For any brand, to be able to communicate with their consumers, understanding the consumer is extremely important. However, consumers in India with multiple budgets, attitudes and cultural differences have always been difficult to market to. They are now rapidly evolving as well. A new generation of consumers is emerging and new consumption patterns are being set. This has prompted brands to change their strategy on how they market to their audiences.
As we approach 2024, The Core spoke to Dheeraj Sinha, Group CEO - India and South Asia, FCB. Foote, Cone & Belding is a global agency network and operates in India with full-service mainline creative agencies. Sinha talks about how the advertising landscape in India is evolving especially in the consumer products space. Sinha pointed out that with demand kicking back in post the pandemic, but disposable incomes remaining low the mid to premium segment across categories have done well.
Talking about how to sell to Indians he said, “Very seldom are you able to take a behaviour or a product from outside and slap it on India. It never really works. If you come to India and say, this is the new way of doing things, you will fall flat. But if you come to India and say, you know what, you like relationships. Fathers want to spend time with sons, and here’s music to help you do that better, it will work.”
Reflecting on the duality of Indian consumers, he explained how the price-conscious consumer does not want to be marketed to on the themes of pricing. As we witness premiumisation across categories, the idea of an upgrade needs to be highlighted through the brands’ messaging, he said.
Sinha added that Indian consumers do not want to think too much. “India is not a market for differentiation, it’s a market for relevance. We don’t want to work hard to compare products. We don’t want to stand out, we want to stand it,” he said.
On The Core Report, Sinha talks about how advertisers will pick up more conversations that GenZ will relate to in 2024 while the themes of joy and celebration of upgrades will continue to feature in brand communications.
Here are edited excerpts from the interview:
So, first question, as you look back at 2023, what were the key changes, or let’s say trends that you saw? One in the way consumers consumed, and second, the way brands and marketeers sold their products or services?
I think 2023 has been a better year, definitely across categories. But the issue in India is that the potential and the projection of the potential is so high that most people are always dissatisfied with how much we are getting. So 6% is not good enough, sometimes 20% is not good enough. But I would say in 2023, many categories, say two wheelers as a category, which was suffering from demand lack, has come back in a good way.
The mass segment, broadly, so to speak, has suffered a bit because there has been a realignment of the consumption wallet because of commodity pressures, inflation pressures, the disposable income not having increased dramatically. The mid-to-premium segment, however, has done well. So if you look at cookies such as Oreo, they’ve done well. But if you look at biscuits at the bottom end, like Marie and Glucose and all of that, they’ve not had a great year. So those are some of the broad patterns you’re seeing. Overall, a mixed year, I would say, as they call the K-shaped curve of the market, the premium is doing very well. The bottom end is struggling a bit.
When it comes to advertising companies like yours, who shape or design the message to consumers, have you been in some ways leading the change or possible change or responding to what you think already is a consumer preference?
It’s a mix of both, really, because many times you’re building products which you know will take off. For example, if you’re talking about Spotify and streaming, you’re pretty much building a category. In India, 60-70% of the work in marketing advertising is about building new categories and changing behaviours. Colgate is trying to tell people now, night brushing is important because how else do you expand that market?
The body of work in this business is actually about building new categories, increasing penetration across segments. We were discussing air conditioning yesterday. We have 5% penetration in air conditioning. You look at sanitary pads, we have single digit penetration. So the bulk of the story in the Indian market is still going deeper, building new behaviours, changing habits.
That’s sort of encouraging and discouraging to hear. So when you say that, let’s say we are trying to encourage night brushing as a category to open up, is this because this is happening elsewhere in the world, or is this something that we want to do in India because we feel it’s a need?
India is a very unique country. Very seldom are you able to take a behaviour or a product from outside and slap it on India. It never really works. There will be a time and place and a way to do everything in India. That’s been my learning.
I think in some of these categories, for example, say streaming, you’re saying this is a new way to stream, but you’re also looking at what is the Indian consumption behaviour on music and content and how can they align in India. If you come to India and say, this is the new way of doing things, you will fall flat. But if you come to India and say, you know what, you like relationships. Fathers want to spend time with sons, and here’s music to help you do that better, it will work. In India, you always sell change through grounds of familiarity. You never sell change by saying: This is how the world behaves, and therefore you should behave.
I’m sure there must be many examples of those who, as you said, have fallen flat on their face. Are you saying then that let’s say 60% to 70% of your work is creation in the true sense? Is that vastly different from other markets then?
Hugely. A lot of my body of work in the last decade has been in building a new model for marketing, branding and advertising. Because if you look at the global model, it was built in the 1920s, in the times of the television era, in the times when the categories were saturated and your big game was market share gain.
You cut that to the 2020s in India. 500-600 million people, India are scrolling their mobile phones on a daily basis. You’re building brands and businesses in multiple medium formats. You are building in an environment where category development is more important than market share gain, there’s a mid and a premium and a base.
Three kinds of consumers, four generations consuming simultaneously.
Therefore simple models like unique selling propositions or simple models like differentiation will win you the game doesn’t work in the Indian market. So we’ve had to reinvent the marketing and the business model completely in the last one decade in the country.
And I’m going to come to some of those categories in a moment. But cost and price, India being known for its value-conscious approach is a critical factor. People might sometimes ignore brands only because let’s say they’re getting something cheaper or what they perceive is better value. How have you seen this trend specifically in the last couple of years?
I think we have to be very delicate about the whole cost-price conversation, especially from a narrative-building perspective. Of course, in India, everything has to be cheaper, Mercedes has to be cheaper, GLR has to be cheaper. That’s at the product buying level.
But in India, we live in duality. While the consumer is wanting a better price, they are not wanting messaging and narrative which is on price. The dominant emotional theme in India is of upgrade. You cannot go down on that narrative.
And at the delivery level, you have to constantly optimise for the pricing and the cost in India. At every level, give upgrades in an accessible way. That’s really the mantra for the market. If you are able to crack that, then you have a win-win.
And that you say would go across categories? It could be two wheelers, it could be soaps.
You mentioned, for example, areas where there’s been a turnaround like two wheelers. And let me stick to that because that’s a big segment of buying in middle and rural India for sure. Do you feel that the marketing message has made a difference or are these categories different more by just the change or shift in, let’s say, consumption or buying power, which could have changed for various other reasons?
I think it’s a macro impact. I don’t think it’s just a pure marketing impact because Covid-19 saw a lot of cash being pulled out of the system. I think some of that is now coming back. And therefore there was a complete dry in demand for two wheelers, et cetera. But some of that economy has come back now. I think a lot of that has led to the coming back of the demand in these segments. But the demand in these segments also, are coming back to 125 cc rather than 100 cc.
Again, everywhere across the board you’re seeing a dash of premiumisation. Cars, again, not the five lakh rupee cars, but the seven lakh rupee cars, That theme is absolutely there, everywhere.
I’m going to spend some time on premiumisation in a moment. But when you look back at, again, some of these categories which were, let’s say, constrained because of purchasing power or income and so on, is there anything that’s fundamentally shifted in the last few years? There are some trends which maybe were sort of permanently changed thanks to Covid. Are you getting a sense of that?
Strangely, a bit of a reversal. It was said that some of the things have changed for good post Covid, and unfortunately, they haven’t. If you look at the whole idea of buying on the internet, every D2C brand today, if you look at their plans, is going omnichannel.
Even demand for things like Rs 100 lipstick has now partly shifted back. People are liking the idea of going back to the physical stores and buying. The only good thing which happened was that you managed to perhaps build brands at a much cheaper cost because you’re building the brands online and now you’re able to take those brands offline. But taking them offline is the big deal.
Why did that happen? Why are consumers shifting back to omnichannel and physical? And we can see this across categories. And secondly, how are now the brands trying to sell to both kinds of consumers?
In India, everything is an event. You talk to a normal middle-class household, they say on the weekend we’ll go to a temple, then we’ll go to a mall, then we’ll go to a food court, eat our food. That’s a triangle. Shopping is not drudgery, it’s enjoyment.
Therefore, when, for example, we’re building Amazon as a business, we never sold it as a convenience. In India, we have time, except for one strata of the society. We want to spend that time in a qualitative way and I think that’s largely the reason why a lot of the demand has shifted offline.
Which is not to say that online is not growing, I think now the parameters of online shopping are shifting. It’s no more about getting it for Rs 500 cheaper. The price leverage is quickly vanishing from the Internet-age economy businesses.
What’s working in the internet-age economy now is choice and accessibility. I’m a 22-year-old girl and I’m sitting in Pilibhit, but I can’t find that mini dress in the neighbourhood stores, but I can find it on Myntra or Amazon. I can see options, I can compare things.
So is this a 2023 phenomenon in some ways, the clear omnichannel?
Yeah, it’s played out hugely in 2023. It’s killed some of the businesses which could not adapt to the omnichannel because the dynamics of building a business on Internet-age economy platforms is very different from having a distribution muscle of people on the road, sales team and physical distribution. They’re two completely different muscles. And the airdrop economy never learned those muscles. So, some of them have been able to cross over and been able to build. Some of them didn’t have the wherewithal and died.
Many of them also had a lot of venture capital and therefore cheap capital to keep throwing at Facebook advertising for that…
Which again, played out in a huge way.
Let’s now talk about premiumisation, which is perhaps the biggest trend that we’ve seen in the last year or two years. And here is where I’d like to get your thoughts on two or three areas.
One is the premiumisation, as we are seeing across categories. Homes worth one crore are selling more than, let’s say, affordable homes that are in the 30 lakh range, at least in the top seven cities in India. Across categories, now we can see more and more brands launching premium versions of their offering. Firstly, why is this happening? Secondly, how is the messaging and the advertising changing to accommodate for this or to capture this? And most importantly, how far could this go?
One is, what is the total addressable market in India? And that debate hasn’t yet been solved. Consulting companies are projecting India as a 1.4 billion market. Actually, India is not a 1.4 billion market. If you look at the broad mathematics, back-of-the-envelope calculation, out of the 1.4 billion people, half of them don’t have access to sanitation and drinking water. So, 700 million are out of the market.
You cut that by the population which has access to the internet, the whole Instagram/YouTube, population. That’s about 500-550 million. You cut that by people who have ever used UPI. About 250-260 million. These are still not the people who are buying things online yet. There are people who are sending, say, Rs 100 to their family back home in Bihar, hypothetically.
You cut that by, say, monthly active users of e-commerce platforms, including Meesho, Myntra, Amazon, it’s about 100-120 million. You cut that by daily active users, about 50 million. That’s really the market now and that’s what brands have realised, that this is not the market yet. It will happen in five or ten years time, but that’s not happening yet.
Therefore, a lot of the businesses are saying, can I upgrade and get to this 50 million base? Which is where the purchasing power is, which is where the maximum amount of sales are happening. So that’s one macro context for premiumisation.
The second context also is that there is up-trading and down-trading in every family. I will cringe my cost on noodles, which are not branded, but it is at five rupees. So, I will down-trade there. But I will save that money and buy a Vivo smartphone for my son. There is continuous up trading and down trading happening all across the board. And therefore, if you can provide premium versions of things, even to the current consuming class, you are able to sell those premium products.
On messaging, therefore it’s hugely important. So this whole idea of Bharat… emotion and all of that, that’s out of the window. If you switch on the TV to look at the body of work which is successful, you have to show a sense of reward for the person. The work has to be glossy, it has to look good. I mean, in India, 90% of the brands sell on the positioning of upgrade… So an Ikea sells on the positioning of upgrade; a two wheeler sells on the positioning upgrade; Spotify sells on the positioning of upgrade.
It’s a very hardworking population. Life is not easy in India, Murphy's law kicks in on a daily basis for all of us. It’s a hard country to make a living in. So the messaging across the board has to be feel-good. It has to be glossy, it has to be about the future. It has to be rewarding people for the work they’re putting in, in bringing the families up and themselves.
You use the word reward quite a few times. Can you illustrate that a little bit?
You have to look at Indian life, we’ve lived for decades with frugality. All the stories have been about pushing the toothpaste so hard that we take the last drop of the toothpaste out. Even now, they don’t remove the plastics in premium cars.
Now from there, we are opening up to let go of it… Beginning to enjoy life. A lot of people can afford a smartphone. They can watch content on OTT and so on and so forth. Because big joys are not happening, not everybody’s able to buy a house, but celebrating the small joys of life is where the emotion is today for the bulk of the country.
Let’s talk about culture in the context of messaging. What’s changed or changing? What’s the subliminal cultural messaging? What is working better or likely to work better in a diverse country like India? Or is it continuing to be about sharp positioning or sharp targeting and so on?
We’ve learned it the hard way, that the teams which create the work for India are far too superiorly educated. I call them triple-filtered MBAs. And that’s my question in the room that we are thinking so hard about this brand messaging and the piece of communication which is going out.
But what trends in India is: so elegant, so beautiful looking like a wow. That’s what trends in India. Our learning has been, there’s a very low cognition market, unlike the Western market, where you think so hard on messaging and so on and so forth.
In India, we don’t want to work hard to compare products. We don’t want to stand out. We want to stand in. These are huge departures from the way marketing thinks globally. India is not a market for differentiation, it’s a market for relevance. My whole theory is that India likes standing in the longest queues, thinking that if there’s so many people standing here, they must be right about it. Why stand in the shorter queue and then feel sorry about it?
Therefore, you have to project consumption as things that are easy. For example, we did a campaign for Spotify, saying Spotify is so easy to download and use. That’s the piece of communication that worked the best for us. We have to make sure that we do not put too much pressure on people’s brains in choice making. So you have to really push people to say…… They like assemblance of choice, but they don’t want to make an effort to make a choice. So across the board, simple messaging, low cognition messaging, making it easy for people to choose and buy is one large trend.
Wrap everything, as I said, in culture, feeling good, familiarity – do not say this is the new way to do things. We hate new ways to do things. We love our own ways of doing things, but doing it in a new format. So familiarity is the other piece. And some bit of emotion always sells. You can never go wrong with a father-daughter theme in India. You can never go wrong with a husband-wife theme in India. You can sell chocolates, furniture, alcohol, apparel, pizzas, and peverything around those themes.
As you go a little deeper into that aspect of culture, there are other, sort of, urban cultures. There are now families which are nuclear. Are these changes driving the way you are thinking about consumers, let’s say, as you look at 2024 and 2025 and the cultural values that they carry, or do they continue to carry the similar cultural values of a few years ago? Actually maybe much more than a few years ago?
If you look, especially at the Gen Z population, there are dramatic shifts. Because the earlier generation was at least a transition generation or a sandwich generation where they had one foot in tradition and one foot in change. You have now a generation which has not had a feet in tradition at all. That’s come up as a big consuming class, though at a slightly more elite level and a lot of the cultural exumes are being questioned.
For example, money which was never a good conversation, is a good open conversation now. Multiplicity of relationship – it’s an alright conversation to have, moving on in jobs, pursuing joys and emotions for yourself. You can have those conversations on what I call the social consciousness level, and it’s alright, you will not have a backlash anymore today.
A lot of the younger brands now are being built on some of those codes and we are finding a huge amount of acceptability on those codes.
Are you responding to these changes or leading them?
I think on building new categories, new behaviours, at a fundamental level, we are leading. But on appealing to the changing social modes and codes, I think India is a bit more sensitive and therefore there we are more a lag indicator than a leading indicator of change.
And I’ve got two more sets of questions. Tell me a little bit about the advertising industry itself. I mean, how are things poised right now at this point? What are the broader challenges, if so, that the industry is facing within?
The Ad Ex (Advertising Expenditure) is increasing, anywhere between 10 to 12% is the projection. Which means that there’s more money being spent. The question is, where is it being spent?
Of course, digital has now come of age. Huge amount of spending is happening on digital. Connected TV is a conversation, especially after IPL this year now, and with all the media changes happening. We are catching up really fast with the West. Connected TV globally has been a conversation since last two, three years, and India is already talking about….. We’re saying we can possibly shift a lot of media money to connected tvs. Suddenly OTT is happening, digital is happening.
And you feel that’s going beyond cricket?
It’s going beyond cricket, yeah. So those are some of the changes where we are leapfrogging, but it's still an ‘and’ market. We still feel that the biggest of the brands and businesses, the best ROI, is still on television. So I built Amazon, Spotify, PhonePe, Acko, all Internet age economy brands through TV work. So that’s not changing dramatically. It’s an ‘and’ market.
The narratives have to support each other. There’s something that TV does best and there are a lot of other things that digital does best. So most clients are doing a combination. A lot of clients at one point in time were saying, we can just live with performance advertising and they burned their fingers because of the Internet age economy clients are now coming back and saying, we have to build a brand boat. That’s one thing that we missed in three to four years.
In terms of the advertising business there will be some bit of consolidation, I feel, because there are far too many players. Is the business good? It is good. Is it good for 25 players? Perhaps not. Will it be very good for three, four players and then a long tail? I think yes.
So the business is undergoing a huge amount of transformation. I’m a big optimist about the advertising business, apart from all the flak that we keep getting, but the idea is how do we stay ahead of the curve. The other thing which is coming back in a big way is the demand for best in class integrated services. Five years back, I would go to clients and they would say : Dheeraj, we are dealing with 15 agencies and we are very happy. We have a specialised social media agency, we have a specialised ORM agency, we have a specialised content agency, and there are 17 people who work with us.
There was certain joy and glee amongst marketers in being able to integrate that. Today they’re saying we can’t do it. They are spent on that and they’re saying, can you come in and do it? So marketing is seeking full funnel services. People who are able to deliver that are the ones who are going to win the market in the next two, three years’ time. But it’s all good.
The cornerstone would be creativity, still?
It would be creativity.
Because when we think of advertising, we think of creativity.
It has to be. If we’re building content on the internet right now, we are seeing how we can build creativity in performance marketing as well? How can our ORM response be a little bit more creative and a bit more personalised and with the help of AI, we are able to deliver that. So I think the tech revolution, the data and the tech piece is helping us be more creative.
And since you mentioned AI, so you don’t see AI eating up the copywriter’s job or things?
No, not at all. Because see, in fact, if you look at a classical account, say a finance brand account, there’ll be theme work – broad theme work on positioning and broadcast stuff and all of that. But we’ll also push out 1000 pieces on ground between merchandise and POS and digital content. I am happy if AI gets me on those thousand pieces to say 80% accuracy and then 20% I do touch, feel and I get it out. That relieves a bulk of my talent to use their creativity on thinking, creativity and messaging.
I feel that AI is going to fix the mistakes and we can relieve a lot of our power and energy to do legitimately what the agency is supposed to do.
In 2024, what’s the kind of stories that you feel are going to be told or you would like to be telling?
I think in 2024, again, the themes will continue to be about celebration, the joy and the celebration of moving up. I think also some of our work laws have become socially more conscious. I am a big believer of capitalism working to the benefit of socialism. You will see – some of the brands are talking about it – doing good for others, and feeling a certain joy about it.
There are issues around gender in the country, finance into gender, women at a grassroots level into empowerment, greater acceptability of all kinds of points of view. I think you will see some of those things being talked about because we are realising that those are slightly more ahead of the curve conversation that the society needs, there is acceptability of those conversations, and brands are willing to take up some of those cudgels.
You’ll see some of the joy, celebration of upgrade coming in. You will also see far more sharper messaging for Gen Z coming in. And some of the themes which the society has cringed so far, say, same-sex, marriage, et cetera, they will become a bit more mainstream. You’ll also see a lot more innovation in products and services coming in. Imagine insurance only for working women, for example, and that getting traction. Some of those cohort-based products, solutions and services will also gain a lot of currency.