BRIDGE Briefings with Jagdish Sheth
Thought leader and Charles H. Kellstadt professor of marketing at Goizueta Business School, Emory University, Jagdish Sheth is a keen observer of consumer behaviour. His insights on global competition, strategic thinking, geopolitics, and emerging markets have benefited many companies in India and abroad. With 30 books and 300 research papers behind him, he spoke recently on Consumers and Consumption in the Digital Age at Gurgaon-based BRIDGE School of Management, a joint venture between HT Media Ltd, publisher of Mint, and Apollo Global Inc. of the US.
In an interview on the sidelines of his talk at “Bridge Briefings”, a forum for dialogue between experts, industry and academia, Sheth spoke about the changing consumer, pressure points for retail and the art of political marketing. Edited excerpts:
What are the broad shifts in the buying behaviour of consumers over the years? Are they making individual choices?
One, consumption itself is becoming a lot more individualistic. This means, within a family, there are individual preferences for products. That’s happened partly because we have grown from unbranded to branded products. Because of that each one says I am loyal to this brand in the same product category. So within a family, the diversity of brands has increased. That is clearly one major shift I see.
As a nation, we have always been individualistic. But we were not allowed to express our individualism in the past by social constraints. Society motivated us to reduce our choices. So we have a lot of pent-up demand.
Secondly, I observed that we are living more and more like room-mates in the family. We used to live like a family: we ate together, we did things together. Today that is not the case. People barely get together to eat. And the microwave has done an enormous job of liberating the mom. Today everybody, even kids, can warm up things on their own. We are becoming a lot more individualistic in our family behaviour, which is what I would call the room-mate family. The rise of the room-mate family is a major change in Indian society.
The next is that the generation gap in India is now less than 8 years. The older sister cannot relate to the younger sister in lifestyle and in values. The gap was very striking to me. It used to be about 20-25 years because we were living in a family. To me this whole notion of generation gap and the discontinuity from the previous generation is a massive change in India. The reality is that this is permanent.
Then there is an interesting phenomenon that everything that we do when it goes away, it always comes back as nostalgia, heritage or as a hobby. For example, gardening and cooking have become major hobby businesses. What was a daily chore becomes a hobby business, which is an interesting paradigm shift which allows new opportunities for entrepreneurs. I see that as a major change.
So all these changes are affecting consumption?
Yes, they affect consumption and in the end the family structure. I thought the change will be only among the educated, metro people. I see the change in second-tier and third-tier cities. Most of the young people are not interested in living with their parents. They pride their own personal freedom and independence more than family obligations or family bondage. It’s early stage, but over the next 10-15 years eventually you’ll have a shift from kinship to a friendship way of relationships.
What is the change in how advertising impacts consumers?
Advertisements have to be more and more on the user side and not on the buyer side. In marketing, we always promoted advertisements to the person who bought the product. Now, it’s about the users. It does not matter who buys it. Sometimes the buyer and the user is the same person, but often it is not. So you appeal to the child directly for the products and not the mother or the father. The focus is on user experience and feedback that is amplified by social media.
The second shift is in media. While print in India will continue to stay strong because of vernacular languages, English media may become more digitized. Ultimately, Internet will take over as the primary medium. I think for the first time in India we crossed one billion cellphones. Smartphones will cross very quickly to 250 to 300 million in a year or two because they are so affordable. So marketers will allocate more resources to smartphones. Advertisements were always location and time bound. Today they are not.
The Internet, compared to all other media, not only has a wide reach, but it is a very rich medium. It is the only medium that can do everything when it comes to communications, unlike print which can do alpha-numeric and photos, but can’t do audio or voice. Radio can do only voice, and television is restricted to voice and video. In Internet there’s a huge convergence possible.
Isn’t the customer becoming homogenous across markets in an increasingly digital world?
It is a contradiction. He is becoming homogenous and heterogeneous. The homogeneity is in terms of reaching them. Like Facebook is 1.2 billion people. It has more citizens than some nations. But there’s tremendous diversity in personalization of communication. The key point is that I can now make communication so personalized to you because I know what you did yesterday and what you did an hour ago. So there is huge personalization on the one hand and commonality on the other.
Is retail facing pressure points, and is e-commerce one of them?
Definitely. E-commerce clearly is a pressure point. In India, it will be a bigger pressure point much sooner because you went on to cellphones. PCs (personal computers) are a big bottleneck because you have to pay Rs.60,000-70,000 to have a laptop. Not too many people can afford it. But I can afford a Rs.5,000 cellphone. Many of our apps are very mobile-savvy, not PC-savvy.
My own view is that the person who will win the e-commerce game is the one who reaches the tier-II, tier-III and tier-IV towns. In a recent interview, the Amazon CEO said that 25% of all the people who bought things actually came from tier-IV cities. This means the divide between the small towns and big towns will go away, which a bricks-and-mortar retailer cannot deliver. It is too expensive.
I don’t think bricks and mortar will die in India soon. E-commerce is not taking as much out of the organized retailers like, say, Big Bazaar, but from the mom-and-pop guys. The neighbourhood mom-and-pop guys had multi-generational loyalty. And the store owner financed you as you had an account with him. That relationship is going away now because the young people don’t want to shop at the neighbourhood store.
How should the marketer react to the new payment systems like mobile wallets?
The new payments systems will be much stronger in emerging economies because they don’t have as many credit cards. They have bypassed the PC evolution because of smartphones and they can bypass the bank credit/debit card evolution through the new payment systems. Banks will jump in eventually with their own mobile wallets. Visa, for instance, can come up with its own payment system. It is so big that it can buy somebody.
The key advantage of this payment system is that it transcends national boundaries. You have restrictions on bank cards in India. It does not have the global mobility of payment systems. But these guys are rising above these problems. This is what we call the “Uberization” of everything in life. Uber transcended all those issues. Wherever in the world there is Uber, I can take a cab and make a payment through a master account. I don’t haggle with the currency or the driver. Once it becomes so convenient, it becomes a necessity.
What’s the difference between political marketing and marketing of consumer products? Do the same rules apply?
Political marketing is much more difficult because the product, the brand, is a live brand. But a product brand is an inert brand. As a live brand, it is reacting to encounters and interactions and therefore it is more fluid. It is much more difficult to manage what you call a personality brand.
The other problem with personality brands is what you do in your other lives equally become relevant data points. Your private behaviour and your public persona…no way you can keep the walls apart. But the advantage on the other hand is as a brand I can personalize it much faster—in real time almost. For instance, with a different crowd I can create multiple avatars of me. With a product, it is harder to do.