Marico Ltd, India’s largest hair oil maker, is taking lessons from nimble startups to identify emerging trends and map niche offerings to cater to the taste of new consumer cohorts. Maker of Parachute hair oil and cooking oil Saffola has set up an incubation team and in-house creative studio to create content and campaigns for digital native brands. In an interview, Koshy George, Marketing Director of Marico, shares his perspective on India’s rapidly changing landscape. Edited excerpts:
Marico spent less on advertising and marketing in 2020-21. Has spending increased in the current fiscal year?
In the covid year there was a lot of uncertainty about what will happen to consumption. But to be honest, we were surprised by the pace of growth, especially in rural areas and small towns. And that obviously gave us a significant boost. I think the task ahead of us is to create categories, which will require investment. However, here is a caveat: in the short term, we are seeing unprecedented inflation due to the Russian-Ukrainian crisis. Commodity prices have exploded everywhere, and some short-term cost management may be required, which will put pressure on profits and losses. Otherwise, the fundamentals are really solid. We see growth returning in the medium to long term and therefore our (marketing) expenses will return to normal. But in the short term, we will face unprecedented cost inflation.
You’ve launched and invested in digital-focused brands. Is new-age brand marketing different from consumer staples brands?
Yes, these are very different. Frankly, we’ve borrowed and learned a lot from some startups. What some digital-focused brands have done really well is catch on to trends really quickly. Second, a large FMCG organization like ours, and this is true for most existing FMCG organizations, is more focused on scale and efficiency, and the whole model is based on that. Startups very effectively cater to smaller segments. The reason some companies like ours don’t stick to it is that we think scale isn’t enough. Today, with the digital ecosystem, the ability to cater to very specialized segments has evolved.
One of the key things is that you need to get to grips with trends very quickly. We have now developed our own trend detection tool, which will help us identify trends almost a year or two in advance before they become significant, so that we can participate in them. The second need is rhythm and agility of execution. There’s also a huge premium in terms of packaging, bringing the right aesthetic value – we’ve invested in the ability to increase this.
Then you need to have the right unit economics if you’re going digital. You need a certain pricing threshold because there is a certain cost to acquiring customers. So I think that’s a model that we’ve completely moved to, and we’ve created an incubation cell that’s looking to cater to those niches and market them very differently. Much of it depends on performance marketing, influencers and advocacy, rather than classic brand building models.
The advantage we have is that we have very good learnings from companies we have acquired like Just Herbs and Beardo. We’ve built our own in-house creative studio, our own performance marketing team. The idea is to create rhythm and agility.
We’ve started with some of our more premium brands, but we’re also working on Parachute Hair Oil. We also work with major agencies like Ogilvy. But with brands in the premium and digital space, in particular, we’ve completely moved to an in-house creative model. There’s a certain set of brands that we’re working on right now, where everything from start to finish has been done in-house. We officially created it three or four months ago.
How do you see the media mix evolving for Marico over the next four to five years?
We have separated the portfolio into three brand archetypes. One is what we call a core legacy brand like Parachute – it still has a huge overlay in small towns and rural areas, and still relies on TV.
Then we have digital-biased brands, where TV is still there, but not as the primary medium; instead, digital has taken over. Third, it’s what we call digital first brands where there’s no TV, it’s all digital content and influencer-led marketing.
Thus, in digital-oriented brands, 40-50% of spend is already digital-oriented. Within digital first, almost 100% of spending is devoted to digital. For the main brands, we will be between 10% and 15%. Going forward, I think 30-40% of our spend as an organization will eventually go digital.
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