ITC’s Sivakumar chats up Prof Mohanbir Sawhney of Kellogg School

MARKETS are changing and so marketing must also change. As the days of mass marketing draws to an end, marketing is clearly struggling to move from a ‘command and control’ to a ‘connect and collaborate’ mindset that relies on customer engagement, dialogue and collaboration.

To get a grip on how marketing will evolve in the years to come, ET and ISB set up a chat between ITC e-Choupal architect S Sivakumar, a practising professional, and Kellogg School of Management guru Professor Mohanbir Sawhney promised fireworks. Not surprisingly, it delivered.

It was a lively discussion facilitated by technology, Mr Sivakumar from the fifth floor of his Secunderabad office linked up with Prof Sawhney at his residence in Chicago, to unravel the new world of marketing, where understanding nuances and humility held key to the customer’s heart.

It’s time to get familiar with the new buzzwords: Collaborative marketing, business model innovations, glocal products, importance of marketing at the frontend and back-end and simple philosophic messages like humility and respect for consumer.

“As markets mature, marketing gains even more importance,” said Prof Sawhney, Mc-Cormick Tribune Professor of Technology and the Director of the Center for Research in Technology and Innovation at the Kellogg School of Management, Northwestern University.

“I think that companies are beginning to engage with customers and are doing a good job of bringing ideas from the outside into the company. Nike is going for interesting experiments with product design and working with customers. I am seeing pockets of excellence in the various marketing processes, but this collaborative marketing is an idea that is still in its infancy and I think a lot needs to be done,” Prof Sawhney said.

In his e-Choupal operation in rural India, Mr Sivakumar actually employs collaborative marketing strategies, particularly for designing products and services in the areas of crop nutrition and insurance.

“We are able to customise offerings up to the individual level. Our sanchalaks, who are at the front-end of the network, interface with customers and personalise their needs. For instance, we work as a channel between insurance companies and rural people and help design products relevant to the people,” he said.

Collaboration with the customer is now penetrating every level from ideation to designing to prototyping and testing.

However, the downside of such collaborations could be a sub-standard product hitting the market and the potential of leakage of proprietary knowledge. Prof Sawhney said: “There are trade-offs. So there are risks, but the benefits are that you get to market faster, that you are surer that you are going to build a product that the customers wants.”

The management guru underscored the need for treating unsophisticated markets with humility and not arrogance. “Many MNCs have probably discovered with bitter experience that they should replace arrogance with humility. Some companies treated consumers in India, China or Brazil as unsophisticated customers and tried to sell products not necessarily state-of-the-art. We saw Motorola do that and stumble badly in the India cellular phone market. They tried to sell outdated models assuming that India is a backward market but Nokia launched state-of-the-art products and had respect for the Indian customer. And today, as a result, Nokia has 68% market share and Motorola is at 9%,” he explained.

In the Indian context, the parallel could be stretched to the urban versus rural divide. There is a huge rural market that does not enjoy the kind of access that urban India does.

Mr Sivakumar said: “Sensitivity to rural market is something that we keep in mind from the time of recruitment. In fact, our management trainees have to spend time in the rural community for extended periods. This helps in enhancing sensitivity and humility towards the rural market.”

The increased sensitivity to consumers also translates into business sense as each market is different and need to be treated differently. “If you are a multinational company, you need to be very, very careful not to transport business models and distribution mechanisms that seem to be working well in the Western world. Dell’s direct model may not work as well in India and China because of the logistical constraint.

And, therefore, it may need to rely on a channel partner, which Dell has never done. This adaptation requires you to be very close to the market, good at understanding the local market differences and local market preferences.”