Dr. Jagdish Sheth
Author and Renowned Scholar
 
I kindly suggest that keep the lights in the audiences on please so that I can know who is there and I would like to see in your eyes as to what you are seeing. I will come back to you at the podium in a minute. Here’s the magic and my height just got increased ok. Actually when you have the laptop around here and I used to be six foot four by the way just for you information. But the aging and all the hard work has cut me down to five foot four. And I like to use a podium with a height on or stand on the side. Well with all that introductions good morning!

My style is totally conversational, informal and we will have a Q&A session to know what is on your mind and that should become what is on my mind rather than my presentation per se so we should have more time for dialog and just to get us going I want to tell you that I’m 67 years old and just turned 68 officially for the life insurance purposes ok. Do I look 67? No! That’s because I’m in marketing and if you are in finance or operations you age so fast, have you seen that thing. You know that CEO’s are aging much faster; we marketing guys have the fun. The first lesson that we teach in marketing is packaging right. That’s what I have learnt that packaging is very important, positioning is very important. So what you see here are the wonders of modern technology put together. So that is what the marketing is all about and we will talk about. But my job here is not to get into the specifics of how Indian companies are going to create and deliver world class brands just like Japan did after World War II, just like Korea has done more recently for example, just like America did hundred years ago the journey is the same and the message is the same.

Brands can never be bought in the market place nor they can be manufactured in the factory, you have to earn it. The message is going to be that the brand will have to learn how to earn. That means, lots about the global branding of the Indian origin has to do more with the back office operational stuff, more in the factory, more in the company than what people note outside the barn life. That is the key message that I will give. Then we will talk about the role of marketing process. So here is my first line.

What is happening at the broader level? There are four forces shaping the global economy so while India was sitting on the side lines for the last fifty years, essentially partly by deliberation partly by intention, India missed out to be in the center of economy. In this century India will be in the center of the global economy whether it likes it or not. I don’ think it is India who is making the decision as to how to bring India into the center of the global economy, it is happening by the outside forces. Here are the four areas and I will go very quickly because we want to get into more of the brand insights specific to the recommendations.

The biggest issue is not what is happening in the emerging nations, the biggest issue is what is happening in the advanced countries. All the advanced countries are aging much more rapidly than they thought that they would be aging. And immigrations is not the solution. The oldest nation in the world is Sweden and it has already reached the point of no return and in no way they can reproduce themselves. Second oldest nation is Japan and in Japan more than a year ago the absolute number of counts of men has declined , every month it is declining. They are having fewer and fewer men maintained to live less than the women and the same trend will continue with women. Last year again in October for the first time the number of deaths exceeded the number of births in Germany. US is a slight exception mainly because we still have a second wave of immigration mostly coming from the Latin American countries like Mexico and further south.

Our ethnic populations are rising much faster, there are landed immigrants bringing more children, producing more children but again with affluence they are going to produce less number of children so it may be a short term but not a longer term solution. So what happens when we have an aging affluent population is that it is not able to produce economic growth to consumption. Most of that is wealth mechanism. So more and more passive incomes are generated than active income from livelihood by large employment…..in fact you don’t need employment. We are producing more millionaires than it is imagined possible, more billionaires and most of these CEO’s retire and even the senior management if they retire will have a huge amount of wealth creation mechanism through stock options and they make money by investing into other companies or into the stock markets like private equity or real estate and this is a passive income so the country has gone from an income driven country which is where the marketing comes into play, to more and more a wealth driven country. This, called a permanent income hypothesis, was advocated in the late fifties, didn’t really take off till the eighties by and large where we saw the shift permanently. This is the key problem. They need economic growth and the only place the economic growth is going to come now is through emerging large nations such as India. We will talk about that one.

Second one is that the world is flat. What was a bottle neck in terms of an infrastructure especially media infrastructure is gone. Today India can produce as good quality newspaper in print, not content necessarily but in terms of the physical flow physical thing, as good a magazine in fact the content is very good in the magazine in my view. Definitely we can produce as good a content on commercials on TV- very good quality in fact. Today the Indian media has all the equipment possible and as we go more and more towards digital media environment and the affordability drops enormously, we will be as good as anyone in this. This is the flattening of the world not just through Tom Friedman’s view which is strictly IT side but it is happening, any thing that could be digitized by and large whether it is mobile cell phones, where, in many ways countries like India and china are way ahead of deploying the next generation of technologies, they are actually leading the world rather than lagging the world as it used to be the phenomenon. Every time I come to India I find that I’m the incompetent person using the cell phone here. Our cell phones are way behind interestingly even though America invented cell phone technology, commercialized it, it is going to lose that industry and I have been working in this industry. I have a center for the telephone industry, just like we invented TV, we commercialized it successfully and we lost it, there isn’t a single TV manufacturer left in America for example which is fascinating. So that’s the world is flat that what was not possible is today possible so these emerging economies can aspire and deliver because the IT infrastructure and the media infrastructure is possible today to deliver in fact a global presence in some fashion.

The third main event has been the collapse of communism. The world is driven less and less by ideology although you see the reaction by the ideology driven stake holders by and large such as religion on one hand and the land lord ship on the other, but more and more the world is driven in fact by the markets and economies. I made a statement that in this century with the new book that just came out for Tectonic Shift and it was deliberately published in India to increase the image of India as a great publisher of good authors and we can always publish it over there and eventually it comes here. I’m deliberately doing it like this reverse strategy. Tectonic Shift is an economic journey, geo political journey, I’ve been involved with the government of Singapore for at least fourteen years and I go from here to Singapore to meet all the permanent secretaries and talk about the repositioning and re-branding of Singapore. As the competition is rising from Shanghai on one hand and Dubai which they never thought was possible. Today Singapore is in a mid life crisis just like all brands are in a mid life crisis. So we are having a session with all the permanent secretaries as to how to revitalize the nation, in this case which is a global brand, relatively respected brand, but the brand is plateauing just like any other brand. American brands are plateauing for example so how do you revitalize them.

The last century was driven by ideology like Vietnam war, Korea war, WWII and the Cold War. This century is driven by economics and in the future, three economies will shape the first half of this world with the rise of China and the rise of India and its impact on you as the largest market today in this world. A very key factor, surprisingly, the consequence for us in the marketing is interesting. We marketing professors and consultants and advisors are much more wanted by the prime ministers of the countries and not by the CEO’s of the large enterprises. Isn’t that interesting? Fascinating! They are in fact public sector enterprises across the world who are begging for marketing expertise. More and more global enterprises will come just like they did from the Chi boss of a Korea which is sort of a semi government highly public private sector involvement; Japan has the Zaibatsu system. Public sector enterprises will be where the global brands will arise faster and faster first before the private sector. All the major brands from china will come from the public sector enterprises. Haier is already number two in the world in the manufacturing of the appliances and pretty much it is likely to become number one and it will go global. Haier, is on the one hand and there are about a dozen of those Chinese corporations creating a global branding, most of them will actually do it through acquisitions. We will talk about the inorganic growth and how that impacts on the branding aspects by and large.
The large thing is the economic pragmatism. Today you don’t win elections anywhere in the world whether it is in the advanced countries or emerging nations unless you fill the stomachs of the people and their wallets. Stomachs are the employment and the wallets are the wealth by it. So the politicians have become very pragmatic, what matters is what Bill Clinton’s advisors told him to win the elections "It's the economy, stupid," and they won their elections. Here is the most popular president after 1991 after the gulf war from where the Americans pushed out the Iraqi’s from the Kuwait saved the nation and became very famous, actually he was more popular than Ronald Reagan was at his highest popularity. 1991-92 he had a recession and he is gone. Same thing happened with John Major and Tony Blair came in and even Tony Blair would’ve gone unless the British economy had done very well. Same thing happened in Germany Helmut Kohl was the longest surviving chancellor but he made the biggest mistake of his life by integrating East Germany with West Germany on equal footing and in the passage unemployment rose to 10% economic malaise came and he is gone. And Schroeder who came in lasted for few years couldn’t turn around the economy and he is gone. Same thing in France same thing in India; why the politically leadership in China continues to survive with no revolutions and no revolts is because they are delivering the economic miracle to the people.

So any political party that delivers the economic miracle to the people is likely to get re-elected again and again both in parliamentary system and in our case the republic system.
So here is the change, economic growth historically came into in 1800’s thru industrial revolutions and the global expansions by the Europeans were the drivers as the markets. Biggest beneficiary was America; it was the largest exporter of cotton in the world for your information before the civil war of 1865.And today you read the kinds of things that Abraham Lincoln did he was probably the best economic reformer as a government guy, as a president of the nation than any body. He implemented a strategy which is exactly what china and India are doing, one through a democratic process and other through a basically top down policy driven process. My institute I have for India and china in America and Jayram Ramesh is the part of that institute and almost a founding member…… is very fascinating and actually as I visit China and visit India and the journey and the destination seems to be the same but the processes of the journey are taking their own approaches which is just fine….. there are two different ways of reaching the destination. US benefited because right after the civil war Abraham Lincoln actually made sure that the country actually does a value add in the country. Rather than shipping out the cotton, can we have cotton mills and rather than shipping out iron ore or coal to England or Europe can be value added to manufacture. It forced the world and Europeans to outsource it. And outsourcing is nothing new and in fact if you go back to the theory of David Ricardo it was all outsourcing and he never called it outsourcing that was not the word. How America grew by manufacturing and becoming the manufacturing capital for the largest market Europe and then it began to outsource therefore in this century it is the large emerging nations with a very large concentration towards China, India are the driving economies in terms of becoming more and more manufacturing hubs and I’m very optimistic that India will also become a very big manufacturing hub just like China has already become and China has about a twenty year advantage in manufacturing and that is what is going to happen. This is the new measure.

The new measure is called the PPP as most of you know quite a lot. There is a BRIC report by Goldman Sachs which is very influential. Goldman Sachs on the one hand and McKinsey on the other are probably the two most influential bodies today shaping expectations of the government on one end and enterprises and CEO’s on the other end at a very high level and both are promoting the idea that we can look at this world in a different way than what you have done before. You can say that china is number two with PPP as 8.2 trillion and it is likely to surpass US by 2021 by every measure. In fact there is no debate. First time I teed up the idea was in 1993-94 remember this gentleman Dr. Lawrence Sommers who eventually went to Harvard to become the president and had to resign recently. He was the Undersecretary of the Treasury in the same group of CEO’s I was talking about. I teed up the idea that China will eventually rise and surpass America it was a shock wave, political debate asked him the question and he said it was absolutely true. Interestingly the government sold a new behind the scenes rise in china at least…it is interesting. And you can see India is number four so I’ll just quickly by pass…China is the second largest economy based on the PPP index and it has just surpassed Japan and it will be the single largest economy by any measure including GDP, India is the fourth and it will surpass obviously Japan as the third economy. So the triple play of three markets, the consumption market of China, rising India’s markets and America will create a play which says that the Indian brands have to be equally comfortable not only in America and England for example but in China. You have to show up in China with as much aggressiveness as you do in western world which is very important evidence and by the way Chinese brand will show up in the Indian markets as aggressively like the Korean brands like Samsung’s for example, like the Hyundai cars are showing up and it is matter of time by and large. And BRIC report that we talked about. So this is the fundamental repositioning of the country.

First of all one dimension is the macro level for the country and the second level is for the corporations. India became an isolated domestic economy by choice, biggest mistake that India ever made after independence to be the part of what is known as non-aligned movement almost pro communism. That is because our leaders grew up with that thinking, as freedom fighters they saw the colonial powers abusing their colonies. The mindset of the leadership made it difficult otherwise today if India had western allies which is UK and the Americans we would have been the manufacturing capital of the world there would have been no rise of Japan or Korea or Taiwan and let alone China for example. Unfortunately it didn’t happen. We made the second biggest mistake in life when we had to align literally for protection anyway, Mrs. Gandhi aligned with the Soviet Bloc which again delayed the whole process of where the world should have taken India into because the key advantage of India is not its markets but its resources. The enormous agricultural land resources, industrial mineral resources, it has enormous human capital resources and those resources are becoming more valuable to the world than just in India. So this is not the old MNC model that they come to identify the potential markets and struggle enormously. Most MNC’s have not done that very well except Hindustan Lever. Most have struggled enormously trying to bring American brands or western brands into the Indian context. The domestic brands have stood up to them pretty well actually. Surprisingly across industries like the luggage industry on one end and the PC industry on the other end so far and of course partly the regular economy helped out a little more which is interesting. So today India from an isolated domestic economy is clearly moving towards the integrated global economy and it is not its choice. Third choice is given after the 1991 crisis in India and it is now having huge economic reforms and if the journey continues no matter which political parties come into power whether it is the BJP or current coalition or the next generation my view is that it is not the choice of the politician to change the course, it is basically controlled more and more by the world economy and the world view in the political arena that matters. What matters is markets are more and more important as opposed to ideologies or policies or regulations interestingly and I’m working a lot behind the scenes with the governments for example I’m working in the agricultural sector. India has to rebalance its economy macro level and it cannot be so much service driven. We went suddenly from the agricultural economy which we still didn’t leverage enough all the way into the services economy. Manufacturing has to come back into India in a big way and agriculture has to value add more just like other nations have done. So we are policy wise orchestrating all this stuff to create a growth in the market in the way that will be very appropriate.

Next one is the diversified domestic conglomerate and this was marred under the license raj. If you were a TATA group or a Birla group you thought about the domestic market and any time there was another license opened up you jumped into that because you had the capital and you have the management talent. But today you cannot fight fifty kinds of competition; you have to choose your battles. no company can fight even the almighty GE can’t do it and when Jack Welch took over the company the mandate that was given to Jack was that from four hundred separate companies reduce it down to a handful of business units and he reduced it down to twelve major business units. Jeff now has reduced it down to six. So more and more these companies are finding that the future lies by focusing on a fewer number of businesses where they have a strategic resource advantage but they go global in those businesses which is the fundamental ship and that is the key area…..so that is what is happening. The journey typically begins and earlier a comment was made which is very correct we think that we are global because we export. Amul is not a global brand although it sells in thirty four countries because it is an ethnic brand only Indian ethnic consumers know about Amul as a world class brand. But unless it is in the table daily of an average American family or an average Japanese family or an average British family it is not a global brand. Most companies begin by having export based global definition which is mostly an international division, manufacturing product here, surplus capacity or there is an incentive given by government, export incentive, divert your capacity for export because that is where you have tax incentives and maybe margins are better or you have these special economic zones or tax free zones whatever we call them in this country etc every country has them. So afterwards a given market becomes very big so usually have a subsidiary created as there is a sales and distribution company, warehousing etc or often you begin to acquire a company there- an acquisition. So from export it becomes acquisition, so now we have a subsidiary based model and those subsidiaries are sometimes created by law as you are not actually allowed to do business without having a local subsidiary as we forced multinationals as they came to India that they should have a separate Indian subsidiary with so much of controlling interest like 51% or 40% etc. and the last one of course is ultimately the journey to become the integrated global company and that is what the global definition is all about. We talk about the definition and I think that the Indian companies are probably going about the first stage export base all the way to international global integrated enterprises. A colleague of mine who is from GE, a very senior executive has quit the job, works with me full time. Suresh Sharma is his name and we are actually having enormous practicing both in India as well as in China how to make export oriented companies to truly globally integrated enterprises, which is more than branding…..as I say that it cannot be bought in the market place through advertising dollars, you have to earn it with lot of operational aspects involved behind creating a global brand. That’s what this is all about here. By the way, most of the multinationals, as the Americans, beginning with multi domestic subsidiaries are now becoming globally integrated whether they are Hindustan Lever on the one had or P&G on the other hand and IBM on the third hand, HP on the fourth makes no difference by and large. Europeans are still not there as they are stuck in the middle but the American enterprises are clearly moving at the next category or new companies like Google or Microsoft are already gone or just beginning all the way to be the global brands and that is the architecture that we can learn. So here are the export based global companies. French champagne can only be made in France, there is no way you can make it anywhere else so the only way out is export. Rolex watches deliberately to control the quality Rolex watches will start making them in China, this is my forecast. All premium brands are now made more and more in the emerging nations which was unthinkable in the mind. Not only semi premium brands like leather goods for example but Gucci’s are all moving towards China both as a market but also a manufacturing place which is interesting. Indian diamonds, we are the largest diamond cutters in the world but we have no brand name. We have a market access for example the single largest brand of retailer of diamonds is Walmart and totally unbranded. There is not a single brand of diamond out there, DeBeers tries to create a brand there but nothing is available at the Walmart that is the store reputation that is giving a brand reputation. People ar buying at Walmart totally unbranded Indian cut diamonds and it has surpassed retail chain for jewelers. So these super retailers are having an interesting strategy which is really unbranded products. While Samsonite may claim that they are the largest branded luggage company, the largest seller item is a Walmart one where a Chinese made unbranded product sells more in volume than Samsonite does. Interesting, so we have to watch that trend. Granite is another one and the same thing is happening, leather goods, textiles…..Indian companies will be dominating with textiles. There is actually a conference going on at the hotel where I’m staying on the textile industry which is the second largest. Markets will shift to textiles not just domestic but more global textile brands will rise from India as our fore past so will the leather goods from these areas. Subsidiary based are of course the General Motors or the Vauxhall brand in the England or Opel brand in Germany, American brands in America and they are having a nightmare. One of the weaknesses in GM, and I have done a lot of advising in there and ford through JWT actually, one of the key problems with GM is that it never agreed to have global brands. It always believed in local brands. They had no economy in the marketing, you have separate agencies, separate budgets, separate everything. You might have media buying power together which is very fascinating. On the other hand it is the Toyota as a rising company decided and I worked with them also, coming out with two global brands one for the premium market Lexus all over the world, Toyota same symbol, same approach and even sub brands categories are the same. At Ford we followed the same thing at the mass market for the Ford brand….. lots of debate about the color, logo, the shape and the size and the global brands the premium brands they are not sure as yet whether it should be in fact a Volvo, for example, which is doing well or should it be a Jaguar, for example, or should they go for premium brands that too with acquisitions. And the same thing you find in companies like Siemens…. is still the same way and they are still subsidiary based and there are a lot of branding debates. This is where the CEO of the company is taking charge. I made a forecast that the marketing will shift as a functioning in fact I wrote a book on this and I have written a couple of articles. Marketing is marginalized because it is housed in the wrong place. It is not at the corporate board table because it is not a part of corporate staff. At the corporate staff functions, finance shows up thru CFO, now CRO shows up in many companies reporting directly to the CEO, human resource guys as a Chief Human Resource Officer position is no longer the personnel guy managing the factories and the labor laws, it is the succession planning of the leaders, for example, where I work quite a lot. Marketing is conspicuously absent, I’m advocating how can you make marketing as a staff function not a line function. Already it is implemented in a few places right now and don’t call him a chief marketing officer because the word marketing has a negative connotation with other professionals. Marketing is selling in their minds and selling is looked down in most western world as it means trading and traders have never been respected in the society. After the industrial revolution especially; so how do you bring about the excellence of the marketing? By having a Chief Customer Officer not the Chief marketing officer and this seems to work. It is sort of a internal selling or a internal marketing, most marketing battles are internal marketing not external marketing as my experience is working with the companies.

And the last one is of course is the integrated global company where the brands are decided and I think that Mittal has done a great job in my view. He is the brand ambassador for India in a way through acquisitions acquiring steels mills and integrating into one brand. I’ll quickly round up the whole; a truly global brand or a company loses its country origin identity among all its stake holders. Customers don’t think that this is an Indian brand, employees don’t think that it is an Indian brand, suppliers don’t think that it is an Indian brand, and these are the five stakeholders and again my colleague Raj Sissodia and I have a book coming out called “Firms of Endearment “ like terms of endearment. I thought that ok we talked about the market share used to be the fighting ground we shifted from market share to the share of wallet as I started the practice called the relationship market as an academic and I said that is going to plateau and the CRM and IT guys have taken over the marketing. So the next thing that we have to think about is the share of heart and how do you win the share of heart, people become the key issue. And the share of heart is just no longer the customer so we actually have a whole theory built around the five stake holders, minimum of twelve models or seven stakeholders and for a company to survive it needs customers, employees and investors. The three things and at the same time the other four are, the community is the very key, suppliers are the very key, and then I have added the government and obviously the media as the public opinion. That’s what we are doing it around here.

A brand or a company becomes a truly global brand or a company when the whole world embraces and takes ownership. It’s my brand; it’s not that country’s brand, without the country of origin biases, positive or negative. Of course rising nations always get the positive attribution and the plateauing nations or the nations that have remained traditional have a negative attitude. So how do you disassociate country of origin identity and each of the five stakeholders says that it is my brand and then you become truly global in brand. And it is happening, surprisingly not in the corporate brands or in product brands but in companies or events like the Olympics. It is a world brand. So what has Olympics done right. Internet is the world brand; there is no country of origin association. It was created by the Americans in the military. It was a problem….all of the scientists who got the enormous money, huge computer installations government paid excess capacity in California, and there was shortage of capacity in the University of Pennsylvania. how do you network it together. Actually the internet protocol, NSF net, as it was called…..the government said let it be in the private sector and the world has embraced it. People will forget where the internet began, that it is an American brand for example or an American company. And MTV is rising the same way and I wanted to give you an example that is different. MTV is embraced locally by every young population. It is no longer an American brand, it loses the identity, right! New technologies an products often become global faster than brands or companies….GSM or G3 or Dserve, interesting this thing. Television – world wide is the television and no one thinks that it was invented by Americans, it is an American brand. So at the product level it seems like globalization in the sense we talked about is much faster than at the brand level and why? That’s the whole point. Unless the brand is synonymous with the product like Xerox for example, or zipper,…. you remember zipper? That is a brand actually. Aspirin is a brand but became generic global which is interesting so I’m looking at that thing as to why the generics become global branded more so than the brand names by and large. This is an interesting topic that I did session on about three years ago. Why the heavy weights if India are so light weight globally? Mainly the reason is that we are highly domestically oriented companies. We look at the world market as a opportunistic export oriented. Lack of global mind set is the key thing and lack of scale…. this is my biggest worry that Indian companies are not having that big scale except in few industries. Now maybe the newcomers like Rreliance are thinking from a scale view point but we just don’t have the scale. If you compare, I sit on the board of Wipro for example. We have all crossed the two billion dollar revenue and we are having enormous euphoria in this country but if you compare this to the revenue of IBM or Accenture where you will have to compete on the global basis it is a tiny blip. There are at least hundred companies worldwide who are two billion dollars in IT alone, in IT enabled services for example. So we really don’t have the scale except in public sector enterprises. LIC is one of the largest insurance companies; BSNL is almost like number two or three which used to be number five about a year ago but with the cellular telephone has become the number two. ONGC, another public sector enterprise, is a major in oil for example. So scale comes surprisingly in India because of the license raj history more in the public sector companies except for the new private sector which is why I’ve been recommending to the large private sector corporations to forget about the diversifications, create a scale in a handful of industries and go global as fast as possible. We also so far had a lack of capital and that has changed enormously in last three four years. Lack of global strategy along with the mind set : those are the two key things and I think that the point that you made is the mind set is the main thing and that will make everything come. Ok we still have surprisingly strong government rules and regulations about the foreign matters. The way we handle domestic rules and regulations come in the way of going global and the next point is very key; I think that we are a very ethnocentric cultural. We want to export Indians world wide -that’s ethnocentric mind. Who said that the Indian managers are superior than the others? In fact in most globalization practices in other companies in other countries I have made a strong comment that always when we had to have a country manager in charge of a country was because of the political agenda. You know how to meet the ministers right, there is nothing about the culture here…. today that is not necessary in the marketing economy. So I have always recommended to put a Korean in charge of the Indian business.

Actually I’m doing a major session in May where IBM is sponsoring 4C your sampano Nissan himself, we have a guy who is victor fung I think who is a very interesting guy out of Hong Kong, Mike Smith who is HSBC Asia guy and his boss is Steven Green and we are working together about the HSBC as a company and how to globalize it, he is coming to the forum and one more person is a lady who is in-charge of the Avon products, it is interesting. And talking about the rise of India and china, and how do you create a global talent as opposed to just an American talent and of course we have limited experience. And this is the key problem in branding. Problem is that there are three markets in general, you have the premium market or the value market or the price market. More often then not the emerging markets start with the price and even IT services we are body shoppers, diamonds at the low end of the size and quality. So if you make beach at the lower end but if you stay there you never survive. You have to move up to the value and ultimately to the premium. This is how Japan conquered the automobile industry, we used to laugh at cars like datsun, Toyota corolla, Honda civic etc they were all at the lower price level, Koreans are doing the same in the automobile industry especially in the America like Hyundai and kiah for example, they all are starting at the lower end and then you improve your quality and your reputation enormously but keep the prices low to conquer the value market. So the Toyota began at the lower left and then moved up to the higher left and then attacks on the right. The premium brand Lexus is selling today better then the Cadillac which is the domestic premium brand and ford of course as a continental brand and both are not doing as well as the Lexus is doing. And they are taking the Lexus globally again so that is the same thing so…India must aspire and must compete in globally in the best value as well as the premium boxes. In fact in some industries and some product categories especially fashion, especially where creativity is involved I’m recommending that India should go from the price driven, low quality, low price kind of a market while you have the business, catch how the business is, make money out of that business but go into extreme premium. India can deliver in the premium most categories world wide from a branded view point and it is very possible. It is exciting that what is happening and I like it in the process so what will it take to succeed globally?
First of all you need to have a global mindset and I do believe that Greenfield will not be enough so we have to do global acquisition and integration. We have to buy brands, you have to buy companies, in the packaged goods company this will be a nightmare. Just like the MNC’s have found when they came to India they would start a brand called thumps up and what do you do with this thumps up now? You still promote coca cola here, or do you somehow take the thumps up and make it into a global brand and interesting debates are going on in all the MNC’s in the package industries and my experience with them. we must have a quality reputation nothing works eventually if you look at the history of Korea, Taiwan, Japan, Hong Kong etc they all moved up in the value chain by offering actually a superior product quality wise but at a lower price. Marketing is a no brainer it is not a rocket science. If you offer superior product at a lower price then competitive prices in a customer friendly manner you will always have a market share in your favor and you will dominate forever and that’s all it takes. But can you make money by this and that is the whole point which is the back office problem again which I mentioned already earlier. Differentiation thru design, I’m always a strong advocate that India has a tremendous capability in design. Marshall and I have been talking about this quite a lot and not just R&D. we are on the same page on bunch of things. How can we move up in the R&D space more or much faster then what we have done so far and that is where the reputation of the nation comes positively. It is thru innovation primarily but more and more I think design is a nice little possibility whether it is the design of the logo on the one hand but more the design of the products, hottest area today world wide today is design in the automotive sector or in the planning sector and would you believe in the consumer electronics like the I pod. This is all a design play, it is such an integration of the existing technology, and there is no innovation there, it is just design by and large. Nurture worldwide talent and leadership, I think in India if it is serious about globalizing itself it must actually embrace other cultures and talent to make them a part of the global architecture, not keep them separate. But how do you blend them properly? There is lot of good American talent by the way and one can leverage that and there is lot of east European talent there and we can leverage that also and that is what this is about. Global branding and positioning which is the key session around here, segmentation should be done on a global basis not on the country by country basis. And the last one is that nothing works in this business unless you have a strong back office which is a world wide supply chain. And the supply chain is very key in everything that we do so…I was asked to comment on the marketing side, marketing has been marginalized as I said unless it becomes a corporate stuff function reporting directly to the CEO and it is breathing thru all the product managers where marketing dollars are allocated like finances is everywhere, human resources is everywhere and that is very different architecture of marketing. I probably have a book ready about a year or so. So wait for that one because we have some very exciting work is done there; develop competitive brand positioning I think that marketing can still offer targeted geography’s where you should go as you cannot go global everywhere. Have to target specific geography’s for specific segments and the market you can do the research up front and suggest what is the market attractiveness and what are the practices that are there and what are the hot countries and what are the cold countries and all the stuff.
Develop competitive brand positioning which means what is our positioning about our price, those three segments that we talked about – price, value and prestige and which one we are going after. Prepare entry plan including market access. This was a very simple idea and I was with amul butter people Mr. Vyas and I think that it was three years ago in my memory, and of course I admire that brand enormously, TATA tea is the same situation. I said that I would really like to see a day when I like to see amul brand of butter and cheese and maybe milk eventually on every table of world and I said that it is very easy to do, that your biggest cost of getting into the US markets would be the access. Have you thought of aligning with wal-mart? Because I had done enormous amount of work with (not clear the name) P&G chairman at my University in terms of P&G wal-mart alignment. Lot of the success of the P&G is because of the wal-mart presence in Canada, wal-mart presence in UK, wal-mart presence in Germany and they are knocking the doors of Hindustan level now. It is no longer Salisbury but wal-mart is now a retailer at number three will become now number two and of course P&G the enormous growth that you see in china is partly or strongly responsible for the growth of the wal- mart. As the organized retailing comes here the same thing…I was amazed that in two months amul was able to negotiate contract with a very large retailer for wal-mart. So today amul’s products will be distributed thru wal-mart system which does not cater to the Indian ethnic population only by the way. We can see the Mexican brands do the same thing when they got into the mainstream distribution they became more global brands. Today in America we don’t consumer ketchup as much which is really the condiment of the Americans more then the Europeans. It is all salsa; it is all Mediterranean, Hispanic and Mexican. We also do not consume potato chips anymore again but we have gone to tortilla chips. But those are all main stream brands not because of brand name but because of the market access. You are now into the main stream distribution where the world comes to shop not the ethnic population comes to shop and that’s the very key and I think that along with brand name you have to have market access point is very key other wise the brands fail quite often because it is not able to deliver thru market access in the process. So there are ways to manage and I have a very simple framework in one of my books I have and it is that if you are thinking about the globalization you have to look at the customer needs from the market view point whether the needs, wants and desires are the same or similar at least to different. And also whether the customer resources which is the time, money and of course expertise. Money we know quite a lot, this a whole economic theory, time is becoming the scarce resource, lots of opportunities and of course expertise will come and in five years we will talk about the expertise where the consumer can do it or whether we help them do it kind of a thing. So the answer is very simple, you can take your marketing plans in the country and extend it out ok if you are in the lower left box. If you are in the upper left box and your needs are different but the resources are the same you have to adjust your product and your promotion, not distribution and not in fact your price. Lower right is the price and the distribution and the upper right is all four of them. Managing the local suppliers is very key. Marketing is the most outsourced function. One day I just realized, I did an audit, it is not the IT that is more outsourced, not human resources but the marketing dollars that we spend and my estimates are running 80 to 85% of whole vendor management. We don’t do the distribution logistics ourselves; all the ad agencies do it for us. Problem is that when you have so much of outsourced function our ore competency has to be vendor management which we don’t do it in the market very well. If you talk to the CIO guy he knows exactly vendor management if he is outsourcing to Wipro – very interesting change there so…I want to stop here because of the time so marketing is the most out sourced function and how do we manage that thing. So I will stop it around here pretty much for any Q&A if you have. Any acquisition for the growth or transformation in marketing in other words are you acquiring companies for growth or are you going to transform yourself as culture by and large. On the whole set of things I think that marketing can play a good role around here so here are the conclusions.

India is destined to become a major economic power in the 21st century despite itself.
The heavy weights of India are lightweights primarily because they lack global mindset, global strategy, global scale and global capital.
Global capital is now very much possible, scale now is possible and the first two are now very key issues.
However India will aspire to compete globally, to be globally competitive Indian industry needs to invest in quality reputation, made in India is attractive to the consumers and they want to buy, if prices are low but the quality is fantastic.
Global branding, design and innovation, worldwide talent and global supply function.
Marketing will play key role in identifying the right target market and the competitive positioning for the companies growth. That is what we do very well. If the strategy is inorganic growth which means acquisitions marketing must integrate brands that are acquired and products as well as the outside suppliers, marketing services in those countries.
Shall I stop here? Thank you very much.

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