It’s an age of unlikely friendships and strange bedfellows. Across categories, brands now realise that operating in isolation may not be the best strategy to catch the next wave of growth and so are becoming open to some very atypical partnerships
LIKE ANY other marketer, S Sivakumar, chief executive - agri business, ITC also talks about version 3.0. But it’s not about the trajectory when it comes to evolution of the consumers, but the business model - it’s echoupal 3.0, the next phase of ITC’s foray into the hinterland. But it’s not just Sivakumar from ITC who’s excited about turning a new page in the book. Because by the time e-choupal 3.0 assumes its final shape, a host of companies and brands will also stand to benefit. ITC may have provided the platform a decade ago. But improvising for the future and even the progress over the last 10 years owes something to what Sivakumar calls “a collective effort.” In short, it’s a trend which one will increasingly witness in the time to come - ecosystem marketing. Yes, a labyrinth of alliances and partnerships all aimed at fuelling the next wave of growth through the decade to come; growth that will be shared by and restricted to those who decided to collaborate. And it’s not just ITC who’s looking at creating an environment of long term strategic alliances, but even players like P&G, Intel and Nokia, who realise the importance of dependent growth to reach out to new markets.
The concept of operating within an eco-system by theory and practise isn’t a new phenomenon. As Sumeet Vohra, director - marketing, P&G puts it; “even our ancestral farmers and traders worked in partnerships with each other and thus functioned within a beneficial eco-system.” What however has changed and made companies pay a greater degree of attention to creating a mutually beneficial environment is the Indian marketplace which has undergone a sea change in the last decade and is likely to change further in the time to come. “What has evolved is the increase in the number of players and hence the options to form ecosystems have multiplied. For instance, mobile and digital companies didn’t feature in the marketing set several years back, but are now strong pillars of the system,” adds Vohra. There are multiple triggers driving the need to create an ecosystem, the primary being meeting the consumer’s needs, both evolved and underserved.
Take the example of ITC’s e-choupal, which according to Sivakumar works on the pivots of collaboration. The online initiative which started with four partners has now grown to 160 partners (brands, NGOs, governmental bodies and others) touching four million farmers across 107 districts in India.
All For One
The rural consumers, says Sivakumar are looking for solutions and not just products. “So to provide rural consumers access to complete services and solutions is like trawling in the deep sea. The transaction costs are high, therefore, an ecosystem approach is needed,” he states, adding that to create the whole chain, the objective is to get specialists in each solution offered on the platform. So the ecosystem created by ITC to reach out to rural consumers is also proving to be beneficial for Nokia, who’s looking at the same rural populace to fuel growth in India through Nokia Life Tools (Jeevan Saadhan). B V Natesh, head (emerging markets), Nokia India says. “The partnerships depend on how much a brand influences the livelihood of the target audience. So one looks at alliances from how does a partner benefit from it and what is the usefulness of such a partnership over a long timeframe for the consumers.” For instance, the eco-system Nokia is looking to create involves diverse players — from ITC and Syngenta to even the Spices board and the national horticulture board.
An ecosystem, brands realise, works even in high clutter urban markets. The high octane growth in India has lead to a more evolved consumer prompting brands to look at alliances to satisfy the growing desire for an experience. Citing the example of personal computers, Prakash Bagri, head - marketing, Intel, says that the purchase of a PC swings from going to telcos for connectivity to procuring hardware to figuring out content. “Now they can access it from each player individually or the players can team up to provide a complete package,” says Bagri, adding that one harnesses the collective power driving towards growth. And it could be driven by as diverse a partnership as one involving a technology player like Intel and a retail chain, Staples. “So the programme is all about configuring the PC the way you want and it is then delivered to you. There is a vendor and an assembler doing it for you,” states Bagri. In another instance of how partnerships can be forged between seemingly unlikely players, FMCG major P&G teamed up with Appleton, a player in the paper industry for fabric enhancers. “We found that Appleton had been utilising the ‘fragrance burst’ technology in the carbonless paper industry for the last 50 years. With this partnership was born perfume microcapsules in fabric enhancers at much lower costs,” says Vohra. The result — “cost savings, competitive edge and patent protection, our fabric enhancer category saw consumer wins in over six countries,” claims Vohra.
The advent of ecosystem marketing has also lead to brands looking at a new monetisation model. Brand marketers like Bagri of Intel says that it has to move from the present ecosystem promotion, where one brand gets a discounted offer vis-a-vis another for tie ups. The quest for the right monetisation model however remains unsolved as an ecosystem involves both for profit and not for profit partners. So horses for the courses, brand managers say, is the only solution for now. “It’s a tough one for brands on how to monetise it. There are some models evolving but it depends on each segment,” says Bagri. Jasmeet Gandhi, head - services, Nokia says in the monetisation model between operators and VAS, there’s a certain way of doing business. “Aggregators go to operators, operators distribute it for them and they take a slice of the revenue,” says Gandhi. In the ecosystem way, the model involves looking at a producer of innovative ideas. “So you aggregate them and make it equitable for them so that there’s a process of continuous innovation.” In the case of NLT, Natesh adds that the company hasn’t gone through the content supplier and revenue sharing model. “All the players involved are ones who have a perceived need to be seen as a solution’s player. So it may not be an outright revenue model for them, but partners realise it’s a huge consumer awareness programme for brands which the conventional media reach cannot give,” he says.
There’s also the scenario that looking at long term strategic alliances becomes a full fledged function within a company. Worldwide, companies like Philips have separate alliance teams who scout for new growth areas through partnerships . While some brands worldwide are breaking the responsibilities of short term quarterly objectives from long term vision, marketers in India believe there can’t be any trade off. “One earns the right to focus on long term by managing short term results. Managerial leadership is all about acquiring balance between responsibilities,” says Sivakumar. Gandhi of Nokia concurs; “Commitment to partnerships could be long term, but marketing to achieve an objective on the road is short term and is tactical.”
Just as the new geo-political changes have resulted in balance of power shifting from one country to another, battle for more market share will mean keeping your eyes and ears open for alliances. For even a seemingly insignificant player can complete the picture and become the fuel for the next wave of growth.
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