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‘Conventional greeting card will survive’ - 21 Oct 2004

Greeting cards will co-exist with e-mail, SMS, MMS and will increasingly be used for special occasions, says C S Das who is the chief executive of the Greeting, Gifting & Stationery SBU. He joined ITC's Packaging and Printing Division in 1980 after a short stint with Larsen & Toubro. Das is an engineer from IIT, Kanpur, and an MBA from the Indian Institute of Management, Bangalore. In his 20-year association with ITC, he has held various positions in marketing and business development. He spoke to Excerpts:

What are the growth prospects for the personal and social expression industry in ndia in the next five years?

The prospects for growth in this industry are very bright. We expect a CAGR (compounded annual growth rate) of 15 per cent over the next five years. Gifting products will drive the growth in this sector. Greeting cards will co-exist with e-mail, SMS, MMS and will increasingly be used for special occasions.

What is ITC's game plan to achieve market leadership?

ITC is tapping local markets through regional languages. ITC is inspired by the growth and success of the regional media and is convinced that the regional languages can significantly contribute to the growth of the personal and social expression industry.

ITC also wants to leverage its proven design and distribution capabilities to market a wide range of paper-based greeting and gifting products. 'Expressions' is currently the second biggest greeting card brand in India with a market share of 20 per cent. ITC has a five per cent share in the stationery market. It is eyeing at garnering an annual consumer spend of Rs. 75 crore in its greeting and gifting products. The company aims to double this turnover figure in the next three years.

What is the company focusing on?

ITC is strategically looking at stationery as a growing element in our product mix and business mix. Currently, the mix is 50:50 between greeting cards and gifting products on the one hand and stationery on the other. ITC is also endeavouring to move up on the paper value chain.

It focusing on building and strengthening capabilities in creating designs and widening and deepening distribution. The company has made significant investments in brand building and IT.

Design is a key element for the success of greeting cards. What is ITC's strategy for design and production of cards that appeal to its target group?

ITC has set up an in-house creative team with talent drawn from across the country. The company has strategically and systematically built up a huge repertoire of national and international images and designs, including masterpieces of well-known artists. This invaluable bank of designs has helped ITC offer a rich choice of cards to consumers suiting a wide range of occasions, relationships and styles of expression.

ITC has been a new entrant to this field which is dominated on the one hand by Archies and Hallmark and the unorganied players on the other. What are ITC's plans to compete aggressively to increase its market share?

The greeting card market in India is estimated to be around Rs. 250 crore in terms of yearly consumer spend. The unorganised sector in the greeting card market will be close to 40 per cent. The organised sector, controlling 60 per cent of the market, is divided between ITC, Archies and Hallmark. While Archies has licensing agreements with international greetings brands, ITC has created a very big library of its own designs, partly from abroad and partly from within the country. These designs are ITC's invaluable intellectual properties.

ITC has specially focused on servicing multi-brand retail outlets by leveraging its all India distribution network. It has also forged special relationships with key retailers under the 'Expressions Valued Customer' scheme.

E-greetings have been gaining popularity with the increased Internet and e-mail usage. How are you coping with the increasing popularity of e-greetings?

These days consumers are looking for convenience and instant gratification. Communication media like the telephone and e-mail facilitate communication to a great extent. But many greeting card sites are moving from a 'free' to a 'pay' mode. This could be an emerging revenue earning opportunity for content providers.
However, ITC's considered opinion is that e-cards, SMS or MMS are very impersonal. The traditional greeting card is the most personal, appealing and touching mode of communication. People will always need emotionally rich cards for special occasions.

Give us an account of the distribution network and promotional campaigns to reach out to the customer?

ITC's extensive India-wide distribution network enables its greeting cards reach over 12,000 multi brand outlets in over 700 cities across the country. In the last three years, 10,000 greeting card designs have reached these outlets with the help of ITC's web-enabled e-commerce model. ITC markets the SOS Children's Villages of India range of greeting cards. The SOS brand is now the third largest brand in the social cause segment in greeting cards.

Our promotional campaigns include free courier schemes for festivals, scratch and win cards for consumers and outlet- based free gifts linked to purchase.
ITC's 'Classmate' Young Author Contest is a unique initiative to discover and encourage talent among budding writers. By discovering and nurturing creative potential at a young age, ITC is able to give these talented youth the right opportunity and the appropriate forum to showcase their penchant for creative expression. What is more, ITC helps these talented youth develop their creative writing skills through interactions with leading literary icons like Ruskin Bond. This continuing interface with schools is symbiotic and mutually beneficial, both to the company and to the students.

ITC is striving to create a widespread awareness of the 'Classsmate' notebook brand and the values that it stands for, high quality, eco-friendliness and the espousal of a crying social cause. ITC is thus unstintingly endeavouring to enhance the equity of the 'Classmate' brand. There is a very compelling emotional reason for young people to upgrade to the use of 'Classmate' notebooks.

'Classmate' has now introduced a wide range of 180 notebooks with contemporary designs. These notebooks are functionally very useful. They provide students with valuable information. The 'PaperKraft' range, on the other hand, is premium stationery for use in offices, universities and colleges..

Is there any scope for regionalisation in greeting cards? How do you address this issue?

Yes. In fact, one of the major challenges of the greeting card industry lies in making cards relevant to specific target consumers. States like Maharashtra already have a significant share of cards in the Marathi language, approximately 30 per cent. This could be replicated in other states as well. It requires sourcing quality copy from the region and promotional inputs at the point of purchase.
ITC's vernacular greeting cards, under the brand name 'Matrubhasha', enable consumers to reach out to their loved ones in their mother tongue.

Do you have any plans to tap export markets?

Yes. ITC is already exporting greeting and gifting products to neighbouring countries and the UAE, where Indian designs and style are more acceptable. Hopefully this segment will grow.

What are your plans for paper-based stationery?

The stationery industry is growing very fast. The market for stationery is ten times larger in size than that for greeting cards. The organised sector in the stationary industry is estimated to be around Rs. 500 crore a year in India. If you include the unorganised sector as well, it will be roughly over Rs. 5,000 crores. Thus, the challenge lies in creating, communicating and capturing value in a market dominated by local players.

ITC has aggressive plans to grow its 'Classmate' range of notebooks for school children and the 'Paperkraft' range for college and office usage. These are already available in over 100 cities. The company plans to leverage its proven strengths in marketing and distribution to grow the market and the business. ITC has now launched its 'White Gold' premium bond paper for discerning consumers.