The last couple of years have been turbulent for the Indian automobile industry. A decline in volume sales, market instability and capacity overhang combined to create a gloomy outlook for this sector.
But the dust is now settling, and some categories within the automobile industry are showing signs of stabilization—and in some cases, even a gradual increase in sales. Still, the passenger car segment, in particular, needs a quick boost to profit. Given the existing capacity overhang, manufacturers may have to explore avenues other than volume sales to achieve this. One such avenue could be the sale of top-end variants.
Clearly, not everyone in the market to buy a new car will purchase a top-end variant. Only 35% of the total auto consumer population are interested in and purchase top-end variants/trims, whether sedans or hatchbacks. At Nielsen, we call them super consumers.
So, who is a super consumer and how are they different from regular consumers?
Getting To Know The Super Consumer
The cliché of ‘boys and their toys’ seems to have its roots in truth, at least for this consumer group. Consumers who own top-end variants tend to be males between the ages of 25 to 35. They also are metro dwellers concentrated, for the most part, in Mumbai and Delhi.
Not surprisingly, they are affluent and earn an average monthly salary of at least INR 60,000 or more. They are fairly successful professionals, often in middle- or senior-level management positions or successful business owners.
These consumers are brand conscious and tend to gravitate towards premium brands, whether in footwear, apparel or fashion accessories. Most of these brands have strong associations with quality. These consumers also engage in a number of activities that are associated with their elite lifestyles, such as regularly frequenting gyms, owning time-share holidays, or club memberships where they play sports like tennis and cricket.
The Super Consumer And His Garage
Approximately 40% of the super consumer segment owns more than one car. These dual-car-owning consumers often have households with two or more wage-earning members. Similarly, businessmen in this category operate their businesses with more than 10 employees.
While super consumers span across all types of cars, more consumers looking for high-end accessories and detailing (high trim) can be found in the sedan and multi-purpose vehicle (MPV) categories.
But where high-trim variants in most other segments are largely a male preserve, the premium car category is different. Comprising a higher ratio of women compared to other categories, consumers in this segment are affluent, with a monthly income of over a lakh. Aged between 26 to 30 years, they are also older than the average super consumer. We also found that Hyderabad has a significant population of such consumers.
WINNING WITH SUPER CONSUMERS
Unlike his price conscious counterpart who values practicality, the super consumer is looking for a vehicle that is smart, premium, trustworthy, safe, trendy and world class. These high-end shoppers use their car as more than just a means of transport.
racing to the top
While India is still primarily a small-car market, this is gradually changing. Despite the dismal start to 2014, the excise duty cuts announced in the national budget coupled with announcements of new launches brought cautious cheer to the Indian automotive industry. How manufacturers and retailers leverage specific groups like the super consumer may be the deciding factor in market success.
The greatest inventions of the last two centuries have one thing in common – their creators fumbled, stumbled and erred enough times to make a virtue of perseverance. The other great commonality that rarely gets spoken of is that they did not have quarterly targets to meet and often bootstrapped themselves to fund their innovation. The world however has changed dramatically for innovators in the last half century. Not only are assessments by the world at large more exacting, investors and management are far less patient in their quest for success.
This is not without reason – we know from our own analysis that innovation is an integral driver of incremental growth and essential to profitable survival. Yet, very few companies and brands manage this in a manner that is truly breakthrough. Surprisingly, breakthrough innovation is not a quest for the impossible – to be conquered only through great wisdom and luck. There is a known path to breakthrough success for brands that use the right map. The tenets of breaking through, though thought to be elusive, often remains strikingly similar across those who manage to achieve it. It rests upon fundamental truths that are embedded in the consumer’s life, rather than strategic and esoteric boardroom discussions.
Our report this year, emphasises these rules and then uncovers a few revelations too. The truth about breaking through in the Indian market:
Make yourself available to your core consumers: On average, our 23 winners were available in 115,000 stores at the end of six months and over 200,000 stores at the end of 18 months. Six winners attained 150,000 stores within six months of launch and five winners had distribution in over 250,000 at the end of 18 months.
Be worth your consumers’ hard earned money: The winners’ average revenue achievement was about INR 80 million at the end of six months which tripled to about INR 240 million by the end of 12 months.
Offer a genuine difference in your category: Even though many winners belonged to well-penetrated categories, on average they garnered 1.5% market share at the end of 18 months which was about 1% last year at the end of 18 months.
THE MAKING OF WINNERS
The current edition of the Breakthrough Innovation Report follows a similar approach that was employed in the first edition and examines all the new launches from more than 80 FMCG categories. For this report, we evaluated products launched in the calendar year 2012 and analysed their performance over next 18 months. To be a breakthrough innovation winner, a product needed to satisfy three requirements:
RELEVANCE: Generate launch-year revenues in the top 0.5 percentile for new FMCG launches in India (in the channels tracked by Nielsen in India). This corresponded to approximately INR 105 million sales in year one at a minimum.
ENDURANCE: This measure confirms a sustained level of consumer demand after the launch year. Winners had to either double launch year sales in months 13-18 or generate revenues in the top 0.5 percentile at the 18 month milestone for all launches. This corresponds to approximately INR 177 million sales at a minimum in the channels tracked by Nielsen in India.
DISTINCTIVENESS: Deliver a new value proposition to the market. Our innovation experts excluded re-packaging, reformulations, and re-positioning and ensured that distinctive offerings that abided by demand-led principles and/or differentiated themselves with breakthrough execution made the final cut.
Our success criteria for threshold sales have come down marginally from 2011 because the average sales generated by all the new launches was lesser in 2012. This further impresses the fact that with overall consumer expenditure coming down, achieving success in 2012 and 2013 was even more difficult. The winners therefore had to show tremendous agility to stay relevant, sustain their endurance and offer distinctiveness to impress consumers.
SUCCEEDING IN TOUGH TIMES
The 23 breakthrough brands we selected are spread across 17 categories ranging from food, personal and household care and overthe-counter pharma products. Though the odds of success remained the same, fewer brands could survive the criterion of distinctiveness, relevance and endurance as compared to 2011. The overall rate of success dropped to 0.1% in 2012, compared with 0.2% in 2011. This was true for both global and local players and nearly similar to the marginal drop in the success rate of top players. However, the top 20 FMCG players continued to dominate the innovation space with the total number of new launches from them going up to 491 in 2012 from 437 in 2011, reinstating the fact that leading companies in FMCG are still the torchbearers on the path of innovation.
With Father's Day just around the corner it's a good time to consider ways in which to engage this valuable consumer segment and, according to new data released by IAB's Mobile Center and Millennial Media, mobile is the way to go.
There are 52 million mobile Dads in the U.S. making up a fifth (21%) of the total U.S. mobile audience, found the IAB and Millennial Media. And, while Moms are traditionally thought of as the heaviest users of mobile, Dads spend only a fraction less of their interactive time on mobile - 71% vs. 57%.
In terms of what content Dads are accessing on mobile, they are aligned with the general population with weather and social media the most frequently accessed content. However, where Dads outstrip Moms is in the categories of sport, financial news and technology news. Surprisingly, Dads are also apt to access horoscopes more than Moms, as well as shopping apps and maps.
Almost three in four mobile Dads work full-time and their spending power makes them an important demographic. More than half (58%) have a household income of more than $75,000 per annum, 33% higher than the mobile average income. Furthermore, 37% of mobile Dads make purchases via their mobile device, rising to 45% among Millennial Dads. Overall, Dads are twice as likely to spend over $500 on mobile purchases compared to the average mobile user and Millennial Dads three times more likely.
"Moms get much attention for being heavy mobile users, as they are. But we think that dads deserve greater attention from marketers as well, and not just around Father's Day," says Joe Laszlo, Senior Director at IAB and Stephen Jenkins, VP Global Marketing & Communications at Millennial Media in a recent blog post. "Seeking out these big mobile spenders can help ensure that family-oriented marketing campaigns reach both parental partners, and increase their likelihood of having an impact."
Even though India’s biggest brands still allocate the bulk of their media spend on television advertising, their creative campaigns aren’t as bulletproof as they once were. Today, consumers are distracted by a growing deluge of messages, they’re more fickle with their remote controls, and once-hallowed time slots have to compete with digital media. As a result, results from the ever-pricier on-air TV commercial are becoming less predictable and costlier to invest in.
Despite the options and channels available to consumers today, the wide reach of TV and its unmatched presence in the household makes television advertising a critical part of any mass media campaign. So what then can marketers straining to maximize return on investment (ROI) do? To help find clarity within the new media landscape, we’ve studied millions of seconds of televised advertising across categories to identify the five key characteristics of successful television campaigns.
Beware, however. These findings aren’t for the faint hearted or for brand managers from a time ruled by limited channels and few media vehicles. But they can be an invaluable source of strategic direction and planning for brand and media custodians who are willing to track, monitor and alter their campaigns in flight rather than after they’ve run their course. For the nimble-footed, these guidelines can form the basis of smarter campaign management and creative direction that can yield better returns and economies that can fund a broader width of marketing support activities to complement a great television campaign.
Rule 1 - Strong ad content breaks through 4x better than a weak ad.
Rule 2 - Be categorical about your comparison: Standing out within your category is more important than being liked.
Rule 3 - Duration doesn’t define impact: Longer formats don’t guarantee higher ad resonance.
Rule 4 - Eliminate overlaps = Efficiency = Better ROI
Rule 5 - Differentiate more to avoid ‘helping’ competitors
LESS IS MORE... SOMETIMES
Ad breakthrough, which confirms that both an ad and the featured brand have been recalled by the respondents, doesn’t vary significantly across formats. Longer formats, despite the fanfare they tend to receive, don’t necessarily guarantee high ad resonance. In fact, while the buzz around them may lead to greater interest and memorability, they usually take too much effort to view repeatedly.
It’s more important for advertisers to focus on creating a compelling ad and integrate adequate brand cues than spending money on a longer format just to create a longer message.
rule of five
This is neither an exhaustive list of rules nor a magic potion to cure bad advertising. But it’s a list that can help you refine your strategy and tactics while a campaign is being conceived and executed. Remembering that a distinctive proposition, the right duration, a better understanding of your desired demographic and the right degree of differentiation can make your campaign more memorable and effective, comprise a surprisingly simple formula for success. The key is remembering to apply these rules during the course of a campaign rather than after it’s too late to make changes.