VIEW FROM THE TOP
Emerging Trends of Marketing in Nepal

By Madan Lamsal & Sunim Tamang

As the global and regional marketing practices get adopted in the Nepali marketplace , the differentiation between Nepali brands and foreign brands (read MNC) gets diffused from a customer perception.

In an economic environment, where investment across many industrial segments is woefully lacking due to a suspect long-term return scenario, economy is attracting investments in those areas which offer short-term returns. This manner of concentrated investment is driving the market players to fight for every percentage point of market share therefore, forcing today’s marketing practitioners to constantly evolve and in some cases reinvent themselves.

Market segmentation, rapidly evolving consumer needs and fragmented channels are driving the need for more efficient approaches of linkages with the consumer. From Business Strategy point of view, there is a great pressure in delivery of bottomlines and maintaining a tight cash flow thereby bringing in this QSQT (quarter se quarter tak) culture in today’s business environment. “Today the only job of CEO is to save his own job” as was touchingly stated by Ajay Gupta of Brand Prophet in his recently held branding workshop in Kathmandu.

As the companies push the frontiers there is a propensity of clutter appearing in every product segment and the days of unchallenged market share seem to be truly over. A glimpse at the market state of affairs.

#             Over twenty different of brands of Candies are fighting for the market share.

#             Some fifty odd brands of instant noodles.

#             Sudden increase of new media products in print as well as electronic media

#                Traditional Soaps and Detergent brands being constantly replaced by newcomers.

#             Financial Institutions reshaping their market segmentation from industrial lending to consumers lending.

#             Hotels radically changing their outlook towards the local markets.

#             Private educational institutes on a cloning spree with no perceptible product and service differentiation.

#             A plethora of new two wheelers being launched in the marketplace and gets over 250 takers a day in Kathmandu valley alone.

Marketing efficiency…

In the world of consumers, a lot has changed over the last half a decade, and literally consumer is the king. “Due to the competitive pressures, almost all the noodles brands have frozen their MRP to a standard of Rs. 10 and less for the last one decade and  are coming up with further value add offers with raffle scheme,” says Rabindra Man Shrestha, CEO of Himalayan Snax, the makers of Mayos noodles.

However, in this age of Branding wouldn’t it be better to go for comprehensive branding to obtain long-term customer loyalty as an alternative of driving constant sales promotions? Shrestha responds: “Even elements of the promotion can add to the overall branding process”.

Vice President (Marketing) of Surya Nepal, Samindra Roy differs: “Unfortunately, many of the companies are spending money in below the line activities like offering free schemes. Though providing free schemes is one way of enhancing the brand, it is not as effective as advertising.  If we are to follow the theory, it is wise to spend about 80% of brand promotion expenses in thematic advertising and only 20% in scheme.  Schemes are effective in the short run. The consumers, who are holding on to one brand, easily shift to another brand when they get better schemes in other brands. This shows schemes are in no way the reliable means to attract loyal customers in the long run.”   

Market observers also point out the lack of innovation in launching new category of services thereby, stalling the growth in many segments. “We fail to see any innovation in product launches and category development in the overall context. Even large MNC follow the same tried and tasted process to access the marketplace” says Rabindra Man Singh.

The knowledge of MNC acquired in similar marketing terrain of other South Asian countries has propelled marketers to think with a different perspective. This in a way, is an innovation at some level for the local marketing community. “The purchasing power of the people in these countries is low and thus they like to try out with smaller sachets of any products. When Lever wanted to penetrate the rural markets, they achieved it introducing small sachets,” notes Roy. Surya Nepal themselves now offer packs of 10’s for their premium brand Surya and its variant Surya Lights. Even Marlboro and its lights variant are now available in packs of 10’s, though, this move is not necessarily targeted toward rural markets. 

CEO of Asian Paints Nepal Indrajit Lahiri also points out the rapid penetration into the various layers of society made by FM stations as an outstanding example of development of marketing frontiers of Nepal. Lahiri stresses: “This is an example where Nepal is ahead in the region and other regional markets need to copy the Nepali success”. Moreover, this occurrence has had a catalytic effect on to spur the development of the whole new category of music that caters to the taste of Nepali listeners and then creating the spiraling growth of indigenous music video industry. This situation has further brought in a wide range of private sector business services to make the cluster structure sustainable as affirmed by the sprouting of a number of digital studios, linear video editors, camera services, graphic services providers specializing in the music world. Currently, within the marketplace of Nepal, Nepali music industry outsells Hindi music albums by four to one.

Indrajit Lahiri then, also emphasizes on the marketing effectiveness and efficiency. Even in Nepal an environment is developing where demands are being placed on marketing professionals to be more accountable and deliver a quantified number of returns. These days it is not enough just focusing on the implementation side of marketing communication. He says, “Marketers better be ready to correlate the media and creative spends with market returns in a structured manner”.

Systems and Processes….

Developing marketing system with a meaningful focus means careful scanning of the immediate environment. The rigor that comes along with a structured market research to get insights into consumer needs, behaviors, habits, living pattern and then articulate these finding to adopt market strategies is not ingrained in the marketing culture in Nepal.

“The success and failure of any product is dependent on entry-level strategy and the research behind the product concept,” says Ravin Lama, the Managing Director of The Himalayan Times, yet the Market Research data should not be considered as the imperative. In most cases, MR can just give a general overview of the marketplace and then it becomes the onus of the marketer to interpret the data.

“The companies are not spending enough money in market research. It is important to make a research in the market so as to be able to decide how to enhance the brand image. This is also necessary to know the health of the brand, what changes in strategies are to be incorporated and so on,” says Roy and he considers environment scanning important more at the macro level.

“For marketers it is very necessary to get warning signals about the future health of the brand but market scanning does not help them in this regard. There are various robust marketing tools that help marketers detect the decline in the health parameters. Though market scanning is one important tool in marketing, it should not be taken in a way to replace market research. However, there is no such evident trend of such shift here,” Roy states.

Process driven companies like Asian Paints and Surya Nepal would rely on Market Research, thereby, keeping a close tab on the direction of the market. The formal article of market research and “its outsourced version” currently prepared by specialized MR outfits is on the rise due to the arrival of the organized firms like AC Nielsen- ORG Marg. This happening has given an impetus to many companies to develop a clear understanding of the market conditions as well as the psychographic trends before embarking on a major product launches or promotions.

Still the culture of structuring of Market Research as an integral part of the marketing process has not so far arrived, though, larger companies like Surya Nepal , Asian Paints and others those with MNC orientation consider Marketing Research a vital internal tool to justify their marketing action plan. Market Research doesn’t always have to formal outsourced third party obtained market data, careful scanning of the business environment also is a form of Market Research says Rabindra Man Shrestha, CEO of Himalayan Snax. Unfortunately, most of Nepal’s owner-managers consider MR as an additional cost head, therefore, there are tendencies to shirk away from this activity or look for close alternatives,” says Ravin Lama.

This scenario reflects the slow pace of internalizing MR within the Nepali business community. Many industry insiders attribute this very weakness to be the basis of large investments failing to recoup. As an illustration, many FMCG brands like Pine, Haywards, Singha, King Fisher, Surya Mild, 555, RC Cola launched by large corporations fail to resonate in the marketplace and misreading of psychographics of consumer segments seems to be a principle factor, says an industry insider. On the other hand, a simple data, demonstrate that 50% of the households in Kathmandu valley possess 7/8 years old TV sets, is driving TV companies in Nepal to flood the market with exchange offers, thus creating a separate category within the marketing mix by kick starting that segment.

Characteristically, in Nepal Marketers tend to look at the marketplace in the same way, as the competitors do and there has been an explosion of too many “me too” occurrences in almost every category of products and services. The archetypal example of Noodles brand war is fought at the level of market share on volumes thereby creating an environment of self imposed margin pressures. Leading marketing practitioners like Ranjit Acharya, CEO of Prisma Advertising, though, sound skeptical on the long-term viability of such schemes where in every Rupee given away as Prizes is passed on to end consumers. Acharya advocates transparency in promotional offer and specifies a promotion where a Colour Television company value added the offer with a warranty for five years and an example of a two-wheeler company offering one year’s subscription of a popular vernacular periodical plus a whopping 24 free servicing.   “Wouldn’t it be better to value add every pack of noodles with a Pencil and an Eraser?” he wonders.

Taking the Brands to the streets and to the hearts……

Allocating the marketing resource in a pragmatic way is always a guessing game in Nepal. The rapid development of media channels especially the print media has given enough options for Marketers to keep their flags visible and it has in its own peculiar way brought about its share of dilemma.

Media in Nepal is at different level of growth stages. The print media is almost on a consolidation phase, while, from the media spend perspective electronic media is at a stage where it is hard to observe  footprints like that in Indian Electronic media. “The reliability for electronic media especially that of TV as an attractive media channel needs to be improved and the responsibility now lies with operators to come up with convincing viewership figures,” opines Indrajit Lahiri on the issue of his brand being conspicuously absent from Television campaign.

In general, advertising spends have gone up as stated by AAAN in their annual reports over the last half a decade and there has been enormous operational innovations in the field of marketing communications. Outdoor advertising with hoardings and bill-boards has emerged as the biggest new channel due the downward trend of production cost. A square foot of flex used to cost Rs 800 just a few years ago, yet these days, one can obtain good quality flex for just Rs. 40 per square foot.

“Advertising revenues have gone up. People have realized that advertisement is important to retain the top of the mind awareness,” says Ravin Lama, a leading marketing whiz of the Nepal.

At the same time he points out the case of Sherpa Soap which has been using the same imagery for its Television Commercial for the last twelve years. Indication of this type of lethargy is a noticeable signal for the demise of many home grown brands in the face of the onslaught of new MNC brands. In the segment of Soap and Detergents, the brand replacement is the most observable fact over the last half a decade.

Additionally, the fear factor amongst the advertising service providers has left the sector in a large gridlock of protracted battle over media commission, thereby, developing a complacency in the creative part of the communication process. In most cases, accounts are won on the bids riding with pay back system where the media commission are passed onto the clients and in so doing most of the agencies work on thinnest of margins forcing them to compromise on the creatives. Despite this inhibitor, that there has been a gradual upsurge on the quality of communication execution, though the pace of change is likely to gather steam only after the churning effect that will eliminate many peripheral players in the advertising business.

This market condition has inadvertently resulted in underserving of many Nepali businesses without the Businesses realizing it.

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