At the Global CEO Conference in Mumbai hosted by the Indian Society of Advertisers (ISA) on 30 October, Manu Anand, president - India and South Asia, Mondelez International, and MD, Cadbury India, spoke on ‘Reigniting growth in an economic slowdown’.
Anand began his speech by acknowledging that VUCA has always been around, but noted that it is a bit more volatile in its present form.
He cited slowdown in GDP growth and slowdown in demand, and delays in infrastructure projects and policy decisions. Adding to these, he noted, was slide of the Indian rupee has impacted import costs. He said, “If you combine all these factors you will find that everyone is competing for the shrinking share of the wallet. Therefore, conventional models of the way we used to do business earlier need some tweaking and different ways of thinking of how to deal with this.”
There are two ways to deal with this kind of uncertainty and slowdown, said Anand. One option he outlined was to ‘buckle down, cut costs, reduce any pricing impacts on consumers, cut unnecessary spends, capital expenditure and wait for the wave to blow over’. The other option the speaker offered, was to look at it as an opportunity to make selective investments, and come out stronger. He underlined that the route to take would depend on several factors - outlook of the company to the market and economy, its financial staying power, competitive power, and strength of its brands and products included.
Referring to how Mondelez dealt with a similar situation in 2008-‘10 and why the particular model worked, Anand recounted that some of the decisions helped it achieve category growth and volume growth when GDP growth was slowing down.
“In reality, you find that companies are doing both. For some product streams they are investing and pushing hard and in others they are pulling back. It is a combination of these two that people resort to deal with economic uncertainty,” he explained.
The key, he said, was in achieving the balance between where to cut costs and where to invest. “Go through your P&L to see what can be curtailed so that anything that is not adding value to the consumer should be questioned, and ways should be found to operate the costs at a much lower level. Be ruthless and use this as an opportunity to cut flab,” he elaborated.
Anand urged companies to make investments for the future, and look for opportunities to invest to achieve category growth. “Strive for marketing RoI and challenge yourself to do much more. Look at master branding, umbrella branding and focus on category growth for its going to drive your company. Lastly, prioritise on where you are spending for the brand - on air media vs. point of buying. In such times, the point of buying with right merchandising and designing makes all the difference,” he added.
Anand said attention has shifted to rural markets, which are growing faster. According to him, the rural market will become less farm-dependant, will become a large consumption centre, and the sooner a company recognises this potential and acts on it the quicker it will be able to harness the opportunity.
Economic slowdowns are also times to launch innovative products like Mondelez did with Oreo and Tang, which turned out to be very successful for the brand, said the Cadbury India MD. He urged companies to create targeted innovation, with examples such as the Cadbury Dairy Milk Silk and Bournville.
Anand advocated conversations with stakeholders while making changes to navigate a slowdown. He surmised, “Learn to make decisions with imperfect data for if you wait for the perfect data, the time lag is too much and you have probably missed an opportunity somewhere in the world.”