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Economic Times - 14 Aug 2006

ITC’s Sivakumar chats upProf Mohanbir Sawhney of Kellogg School

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

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

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

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

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

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

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

“We are able to customise offerings upto 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 channelbetween insurance companies and rural people and help design products relevant to thepeople,” he said.

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

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

The management guru underscored the needfor treating unsophisticated markets with humility and not arrogance. “Many MNCs haveprobably discovered with bitter experience that they should replace arrogance withhumility. Some companies treated consumers in India, China or Brazil as unsophisticatedcustomers and tried to sell products not necessarily state-of-the-art. We saw Motorola dothat and stumble badly in the India cellular phone market. They tried to sell outdatedmodels assuming that India is a backward market but Nokia launched state-of-the-artproducts 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 couldbe stretched to the urban versus rural divide. There is a huge rural market that does notenjoy the kind of access that urban India does.

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

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

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