January 22, 2014 00:00 By Eric Rosenkranz er@ethree-asi
In the 1980s the multinational I was working for sent me to Asia to help run their operations. One of my tasks was to help Procter and Gamble (P&G) with their marketing efforts.
Asia was pretty open at that time and was very fertile ground for international companies to come and sell their products. We eventually made P&G a success in Japan, followed by South Korea. For historical reasons, P&G had always been strong in the Philippines, following heavy US investment before and after World War II.
India was a different case, as it had always been a strong Unilever market. Lever had come to India in 1888, selling some of the first branded products in that country. 100 years later, Hindustan Lever was one of the premier companies and employers in India, dominating almost every category they were in.
On the other hand my client, P&G, was virtually nowhere in that country.
We decided to attack Lever on their home ground.
Now one of the problems was that P&G was used to being the market leader. And as such, they would generally use marketing tactics as befits a category leader. Generally, marketing theory teaches us that leaders have to use different tactics than companies with smaller market shares.
The following table gives a rough guide as to the differing tactics leaders and followers need to employ.
l Attack many markets
l Absorb competitors
l Match differentiation
l Be everywhere
l Ignore others
Small Share Companies
l Dominate niche
l Be different
l Get close to customer
l Confuse the enemy
We faced a serious uphill battle. P&G was used to launching multiple products in many different product categories; we had to convince this extremely successful company to launch only a few products in very specific categories – and launch only those products which were significantly and demonstrably better than the competition. Even then, we struggled. Our products would be found on the floor, in-store advertising ripped down, our competition did everything in their power to disrupt us.
No complaints here – all is fair in love, war and business.
Bit by bit, product by product, category by category, we slowly achieved a foothold, and today, while Lever still dominates the market, P&G has achieved a substantial market share. By the way, Lever wasn’t sitting idle during this time. They were attacking P&G in the Philippines, and today they are doing much better there than historically.
Frequent readers of this column will know that a primary theme is that success in business comes from a deep understanding of your potential consumer. Companies succeed when they create products and services that solve consumer problems. Companies need to simultaneously satisfy their current consumers while also offering benefits to users of the competition, to convince them to switch. P&G’s goal in India was to convince loyal Lever users to switch products.
Now, is it possible to apply these principals of marketing to politics? I would like to stress that I am neither red shirt nor yellow, and as a foreigner in Thailand it is not my place to comment on the current political situation. (This column is being written before the demonstrations of January 13). The purpose of this analysis is to see the relevance of marketing to politics.
In 2001, a new political party came onto the scene called Thai Rak Thai. The TRT can be thought of as equivalent to P&G in India in the 1980s as they had zero market share and were up against a longstanding competitor in the Democratic Party. TRT followed the principals of the weak competitor – it focused its activity geographically, and it offered new products with new benefits to a specific target group (Bt30 medical insurance, Bt1-million-per-village fund, One Tambon One Product).
More than 10 years later, this party and their successors have built a loyal customer group out of nothing. Their competition has created strong loyalty in the South and to a lesser extent in the capital, but still has an overall lower market share.
How then is the Democrat Party to compete? It now needs to follow the “Small Share Competitor” strategy, and needs to offer new benefits to new user groups. Its struggle is similar to that faced by the Republican Party in the US today: how to continue to retain the support of their current customer base while also extending and getting new market share from new customers?
Can this be done? Again, we can look at American politics. Today the US South and Texas are considered bastions of support for Republicans, while California is considered a “safe” Democratic state. However, as recently as the 1976 national elections the Democrat Party in the US won the southern states and Texas, while the Republicans won California.
The Democrats in Thailand (or any opposition party) need to do exactly what the TRT did in 2001: come up with marketing plans and proposals to appeal to a new customer base.
Will this happen quickly? No, that is the problem. It usually takes a long period of time to execute and to change consumer behaviour. But marketing theory, and the success of companies like P&G in India, prove that this can be done.
It’s a lot smarter than holding a demonstration.
Eric Rosenkranz is chairman and founder of e.three (www.ethree-asia.com), a strategic advisory helping companies in Southeast Asia develop growth oriented strategies.