The Core marketing hasn't changed, but the way you communicate has changed marketing. It is morphing every day. That’s where the big shift has happened. The art of storytelling is very much there but how you tell the story and the medium through which you tell the story is the key. The big changes that will happen in marketing, just as in business, is artificial intelligence and machine learning, says Sanjiv Mehta, CEO & MD of Hindustan Unilever Ltd
Sanjiv Mehta is the CEO & Managing Director of Hindustan Unilever Limited. He also leads Unilever’s business in South Asia as the Executive Vice President. Mehta, who took over as the CEO and Managing Director of HUL in October 2013, has done his Advanced Management Program from Harvard Business School. Sanjiv has been with Unilever for 25 years and for the past 16 years has led businesses in different parts of the world. He has been Chairman and Managing Director of Unilever Bangladesh Limited, Chairman and CEO of Unilever Philippines Inc, and Chairman of Unilever, North Africa & Middle East. Mehta is also on the South Asia Advisory Board of Harvard Business School.
Corporate Citizen interacts with him during the CII Marketing Conference – Navigating in the VUCA World - on marketing strategies in the present era of technology.
Increasingly you have to develop one-on-one relationships with the consumer. That’s the need of the hour; that’s what will make you survive in the new world. Marketing at its core is about the mind and the heart. It is about intelligence and emotion—you have to provide the functional benefits—but you also have to occupy the emotional space in the minds of the consumers.
So the core of marketing hasn’t changed, but the way you communicate has changed marketing. It is morphing every day and that’s where the big shift has happened. The art of storytelling is very much there but how you tell the story and the mediums through which you tell the story is the key. The big changes that will happen in marketing, just as in business, are artificial intelligence and machine learning. They take analytics and content, and increasingly it would be personalised content.
When I went to my daughters’ home in New York, I was stunned because they didn’t have a television in their home and I could not watch my CNN, but for them that’s what life is like. They watch what they want, when they want, and not what is beamed on the television. And importantly, content will be the key driver, going forward.
"Marketing at its core is about the mind and the heart. It is about intelligence and emotion—you have to provide the functional benefits —but you also have to occupy the emotional space in the minds of the consumers"
First and most important, never lose sight of your purpose. Very often, we forget why we are in the business. As a company, as Hindustan Unilever, our purpose is very simple. It is to make sustainable living commonplace. In our vision statements, we never talk about shareholder value creation. Because we believe that if you look after your consumers, who are our stakeholders, then the value will get created for the shareholders. We create immense value for our shareholders; our market capital is $40 billion. We are the sixth most valuable company in the country. But our focus is not on shareholder value creation. Our focus is on doing the right things.
I will give a few examples. If you take Lifebuoy Soap—it is the largest hygiene brand in the country—the focus on Lifebuoy is not just selling more bars of soap but how you change consumer behaviour. Today, toilet soaps as skin cleansers are one of the most penetrated categories in the country at 99%, but if you go into many parts of rural India, the habit of washing hands with soap is in single digit because many people feel that visibly clean hands are clean. How do you help a child reach the age of five who has no idea of this aspect of hygiene? We have a whole programme on changing the behaviour of consumers, children and parents, around hand washing.
The other example is that of the Pureit water filter. Pureit started with the question as to how you can give people bacteria-free water where you do not have running water or electricity. Pureit does it at 30 paise/litre. It is significantly cheaper than any bottled water you will find in the country. Or take the example of Domex, a toilet cleaner. The whole purpose is not just setting up toilets but making people use toilets.
About two years back, I was in a village in Uttar Pradesh. I was speaking to a village pradhan. When you go to rural India, suddenly a large crowd of people come clamouring around. I was talking to him about the economics of the village and then turned to the people who were standing there and asked, ‘Kitne logo ke ghar shauchh hain?’ (how many of you have toilets at home?) A lot of hands went up. Then I asked, ‘Kitne log ghar me shauchh use karte hain?’ Very few hands went up. Then I asked them ‘Aap log shauchh kyun nahi use karte?’ An elderly man gave a profound answer – ‘Main chahta nahi hu ki meri gharwali shauch saaf kare’. (I don’t want my wife to clean the toilet.) If you understand India’s hierarchy in the villages, the scavenger was right at the bottom of the pyramid and so this villager wanted to make it clear that he didn’t want his wife to clean the toilet, because he related this activity with scavengers. So the toilets existed but they were not cleaned. Hence, this is not just about constructing toilets, it is about changing behaviour towards toilets and that’s what we plan to do by using marketing skills.
How many of you start your day with Red Label Tea? This is what Thomas Brooke said 100 years back. Brooke Bond is all about togetherness and let me show how we are bringing that to life in contemporary India.
As for Surf Excel, we propound the philosophy of ‘dirt is good’ and the concept arises from letting children go and play, for they grow by playing. Let them dirty their clothes, Surf Excel will take care of that. That is the philosophy.
If you want to build great brands, you have to go beyond functionality. There has to be a purpose behind it. Dove—Real Beauty, Surf Excel —I am ready for life, Brooke Bond—togetherness. That’s how you build great brands. So what we are trying to do is to create a business model where you have a purpose behind a brand, reduce environmental footprints and increase societal impact. This is the core as to how we do our business.
“HUL is a purpose-driven company led by values. Values are so important. This is not about putting them on a nice frame and hanging it in the boardroom. This is about living the values, and they are important; whether it is integrity, whether it is respect for individuals or whether it is the responsibility you have for different stakeholders”
Cause-relative marketing is a form of marketing in which a company and a charity team up together to tackle a social or environmental problem and create business value for the company at the same time. In India, for hundreds of years, charity has been a part of business manifested through building of a temple or school. But after that you move into cause-relative marketing and then you move to Corporate Social Responsibility (CSR). The difference between CSR and our new business model is that CSR is an appendage which is superimposed on the business, whereas a new business model which we preach is about a sustainable living plan and that is the core of how we do our business.
I always believe HUL is a purpose-driven company led by values. Values are so important. This is not about putting them on a nice frame and hanging it in the boardroom. This is about living the values, and they are important; whether it is integrity, whether it is respect for individuals or whether it is the responsibility you have for different stakeholders. For the last 18 years, we have been the pioneers of the FMCG business in the country and I can assure you if the company remains true to its purpose and values for the next 100 years, it would still remain the leader of FMCG despite the claims of many. Because the foundations are built very strong and you don’t get swayed by short-term thinking or short-term business. We are saying, while we grow our business, we will watch our environmental footprints and increase our societal impact.
I don’t have a CSR department in the company but we work in 5,000 villages in the country, working with the villagers to help them manage their water. Now you might ask what Hindustan Unilever has got to do with water. Let me explain.
When you get up in the morning, you would need to brush your teeth. Whether it is Pepsodent or Closeup, it requires water. Then you would want a fresh cup of tea or coffee, hopefully, it would be Red Label, Lipton or Bru—it would require water. For a clean shower, you would be using Lux, Lifebuoy or Dove —it requires water. You would want to wash your hair and you would use Dove, Tresemme or Sunsilk—it requires water. You step out, you want to wear squeaky-clean clothes, hopefully, they would have been washed using Rin or Surf Excel or Wheel—it requires water. Then you would have a nice good breakfast. Hopefully, the dishes have been cleaned by Vim—it requires water and so goes the day. So if there is no water, Hindustan Unilever won’t have its business. That’s the reason we have started focusing on water and we have created an ecosys-tem where we conserve hundred billion litres of water every year. Now hundred billion litres of water for a country maybe small but it does provide for the requirement of 20 million people every year. More important is providing the thought leadership so that the villagers can own the water agenda themselves—that is where we can make a difference.
The other issue is societal impact. In a slum in Ghatkopar East, Mumbai, you will see a beautiful ‘Suvidha Centre’. It is an oasis in a slum area. We wanted to come up with a model, which is based on monthly passes and weekly passes with a laundromat, clean toilets and clean bathrooms. The slum dweller community can have a beautiful life together. And that’s what Suvidha is all about: going beyond business to upgrade community living in a slum neighbourhood.
Now, talking about the VUCA environment from a business perspective. What are the things you need to have in a business? First is resilience, second is adaptability, third is agility and speed and fourth is a spirit of collaboration.
Why resilience? Your business growth trajectory will never be the same. If you look at the history of great brands, you will often find there have been stages of stumbling and falling. The greatness lies in how quickly you stand up and start running again. That is what is called resilience. Today, you cannot predict the future. But if you are a resilient team, a resilient brand, a resilient business, you can still stand up and start running again.
The second is adaptability. We have a portfolio where we cater to all levels of customers. For example, we have a one rupee sachet of Clinic Plus which is the largest selling SKU (Stock Keeping Unit) in the FMCG industry and it goes up to Rs.432 for Indulekha Ayurveda Hair Oil. So, when the times are bad we can downtrade the consumers and when the times are good we can up-trade the consumers and that is the kind of portfolio you need if you have to navigate the VUCA environment.
The other important bit about adaptability is technology, as every industry will be impacted by technology. You need to reimagine your future. This is a very classic business model of the FMCG industry. But I tell you that each component of this business model is being disrupted by technology. When Airbnb and Uber came in, it was with disruption. When Amazon came in, what they did to the bookstores was an abrupt disruption. But many times the disruption is like a frog in boiling water. If you don’t sense it, the frog will get charred to death and it is more important for you to lead the change than form the change.
As for digital technology, many times your reaction would be that it is only meant for the top of the pyramid. Yes, it is meant for the top of the pyramid but it also has huge relevance when it comes to the bottom of the pyramid. Now there are many parts of India where we don’t have continuous electricity. So there is no question of using radios, but they can entertain themselves by giving a missed call to 1800- 3000-0123.
(Our addition: As per a news report in Business Standard, Hindustan Lever’s “mobile marketing initiative, Kan Khajura Tesan has been hailed as a true example of innovation at various award shows. Kan Khajura Tesan, which means ‘earworm radio channel’, was designed to help HUL brands engage with their rural consumers in media-dark areas. A short video about the radio station on YouTube defines media-dark as areas with power cuts for several hours, resulting in limited or no access to television, and no radio frequency. According to the video, Bihar is one of the most media dark states in India, with TV and print media reaching only 20 per cent of the population. The reach of television stands at 23 million whereas that of the mobile phone is at 54 million. Kan Khajura Tesan has achieved these stellar numbers at a cost per contact of less than four cents, about Rs.2.4 ($1=Rs.60).With the changing paradigm on connectivity, many rural consumers now have mobile phones as their first device. This consumer insight was used to create Kan Khajura Tesan, an always-on-mobile entertainment radio channel in which the content is interspersed with HUL brand communication. First piloted in Bihar, consumers had to dial 1800 3000 0123 and give a missed call. They would then receive a call from the channel to enjoy 18 minutes of pre-programmed capsule content that consisted of popular local music, HUL advertising spots, jokes and an RJ to host the show.’’)
Thanks to big data analytics, Kan Khajura Tesan entertains as per the profile of the caller. If it is a 60-year-old man calling at 6 am, we entertain him with bhajans. If it is a woman calling between 11am-2 pm, we entertain her with Bollywood songs, if there is a young man calling between 5 and 8 pm, we entertain him with Bhojpuri jokes. Depending on the profile of the person, we provide the content. Now we are moving from audio to video content, which will be visible on the mobile phone.
In today’s world, we have to have an organisation which is flatter and in which we have systems which are not bureaucratic, and that is the only way you will be able to survive the VUCA environment. Your response time has to be in nanoseconds. You can’t be doing anything alone —you will need to partner and collaborate, and you have to set up an ecosystem.
For instance, recently, Forbes came out with a global list of ‘Most Innovative Companies in the World’ and I am so pleased to tell you that Hindustan Unilever was placed 7th in the world and 1st in India. One of the reasons why we are rated as one of the Most Innovative Companies in the World is because of the ecosystem that we have set up. Today, we have a concept called Open Innovation. If you go to your stores today you will find a brand called Lever Ayush which shows the multi-category launch we have done in record time. We were able to do that because we collaborated with Arya Vaidya Pharmacy. They are the authority on Ayurveda in the country, and that enabled us to do a multi-category launch in record time.
As far as marketing is concerned, what was classically class marketing is slowly but surely moving towards massive customisation. What is important for you as an individual and your organisation is not to resist change but to embrace change. Many times you won’t get clues to the change till it is upon you. So be alert to the first signs of the change. Develop an early warning system to know what is happening around you, not necessary only your industry but in allied industries too.
Many a time we hesitate to change our business models, but lest you fall into the Kodak trap or Nokia moment, it is very important for you to disrupt yourself before you get disrupted. So don’t hesitate to change your business partner. Spot the opportunity, break the routine. Remember, fear is natural; it is not about fear you should worry about; what you should be worrying about is how you act when you are in fear. You should do what you are best at, set very high standards of excellence, don’t just believe on hunches. Today you have facts, brutal facts—put them on the table. Remember, you won’t be able to do everything; you need to have empowered beings. Make decision making as close to the action as possible and very importantly, have your feet on the ground; humility laced with ambition becomes ‘humbition.’ It is a classic way to succeed.
So, VUCA is not a choice; everyone will have to fit in the VUCA environment. Stay rooted in purpose and be led by values. The entire technology, people, data, sector analytics and artificial intelligence will play a big role in FMCG as it is playing in other industries.
First, people are experimental, they are also in many ways, more flirters. They move from brands much more easily. We did a survey on youth from 18 to 30 years of age and what came out was that they were willing to pay for a company that was rooted in purpose; a brand rooted in purpose, so they were flirters, but with much deeper conscience than ours. They are concerned.
“We are setting up a warehouse which will be manned 100% by robots. There won’t be any people. That will completely change how we manage the big bulk; how we pack the small assortments. And how we pick up stock to distribute at speed”
When Google went vernacular, the number of searches went up by 65% in the month after the launch. Our advertisements appear in seven to nine languages. If you have to relate to a consumer and his emotions, language does play a role. There was a time when people who didn’t know English were diffident. In today’s New India you don’t need to worry about not knowing English. That’s perfectly fine. As long you can converse well in your language, it is fabulous. That’s the New India, that’s the Confident India.
Let me give you my philosophy. We observe our competitors very closely but my obsession is not with competitors but with consumers. So as long as I can meet the needs of the consumers, they will still be loyal to me. We are very pleased with a good competitor. It is in the interest of the consumer and the industry. And you know what a good competitor does to us? It brings out the best in Hindustan Lever.
We are very clear that our journey from mass marketing to massive customisation will have to be led by a company like ours. And today there is a huge number of experiments which are on. We have invested significantly in Big Data analytics. Just to give you an idea, we have 1,000 SKUs and we reach many other stores. Just the combination of stores and SKUs, what a mine-full of data it is. But the challenge today is, we need to have the right assortment for each store. If I pick up the example of Mumbai, a grocery store in Peddar Road and a similar grocery store in Dharavi or in Dahisar will have totally different assortments. And today, thanks to analytics, you know who are the consumers staying in the neighbourhood, you know the kind of category penetration in the neighbourhood, and you can customise the offerings there.
Let me give you one more example of how we are using analytics and automation. India is a country of shopkeepers. There are nine million of them in the country, which means at least 45 to 50 million people whose life depends on those shops. So, it’s a big chunk of India’s economy. So, we thought, how do we bring in the power of technology to the humble grocer? We have set up an online process. There is a website called www.humarashop.com. You go into that site, put your pin code and up will pop the grocers in your neighbourhood. You pick one grocer, place the order and the grocer will deliver it to you and collect the cash. So, what we are trying to do is use the power of the last-mile technology and make grocers still relevant in Modern India. So, technology, like I said, can play a part across the value chain.
We are setting up a warehouse which will be manned 100% by robots. There won’t be any people. That will completely change how we manage the big bulk; how we pack the small assortments. And how we pick up stock to distribute at speed. So technology will be pervasive, and will impact the entire market.
We are doing a lot of work to prevent counterfeits and look-alikes. There are estimates that 20 to 25% of total sales are affected by these counterfeits. And such counterfeits, besides harming the brands are also harming consumers because they are poor in quality. So we have been working with government authorities to identify and catch the perpetrators of counterfeits. Every year, along with the government authorities, we conduct between 300 to 500 raids—more than one raid a day to catch the counterfeits. Now with the switch from audio to video we should be able to tell consumers how to identify a counterfeit.
I am not talking of collaborating necessarily with my competitors. I am talking about collaborating with my suppliers, with R&D labs in the country. But when it comes to counterfeits, I would be very happy to collaborate with my competitors also. Because it is a menace, it is impacting the industry, and everyone needs to join hands.
The number of stakeholders in the industry has gone up. There was a time when a doctor did the prescribing, or if you didn’t have a prescription, then your pharmacist did the prescribing. Today, you have telemedicine. So it comes down to identifying your key stakeholders and then having a one-on-one relationship. The more you reach them, the more you are able to educate them, the more you will make them prescribe your drugs. That is the game you want to play. It is very similar to dealing with millions of consumers. You are moving from a stage where it was rather protected to now when you have a more open system. The best way forward is to develop more and more relationships. And today, thanks to media and technology, you can develop that relationship. You don’t need a salesman to visit so many lakh doctors. The customers are present on social networking websites. We set up what is called the people data centre. And we monitor all conversations that are happening on the social media on our brands, 24x7.
By Vinita Deshmukh
