One of the first questions Michael Roth, chairman and CEO, Interpublic, asked Harish Manwani, COO, Unilever, and chairman, Hindustan Unilever, was about global trends he’s been observing. Manwani enumerated three of them: a shift of the centre of gravity to emerging markets (90 percent of the economic growth is forecast to come from them, and Asia will be one of the largest consumer blocks, significantly ahead of North America); sustainability; and digitisation.
Manwani also spoke about some of the learnings of HUL as a company (it started 100 years ago in India, with brands like Sunlight and Lifebuoy). “First, there is no one India, but many Indias. We need to straddle the pyramid and cover different segments and price points. Second, in markets like India, we aren’t competing for market share, but for market development. Third, affordability and accessibility are important. Half our business comes from products that sell at under 10 cents.”
The HUL chairman emphasised the need to develop business models, which are the equivalent of reverse engineering. He elaborated with an example from their own history – “In the shampoo business 25 yrs ago, the price of a sachet was Rs 2, and the reasoning behind the pricing was cost plus margin would be equal to the price (a bottle would be cheaper than a sachet). But the market didn’t take off. So we went to the consumer, who said she wanted to pay Re 1 for the sachet. So we reverse engineered it, and we discovered we were using formulations using high conditioning at a high cost. But the consumers were using hair oil, and all they wanted to do was wash it off. So we set up a big sachet manufacturing plant and drove costs down.”
The other extreme is the high-end consumer in the Indian market. “There is also premiumisation and we have to be schizophrenic in the market,” said Manwani, adding that the ability to reach consumers where they are and having the right talent is also imperative.
To Roth’s question on how do you market to the consumer, Manwani replied, “There are 80 million people on the internet, but there are 300 million in media-dark pockets of the country. Are we really understanding the power of mobile to reach urban and rural audiences?” He added that marketing is changing with a sharper focus around shoppers, rather than consumers.
According to Manwani, the fourth dimension of growth, after consistency, competitiveness and profitability, is responsibility. “We are trying to make sure our brands carry a social mission (beyond the functional and emotional), like Surf Easy Wash that promised to save two buckets of water. Our target is to reduce our environmental impact by half and hence integrating social missions with brands is critical.” He also spoke about how Lifebuoy is teaching people how to wash hands, and about Project Shakti that trained 45,000 impoverished rural women to carry the message of hygiene and nutrition to schools and homes, and simultaneously sell HUL brands as a small business.
On the future, Manwani said, “54 percent of our business will be from developing and emerging markets. We’re the emerging market company – India and China will soon constitute 40 percent of our world growth. Africa is not yet discovered in a business sense, even though their economy is growing by 5-6 percent per annum.”
On how he sees the agency- brand relationship evolving, Manwani predicted, “Some things won’t change: the power of brands, the role of marketing and advertising, the power of consumer insights and having a point of view about the future, the ability of agencies to create great advertising, and the constant bickering around fees. Going forward, in ten years’ time, the ad and marketing world will be a very different place, largely because of digital. The ability to work with consumers and go 360 will be critical. Hence the agency-client relationship has to be strategic, not opportunistic.”