With Diwali at our doorstep, shopping has reached a fever pitch this week. We find out how marketers are dealing with the radical shift in consumption and purchase patterns in the age of e-commerce
BY ALIEFYA VAHANVATY
(With inputs from Ravi Bansal)
A new narrative for festive marketing has replaced the age-old discourse, moving the conversation from traditional to trendy. The unmistakable change in the consumption of festivals in India marks the end of an era, where traditional ways ruled the mind and the market. Festivals are now time for brands to raise the pitch and decibel level to vie for the consumer’s attention and wallet. This year too, there is a surge of marketing activities by brands of all hues. The market seems to be in a cautiously buoyant mood, somewhat boosted by the Narendra Modi-led Government’s policies to give the economy a much-needed push. The new dialogues of celebration hold several implications for brands which used to ride the festive wave in stereotypical ways. Today, they have no option but to alter their behaviour to remain relevant.
CONSUMPTION CALLING
Despite the not-so rosy economic outlook, Indian consumers are expected to spend about $8bn (Rs 52,000 crore) as they go online shopping this festive season, according to the latest estimates of an Assocham study. The industry body predicted increased sales for e-commerce merchants by at least 40% to 45%, for this holiday season which started with the Navratras and covers Durga Puja, Dussehra, Diwali and Christmas.
If Rs 52,000 crore appears an exaggeration, don’t forget the huge sales turnover raked in by the etailers in last week’s big sales. Flipkart, for instance, told ET Now that it clocked $300 million (Rs 1,900 crore) in gross merchandise value during its ‘Big Billion Days’ sale from October 13 to 17. The company sold over one million mobile phones and 60,000 TVs, got orders worth over 10 lakh units of fashion merchandise during the first 10 hours and the sale helped over 100 sellers turn millionaires in just five days.
The numbers were equally impressive for its rival Amazon, which reportedly said its ‘Great Indian Festive Sale’ between October 13 and 17 was four times bigger than the event last year. It’s gearing up for another discount-led campaign — the Great Indian Diwali Sale — from October 26 to 28. Another etailer Snapdeal projected sales of $100 million from just electronic goods on the first day of the sale last week.
Among the driving factors for this anticipated growth in online shopping are tech-savvy younger consumers as well as the convenience of e-commerce, which can encourage snap purchases, say experts. Speaking to the media, D S Rawat, secretary general of Assocham said, “The customer is connected 24x7 through smartphones, tablets and other mobile devices which has led to a gradual evolution of e-commerce into mobile commerce. There is also convenience which leads to impulse buying.”
In this context, consumers aged 15 to 35, who are described as “net savvy” and who enjoy the experience of new forms of shopping, are playing a key role in shaping the new conversations around festivals. “One thing which is very different from earlier is that consumption and purchase patterns have shifted very rapidly. Earlier, both these things followed certain religious or cultural traditions. For example, around Dhanteras people would buy metal or gold. Now they have started buying durables of personal nature such as mobile phones, tablets etc.
Also, a lot of the gift ordering is happening over the Internet through e-commerce. So that is starting a completely new trend and it opens up limitless possibilities for brands to take the conversation forward with their consumers. Another factor that is seeing a change is pricing. Today, if dry fruits are expensive, chocolates are slowly replacing this item in the box with wide acceptance. People are no longer restricted by tradition. These are some of the more noticeable changes on the consumption front that are happening today,” says Ashish Bhasin, Chairman and CEO-South Asia, Dentsu Aegis Network.
But media experts also say it’s not as simple as it sounds. “The consumer behaviour change has to a large extent been driven by the way brands have behaved. So for example, brands have moved online to reach out to younger people over there, and in turn more of the younger consumers have migrated online. Brands have also become a lot more social and so have greater engagement with consumers. Brands have also taken to having flash sales and deals throughout the year rather than having it just during festive season and so consumers are purchasing all year round,” says Debraj Tripathy, Managing Director at MediaCom India.
MEDIA MATTERS
To capitalize on that generous Diwali shopping spirit, many e-commerce titans and start-ups alike have splurged on glittering Print and TV ads replete with the power of celebrities and a healthy dose of seasonal sentimentality. According to a recent Internet and Mobile Association of India (IAMAI) report, India has 350 million active web users, out of a population of nearly 1.3 billion, so the festive ads on traditional media like TV and Print are a way to lure in brand-new online shoppers – as well as a chance to dazzle e-commerce converts. The e-commerce ad splash comes as no surprise since the sector has been driving India’s growing advertiser base year-on-year. It is hard to miss the fillip that new categories like e-commerce, start-ups, and new-age companies are giving to the overall advertising pie, admit media experts. After all, these companies are flush with funds from private equity and venture capital and are grabbing every opportunity to make themselves visible. This is evident from the recent TAM Adex figures which reveal that over 2,000 new companies joined the advertiser base in the first nine months of 2015, and expectations are that another 500 advertisers could be added in the October-December quarter, thanks to festive season advertising. The Times of India recently even pointed out how too many jacket ads in its pages last month – between 8 and 10 pages, mostly flaunting Diwali sales — prompted some readers to complain.
“Today all the e-commerce companies have jacket on jacket on jacket in Print. If one day Flipkart has the jacket, the next day it’s Amazon and the day after, it’s Snapdeal. If one observes the patterns of how things are playing out in Print, you get an understanding of the cut-throat competition. For instance, this year there are estimates that about Rs 2,000 crore of e-commerce festive money has been pumped into the four to six week festival season and it’s completely believable. For our regular clients whatever was the rate for premium positions, e-commerce companies are paying huge premiums on that. So the regular advertisers are no longer getting the ads they want. Look at Panasonic or LG or any other brand. They are all inside, not on the jackets. The best positions are not available. Even if they are available, they’re available at such great premiums that it’s difficult to justify it. And I don’t blame the media for it because it is a demand and supply situation. It is completely the seller’s market around festive season,” says Anita Nayyar, CEO India & South Asia at Havas Media.
Agrees Bharat Rajamani, EY, “Taking a cue from e-tailers and the mini successes they have had over the past couple of years, other brands have started targeting people online more than earlier. Consumers are now bombarded with advertising messages on mobile apps, in addition to the ads they see while surfing the Net or accessing their social media pages. Having said that, brands are not yet ready to shift a significant percentage of their advertising expenditure towards digital media. Conventional media continues to get a lion’s share of the advertising spends. This has only made the advertising and media industry more competitive. Top dailies have three and four jackets every day as festivals come closer. Running television campaigns during these periods have become difficult as inventory has become an issue for brands.”
CLICKS AND FOOTFALLS
If e-commerce companies had splurged heavily on advertising two weeks back, an even higher amount of spending is expected from other e-commerce companies joining the fray in this last leg of the festive season.
For instance, ShopClues launched their Diwali sale from November 3 to 9 and the brand is spending 5-10 times more than what it did last year. While the campaign is slated to run across all media, the brand is going to be heavily focused on TV. Nitin Agarwal, AVP-Marketing, ShopClues said the company had invested in a lot of media research before the Diwali season and had found out that TV was the most efficient medium. “About 60% of our festive spends will be put on this campaign, while 40% have already been spent on the #ekzerokum ‘Diwali Se Pehle Dhamaka’ campaign,” he revealed.
Craftsvilla, too, has Diwali plans lined up with their new campaign. The brand has set aside a budget of Rs 15 crore on the campaign which will run during the Diwali period, say media reports.
Amazon was one of the early brands to get in on the Diwali sales with ‘The Great Indian Diwali Sale’ from October 26-28. The e-commerce giant had a high decibel campaign which was across TV, Print, Digital and Radio and began a few days prior to October 26. Although its Diwali sale is now over, media planners expect the company to continue its festive spending till the end of Diwali. In Q3 FY14-15 (October-December) Amazon saw its ad volume grow by 275% when compared to volumes during Q1 of the same financial year, according to S-Group Insights.
Meanwhile, Askmebazaar launched their ‘Diwali Deal Walon Ki’ sale campaign and is also running the Daily Jackpot Sale up to November 13. The festive sales include upto 80% off on select products as well as daily offers like buy-one-get-one-free. The company is already running ad campaigns on TV and Digital.
Online furniture and home products seller Pepperfry too has been very visible in the Diwali period. It launched its festive campaign ‘Iss Diwali Kuch Badal Ke Dekhiye’. The campaign has been mainly focused on TV, Digital and social media. The TV campaign is extensive with the TVC playing on English infotainment, Entertainment, Movies, Lifestyle and select HD channels/properties and regional channels. The campaign is expected to intensify this week.
Jabong launched its TV ad campaign for Diwali which is a continuation of its earlier ‘Be You’ campaign. The brand is expected to promote its clothing and apparel products heavily for the festive season.
However, online businesses are not the only ones caught in a growth frenzy this festival season, whether for gross merchandise volume (GMV) or multiple-time increase in traffic. Brick and mortar retailers are also expecting double-digit growth this Diwali. This is despite fierce competition by way of mega discounts and offers from the online players, signalling a sharp reversal from last year when stores reported subdued demand as ecommerce players successfully lured away consumers.
Top retailers such as Future Group, Arvind Brands, Shoppers Stop, Vijay Sales, Puma and Max have reported buoyant demand over the past few weeks. According to media reports, Kumar Rajagopalan, Chief Executive, Retailers Association of India, recently stated that eastern India witnessed around 15 % growth in retail sales around Dussehra, and he was confident that during Diwali the sector would witness additional growth of 10-15 %. He said e-commerce marketplaces were doing well in specific categories, such as mobile phones, while brick and mortar was showing good results in almost every other category.
“Godrej has always had festive offers but now we’re taking into account modern reality and so for example are bringing in aspects like payment plans for buying durables and have also loaded up our Free G platform to cater to the festive season. As a company we have put a very significant layer on top of the shopping and spending trends we have observed in consumer behaviour in recent times. Our Free G piece has worked out really well for us this year, in the same manner that online companies have managed to do with their recommendations and call to action. So if a consumer is looking at our menu in Free G, he or she can choose Diwali offers and see a whole range of related offers across products and categories,” says Shireesh Joshi, COO, Strategic Marketing Group at Godrej.
Archan Banerjee, Head-Digital Marketing, Dabur India Ltd says, “We have a brand called Greetings, which we activated last Diwali. It comprises a range of 13 Diwali gift packs, comprising Réal and Réal Activ fruit juices and Dabur Honey. This year we have marketed it keeping in mind that we have a very small window of opportunity. So we are doing specialized and localized content, on ground activations and this has allowed us to get better traction.” Future Group founder and CEO Kishore Biyani told ET recently, that the chain was set to grow its business 25-30% this Diwali over last as sentiments looked positive. “E-commerce is still a minuscule of the entire market, except a few categories like mobile phones, so there is no impact on business,” he told ET.
Factors like fresh merchandise, fewer discounts on big brands by online players are some of the reasons cited by offline retailers for increased sales this Diwali. “Apparently the novelty factor which swung the game in favour of e-commerce giants last year has worn off this year and combined with lower discounts offered by them and better range of merchandise offered by us we are seeing a sales growth of 8-15%,” J Suresh, Managing Director and CEO at Arvind Lifestyle Brands Ltd and Arvind Retail Ltd, was reported as saying by other media.
AUTO‘MATIC’ CHEER
Last year, the automobile sector ad spends during the festive period was an estimated Rs 450-500 crore. The sector’s total ad spends in 2014 accounted for an estimated Rs 3,000 crore and were more spread out throughout the year.
In 2015, the ad spends by the auto sector are estimated to grow by over 30% to Rs 4,000 crore. The automobile ad spends during the festive period this year are expected to be Rs 1,500 crore according to senior media planners.
“Ad spends of automobile in H1’15 has increased by 40% and this growth is expected to continue in H2’15 as well due to various launches by major auto players. Total ad spends of automobile category in 2015 is expected to touch Rs 4,000 crore with approximately 60% of spends in H2’15,” a senior media planner told IMPACT.
Several launches from auto companies during the festive period are expected to fuel the high growth. Honda Motorcycles and Scooter India is launching nine new two-wheelers this year. Bajaj Auto is expected to launch two new models; Hero MotoCorp is expected to launch two new scooters. Many of these launches have coincided with the festive season as sales during this period see a large growth. TVS Motors and Yamaha are also have new additions on the cards.
There are several four-wheelers which are slated to be launched during this period. Maruti Suzuki YRA (Baleno) Premium Hatchback was launched a couple of weeks ago, as was the new Ertiga. Renault Kwid was also launched this festive season. Mahindra launched the TUV300 sub-compact SUV recently and will launch S101 Mini SUV by the latter half of this festive season. Tata Motors is expected to come out with the Tata Kite hatchback and Kite sedan soon. The Chevrolet Trailblazer was introduced in the market recently and so were the Ford Endeavour and the new generation Ford Figo hatchback and the Ford Aspire sedan. “The way consumers are consuming information and festival offers and festival schemes in the market have changed dramatically. What still prevails is that Diwali is the biggest purchase time for the consumer. But the way they are getting to that purchase decision has evolved because of access to instant information. People are constantly surfing to check out deals on products and services. That is one significant change we have seen and it follows that our marketing is also keeping pace with this,” says Kamal Basu, Head – Marketing & PR, Volkswagen Passenger Cars.
DEAL-MAKERS
The festival season in India is very critical to the consumer durable companies as around 60% of sales take place during this period. In 2015, the industry expects a growth rate of 20-25% with a sales target of around Rs 20,000 crore.
LG India recently launched its OLED TV and Smart TVs, the promotional activities of which have been buzzing during the festive season along with the company’s regular discount offers and freebies.
Niladri Datta, Head of Corporate Marketing at LG India, says, “The festive season is very important for the entire industry and we all look forward to a surge in sales. However, the overall trend is changing. Now consumers are buying big-ticket items throughout the year. Premium products are the focus across categories. Manufacturers are strengthening their product portfolio as consumers are ready to pay a premium for premium products.
In fact, there is a huge demand by consumers in India who want to own and experience the products soon after the international launch.”
“It’s true that growing Internet penetration and the search for pre-purchase information online has made us increase our brand presence online. But one has to remember that sales through e-commerce are still a fraction of the overall sales so the brick-and mortar stores remain as important as before and the mix of activities during Diwali has not changed that much....gifts for consumers remain as important today as they did before, as do incentives for dealers. We still spend substantial amounts on below the line too,” says Kapil Agarwal, Vice President Marketing, Whirlpool of India.
Videocon is gearing up for an action-packed festive season as well. The company has launched new products like the Titanium series of refrigerators and televisions with Liquid Luminous technology. It is aiming for a 50 % sales growth over last year and is planning to re-introduce its extended warranty and easy finance schemes to boost sales and to make the most of the festive season. Videocon will be also be rolling out region-specific advertising and marketing campaigns, and has earmarked Rs 25 to 30 crore or its festive season marketing activities out of the total marketing budget of Rs 250 crore this year. “Offers have always been a part of festive celebrations. However, it is now about creating an experience. So if a customer comes to us during Diwali, how are we creating that experience of having a feel of Diwali? Even if the customer visits on you a digital platform or at a mall or in a shop, how does a brand give him that festive experience? So if you are talking about a very nice television, then how does that turn into that warmth of Diwali? I think that experience layer has added onto the festive flavour in recent times and it is still evolving. Five years ago, it was easier. Any offer was a good offer,” says Shikher Gupta, Head of Brand and Digital Marketing, Videocon.
Fresh hues are also brightening up homes this Diwali and 40-45% of sales and ad spends for paints happen during this season. Paint companies like Asian Paints, Goodlass Nerolac and Berger Paints are betting big on changing consumer trends, unveiling innovative products and campaigns around Diwali. So much so, that like in FMCG or consumer durables, promos and freebies are being thrown in for good measure for different marketing strokes. Leveraging on changing consumer perception towards painting homes, Asian Paints is also running a “colour week” through channels, websites, books, consultants and helplines to address all questions on colour themes and schemes.
“For us the festive season contributes to more than 30% of the paint sales of the year. This year we will spend around Rs 13-14 crore, about 40% of our ad budget on various above and below the line activities. For example, this Diwali, we’ve set up branded stalls across key towns in the country, which will give instant gifts on purchase of Nerolac products,” Anuj Jain, VP, Sales and Marketing, Goodlass Nerolac Paints was quoted as saying in the media.
ARE THE ACCHE DIN HERE?
Of course, there is cheer in the air and consumers are loosening the purse strings but it is a cautious optimism too. After all, stock market indices have been flat — the Sensex is hovering around the 28,000 mark just like it was a year ago; economic indicators are mixed — whilst industrial production hit a nearly three-year high in August, retail inflation rose in September; and global ratings agency Standard & Poor’s gives India the same BBB- rating today that it did during the global financial crisis of 2008.
What has improved is consumer sentiment nudged by the Reserve Bank cutting the repo rate by a handsome 50 basis points to a four-and-a-half-year low of 6.75% which is perhaps the biggest contributor to the mood of optimism on the streets. The consumers are spending today because there is more clarity about tomorrow. Today is definitely better than yesterday. And perhaps they’re also tired of waiting for acche din. As far as consumers are concerned, the clamour of revving bikes and cars, selfie-enhancing smartphones and blaring ultra-HD TVs; and for marketers, the ringing of cash registers once again is festive enough to celebrate this Diwali together.
FEEDBACK: aliefya@exchange4media.com
