Many who advertise to push their products hard into the market for the first time get hurt so badly that they do not return to market again. Some even close their business! Many people think that once they begin advertising ...
customers will become aware and begin buying and the sales level will increase. Well, that is how it is supposed to happen. It is literally worth millions to you to learn why it does not happen this way many times - and what you should do to avoid losing money due to advertising.
A strong burst of advertising is like an air force attack. The planes are visible, fast and power-packed. But it all gets over fast and before you know the planes have unloaded their bombs and headed home. In the same way, a strong advertising blitz through mainline media can guzzle millions of rupees a week and, before you know, you will have finished your budget!
If you are the first timer in the world of advertising, chances are that you may not have got your act together - because you have not advertised before! Even if the campaign works out without a hitch, you will face problems you had not anticipated. For instance, chances are that you will discover that your supply chain is not adequately tuned to cater to your needs.
In 1992, I was Vice President of Marketing and Sales at Balsara, we watched the entry of IPCL into mosquito repellent mats market with a brand called "6-to-6". We were selling similar mats under the brand name "Odomos Mats" and our Chairman Aspi Balsara was rather concerned what would happen to our brands because they had a good story (a mat that lasts 12 hours from 6pm evening to 6am in the morning) and were highly visible on the TV with a good looking ad. I told him I was not concerned and it will be only a few months before the brand got wounded. Sure enough, what happened was worse than I had predicted - they closed down the whole consumer division . This resulted in their having to sell off their brand Teepol too!
How did I know ? Because their supply chain and distribution network was so weak that it could not have kept pace with the kind of national TV advertising they were doing. They had a distribution system that was created and sustained by their dish-wash liquid brand Teepol. It was a niche brand, used only by a few top households in the country - and its distribution footprint was woefully inadequate for the mass media campaign they had unleashed. By 1992 calculations, for a mass advertised brand to sustain itself and make it financially worthwhile, it should have to be in at least 4 Lakh outlets. Teepol was available not even in 40000 outlets! It was to clear to me that the new brand "6 to 6", which was riding on the distribution network of Teepol, could reach only about 40000-50000 outlets. The sale, even if brisk, from so few outlets, could never have sustained the expense involved in national TV campaign. It is easy to spend millions in media but it takes years to increase distribution from 40000 to 4 Lakhs on a sustainable basis. That was the rub. Before they could even begin expending the network and supply chain, the campaign was over! A huge amount of cash was spent - without a commensurate sales in return. The consumer division never recovered from the red ink created by the success of advertising!
These kind of supply chain wrinkles cannot be ironed out in a hurry. A furniture retailer from Mumbai advertised 3 furniture items together. For one of the items, the response was so overwhelming that he ran out of stock and incurred an opportunity loss. Since the item was imported, it would take weeks before he could get the next order in. On the other hand, one of the other two items he advertised had no takers.
No air force can win a war by itself. Its action needs to be co-ordinated with action of troops on the ground and directed by generals who have an understanding of what is happening in the entire theatre of the war. Similarly, advertising by itself cannot generate business and profits. It has to be in tandem with action in the factory and through the sales force and a good distribution system.
Many first time advertisers are in a hurry to launch publicity campaigns because they want to be quick in establishing themselves in a market. What they do not see is that the advertising works for their big competitors because they have got their act together before they started advertising. Their distribution is in place. They know exactly what kind of an impact advertising has had on their business. They have marketing personnel who tap the right target audience, with the right message, through the right medium. These are all pre-conditions for advertising to produce results.
Since “Drinking Chocolate” is a beverage that is drunk hot abroad, Cadbury’s started off by promoting it as a hot drink in India. Later they realized the housewives here were using it more as a recipe ingredient and less as a beverage. The company had to go in for a refocus. Cadbury survived to see another day because it was a going company - but had it been a small company with limited resources, it could easily have gone under for sending out a wrong message.
Good generals use the air force only after their on-ground troops are in the right place and formation, with a good map of the territory and when they know exactly where the enemy needs to be attacked. Similarly, good businessmen should use advertising only after you are sure that the groundwork has been taken care of. You should know who your audience is, what you should tell them, in what tone and through which medium. You should also have a reasonable estimate of what type of products will get sold and in what quantities. But how will you know all this unless you advertise in the first place? This is a very real dilemma for first time advertisers.
Once, working for a comapny called Corn Products ( Now Best Foods) I had to choose a promotional gift for the customers. I sent my product manager to go to Apna Bazaar opposite Regal Cinema and actually offer a choice to housewives who came to buy our products. Within a day we had the answer. 80% of the housewives ignored the fancy stuff we had procured and preferred a plain stainless steel spoon! In our case we had done our homework and knew exactly what to play up.
Market researchers can probably tell you how customers may respond to your ad but you will never know how the industry will react or how the supply system will cope up till you actually release the ad. The wise thing to do is learn by trial and error : test market in one small market then move up the scale. And by all means resist the pressure or temptation to undertake a big national campaign : you may end up losing millions.
