attitude and behaviour of our people.
‘Living the moment’: Our culture is not about ‘living the moment’, but about ‘saving for the future’. But today it’s very different. You want more experiences. You want to live the moment rather than worry about the future. That’s a trend which is leading towards more consumerism.
‘Breaking stereotypes’: We have a factory in Haridwar, where from the factory general manager to the shop floor worker, everyone is a woman. Could we have envisaged that in India a few decades back? Probably not. Today, women are getting into jobs where by culture, the bias would be that they wouldn’t be suitable for it. But, they are completely breaking the stereotype. There isn’t a more hallowed engineering institution than MIT in Boston, and if you look at their record now, maybe half the graduates are women.
‘Allure of Authenticity’: While you see change happening all around you, technology being all-pervasive, still you want to go back to your roots and culture. Now, it is the manifestation of natural products in the country. Natural can be manifested in very different ways. But, it is the allure of authenticity that you want to get back to.
‘Accumulating experiences’: Today, Indians are becoming great travellers. There is no part of the world where you won’t hear Hindi being spoken, or find Indian restaurants. Rather than saving for the future, they want to experience what the world has to offer. That also gets manifested in what they want to buy, how they want to buy and experience the world.
‘More personalization’: We are moving away from treating consumers as one block. Each wants to be treated differently, each has his or her own consumer journey. You would want to watch a programme, when you want, on the medium you want to watch. You don’t like an environment where a company talks down to you. You want things to be done to you in a manner you deem fit. So, there is a very clear shift happening in consumer preferences. Now, every business, or every industry has got a dominant business model. If you look at the consumer goods industry, I have tried to articulate what are the main blocks of our business model. We classically do a lot of consumer work to gain insights. Based on insights, we try to determine what are the unmet needs of the consumers, then our R&D team works and creates prototypes. Based on successful prototypes, we start manufacturing. We have 70 sites in the country manufacturing our products, over three million tonnes every year - just to put things in perspective, 40 billion pieces of finished products every year. So, again the concept is about mass scale. And then you have distribution. In India we have got nine million stores. So, your strength lies in how many stores you can reach so that our goods are available everywhere.
The other important bit is the story-telling, that doesn’t go away. You have to tell the functional benefits, and you have to occupy the emotional space. That’s still the core of marketing. Another aspect is your purpose and values. At Hindustan Unilever, we believe our success over the last 80 years has been because we are a purpose-driven company and a values-led business.
HOW ADCS IMPACT THE FMCG SECTOR
So how are ADCs shaping the business model of an FMCG company? Let’s start by generating insights. The classical model was market researchers finding out about the unmet needs of consumers. Today, we have a People Data Center where we monitor 24/7 live conversations happening across the country and the world about our brands. We get in our consumer engagement centres 5,000 to10,000 calls every day. In less than 1% of the calls people say ‘Surf Excel is not available here’ or things like that. Most of them are saying, ‘I want to attend a wedding, what kind of make-up should I do’; ‘My skin is dry, what kind of Vaseline should I use’. They are asking for solutions to their problems. The PTC center and my consumer engagement center are a minefield of knowledge for me. Converting speech to text enables me to decipher the trends shaping the world. So, the age of the classical market research will give way to picking up trends from conversations. Today, the consumers are talking to you. You don’t have to extol them to tell you what they want. They are speaking to you, they are expressing themselves and that is what you are able to capture, thanks to technology.
Technology is also used to simulate shopper behaviour. Today, we are able to tell how many people are looking at a hoarding that we have put up on Eastern Express Highway, or whether the merchandising or props I have put up at a store are attracting shoppers. We are able to see the impact of the colours, graphics, merchandising material in shops without it being a trial and error.
A LESSON FROM THE ‘UBERIZATION’ OF TRUCKS
The world of distribution is set to change rapidly. Soon, I won’t need mega data distribution centres in 41 places across the country. I clearly see a day when the number will come down dramatically, thanks to the ‘Uberization’ of trucks. In the classical way in which a truck operates in the country, a driver would load up the truck at a factory, drive for two hours and stop at a wayside dhaba to have tea (Hopefully a Brooke Bond tea!) Then he starts his journey and later halts for the night. He must have driven all of 7-8 hours a day, which is utilizing just one-third of the running capacity of the truck. With Uberization of trucks, the truck driver starts from X place and after driving for four hours, there is a returning truck in which he drives back. The driver who picked up his truck will go on for another four hours and the relay will continue. Today, thanks to GST and Uberization, delivery time of goods would be cut by half.
As for Robotics, we have started a warehouse which is 100% manned by robots. It should be commissioned in a few days. There won’t be any people there. It would allow us to break the pattern, sort and mix goods and finally cart them away with speed.
OCCUPY THE EMOTIONAL SPACE OF CONSUMERS
Content has become very important. Brands want to occupy the emotional space of consumers. We have had a few Brooke Bond ads in the last few years - the Hindu-Muslim ad or the one talking about live-in relationships. Brooke Bond is an over 100-year-old brand. For Arthur Brooke, who founded it in the UK, the essence of the brand was all about togetherness, how to bond with people over a refreshing cup of tea. Last year, we started the transgender 6-Pack band. It won the Glass Grand Prix at Cannes and was one of the most celebrated commercials. Today, Brooke Bond is the fastest growing tea brand in the country. That is what content does. It brings in magic to a brand.
DISRUPT YOUR OWN BUSINESS MODEL
So, in a large company like ours, how do we bring in the feel of a start-up? We have started something called The Foundry. Our team scouts around and finds a handful of start-ups which are in sync with our business model. Then we invite them to pitch to us and enter into partnerships with those that make sense to us. The partnership involves the start-ups working with our young managers and bringing a project to fruition. And it’s been amazingly successful. We get access to technology, and for a start-up, as soon as they use the word Hindustan Unilever as a partner, they get another round of funding. That is how we bring the feel of a small company with an entrepreneurial mind-set to a large company like HUL.
You need to invest in capabilities for the future. If you have to reinvent your business to survive in this fast-changing world, you will have to very clearly look at things, and not worry about disrupting your own business model. You have to re-imagine and unlearn to learn many things. It is not just about fulfilling a consumer’s need. You have to predict what a consumer will not be able to articulate, look at the trends that are shaping up, the conversations they are having. You have to get into one-on-one relationships with all kinds of consumers. Digital or technology is not only impacting marketing, but rather the entire value chain. It is no longer about digital marketing, but about marketing in a connected world. Success will be redefined because the dynamics are changing so rapidly. And what gave a company an edge in the past – its scale, size, bench strength, technology - will not necessarily give it a competitive edge in the future. You have to move to developing more one-on-one relationships with consumers. In many ways, we are reaching an era where things will get redefined. We will move from mass marketing to massive customization. That is the big change that will happen in the consumer goods industry.
